Tag: ICICI Bank

Q4 performance: ICICI Bank net profit up 261% y-o-y

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The average current account deposits increased (CASA) by 34% y-o-y. Average savings account deposits increased by 21% y-o-y during Q4FY21.

ICICI Bank on Saturday reported a 261% year-on-year (y-o-y) rise in its net profit at Rs 4,402 crore in the March quarter (Q4FY21) on the back of healthy interest income and reduced provisioning.

The operating profit of the lender increased 15.6% y-o-y to Rs 8,540 crore.

The interest income (NII) increased 17% y-o-y and 5.24% quarter-on-quarter (q-o-q) to Rs 10,431 crore.

Provisions for the lender declined 51.7% y-o-y to Rs 2,883 crore.

However, the bank has made an additional Covid-19 related provision of Rs 1,000 crore in the March quarter. The provision coverage ratio stood at 77.7% at the end of March, 2021.

Sandeep Batra, executive director, ICICI Bank, said, “The growth in business banking continued to be robust,leveraging the bank’s distribution network and digital platforms such asInstaBIZ and Trade Online.”

The credit card spends in Q4-2021 increased substantially over Q3FY21 driven by spends across electronics, wellness and jewellery categories, he added. Speaking on the impact of the current wave of Covid-19, Batra said, “There has been a bit of a slowdown in the current quarter, but these are still early days as yet.”

The net interest margin (NIM) of the lender declined 3 basis points (bps) y-o-y at 3.84%, but increased 17 bps sequentially.

The asset quality of the lender deteriorated a bit during the March quarter, after the standstill on declaring non-performing assets was lifted by the apex court. Gross non-performing assets (NPAs) ratio of the lender increased 58 bps to 4.96%, compared to 4.38% in the previous quarter.

Similarly, net NPAs ratio increased 51 bps to 1.14% from 0.63% in the December quarter. During the quarter, the gross NPA additions, excluding borrowers in the proforma NPAs as of December 31, 2020, were Rs 5,523 crore, Batra said . “Recoveries and upgrades, excluding recoveries from proforma NPAs, write-offs and sale, from non-performing loans were at 2,560 crore in Q4 FY21,” he added.

Advances grew 14% y-o-y to Rs 7.33 lakh crore. The retail loan portfolio grew by 20% y-o-yand 7% sequentially. “The growth in the performing domestic corporate portfolio was about 13% y-o-y driven by disbursements to higher crated corporates and public sector undertakings (PSUs) across various sectors to meet their working capital and capital expenditure requirements,” the bank said.

Deposits saw a robust growth of 21% y-o-y at Rs 9.32 lakh crore. The average current account deposits increased (CASA) by 34% y-o-y. Average savings account deposits increased by 21% y-o-y during Q4FY21.

The fee income of the lender increased 6% y-o-y to Rs 3,815 crore. There was a treasury loss of Rs 25 crore in Q4FY21,compared to a profit of Rs 242 crore during the same quarter last year. The treasury loss in the March quarter reflects the increase in yields on fixed income and government securities, the bank said.

The capital adequacy ratio of the lender stood at 19.12% and tier-1 capital adequacy ratio of 18.06% at the end of the March quarter.

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ICICI Bank Q4 profit surges 260% to ₹4,402 cr

Banking & Finance

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Private sector lender ICICI Bank’s standalone net profit more than doubled by 260.4 per cent to ₹4,402.61 crore in the quarter ended March 31, 2021 with a robust increase in net interest income.

Its standalone net profit was ₹1,221.36 crore in the fourth quarter of 2019-20.

On a standalone basis, ICICI Bank’s net profit grew 104 per cent to ₹16,193 crore in 2020-21 from ₹7,931 crore in 2019-20.

Also read: ICICI Bank, SBI Cards see robust growth in credit cards

For the quarter ended March 31, 2021, the bank’s net interest income increased by 17 per cent to ₹10,431 crore from ₹8,927 crore in the same period a year ago.

The net interest margin was 3.84 per cent in the fourth quarter of 2020-21 compared to 3.67 per cent in the quarter ended December 31, 2020 and 3.87 per cent a year ago.

Non-interest income, excluding treasury income, grew three per cent to ₹4,137 crore in the quarter under review.

Provisions stood at ₹2,883.47 crore for the fourth quarter of 2020-21 versus ₹5,967.44 crore in the corresponding quarter in 2019-20.

During the fourth quarter of 2020-21, the bank utilised contingency provision totalling ₹3,509 crore towards proforma NPAs as of December 31, 2020.It also made additional Covid-19 related provisions of ₹1,000 crore during the fourth quarter of 2020-21.

Asset quality was stable. Gross non-performing assets stood at ₹41,373.42 crore or 5.33 per cent of gross advances as on March 31, 2021 as against 4.72 per cent as on December 31, 2020 and 6.04 per cent as on March 31, 2020.

Net NPAs were 1.24 per cent of net advances as on March 31, 2021 versus 1.54 per cent a year ago.

Dividend announced

The board also recommended a dividend of ₹2 per equity share of face value of ₹2 each, subject to requisite approvals.

The board of directors also approved fund raising by way of issuances of debt securities including by way of non-convertible debentures in domestic markets up to an overall limit of ₹20,000 crore by way of private placement and issuances of bonds/notes/offshore certificate of deposits in overseas markets up to $1.50 billion in single/multiple tranches for a period of one year, from the date of passing of resolution by the board.

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Profit surges 261% to Rs 4,403 crore, misses Street estimates, BFSI News, ET BFSI

Banking & Finance

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NEW DELHI: ICICI Bank on Saturday reported a 261 per cent year-on-year (YoY) rise in net profit at Rs 4,403 crore compared with a profit of Rs 1,221.40 crore in the corresponding quarter last year.

Analysts in an ET NOW poll had projected the profit figure at Rs 4,980 crore.

Net interest income (NII) for the quarter rose 17 per cent YoY to Rs 10,431 crore compared with Rs 8,927 crore in the year-ago quarter. ET NOW poll had forecast the NII figure at Rs 10,306 crore.

The net interest margin (NIM) for the quarter came in at 3.84 per cent compared with 3.67 per cent in December quarter and 3.87 per cent in the year-ago quarter.

The bank made a net provision of Rs 2,883 crore for the quarter, which included Rs 1,000 crore in Covid-related provisions. The private lender had made provisions worth Rs 5,967 crore in the year-ago quarter.

“During Q4, the bank utilised contingency provision amounting to Rs 3,509 crore towards proforma NPAs as of December 31, 2020, as these loans have now been classified as per the RBI guidelines. Further, the bank made additional Covid-19 related provisions of Rs 1,000 crore during Q4-2021,” it said.



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RBI sets up a six-member committee to review ARC regulations, BFSI News, ET BFSI

Banking & Finance

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The Reserve Bank of India announced formation of a committee to conduct a comprehensive review of the functioning of ARCs in the financial sector ecosystem and to recommend suitable measures for enabling such entities to meet the financial sector’s growing needs.

Committee will submit its report within three months from the date of its first meeting. The Reserve Bank of India’s Department of Regulation will provide the committee with the necessary secretarial support.

The committee is headed by Sudarshan Sen former RBI executive director and other members comprises Vishakha Mulye, executive director, ICICI Bank, P N Prasad, former deputy managing director of State Bank of India, Rohit Prasad, professor of economics, Management Development Institute, Gurugram, Abizer Diwanji, partner, Ernst and Young, and chartered accountant R Anand.

The committee will review business models of the ARCs, examine the current legal and regulatory system, and make recommendations on ways to enhance ARC efficacy. It will also examine their role in stressed asset resolution under the Insolvency and Bankruptcy Code (IBC) and make recommendations to enhance security receipt liquidity and trading.



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Why HDFC deposits are a safe option for senior citizens

Personal Finance

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The prevailing low interest rates on deposits have been pinching senior citizens the most. Seniors who are more keen on capital conservation than higher interest rates can consider the deposits from HDFC. Currently, HDFC offers seniors 6.1 per cent interest for 24-month deposits

Depositors who wish to get regular payouts can opt for the non-cumulative option, with monthly/quarterly/half yearly or annual payouts. Those who don’t need regular payouts, can instead opt for the cumulative option which offers annual compounding.

The minimum amount that can be deposited with HDFC for a fixed deposit is ₹20,000.

While the deposits of HDFC, an NBFC, are not covered by deposit insurance (bank deposits of up to ₹5 lakh are covered by DICGC), its 40-year plus stable business provides significant confidence. Besides, the company has been maintaining a AAA rating on its deposits for more than 26 years.

How they fare

As interest rates have almost bottomed out, they are likely to inch up in the next two to three years. Hence, at the current juncture, it is wise to lock into deposits with a tenure of one or two years.

For such tenures, HDFC offers seniors better interest rates than those offered by prominent banks such as SBI (up to 5.6 per cent), HDFC Bank (up to 5.4 per cent), ICICI Bank (up to 5.5 per cent) and Axis Bank (up to 6.05 per cent), which are considered safest options among banks.

Other private sector banks and small finance banks, however, offer even higher rates (up to 7.5 per cent) for one to two year deposits. The recent debacles at YES Bank and other co-operative banks have stoked fear in the minds of depositors. Given that, seniors may prefer safety of capital over the lure of higher rates.

HDFC also offers better rates compared to corporate FDs with similar ratings from other NBFCs such as LIC Housing Finance, that offers up to 5.9 per cent for a tenure of up to 2 years.

About HDFC

Incorporated in 1977, HDFC, a housing finance company currently offers loans to individuals (comprising 76 per cent of the loan book) and corporates (6 per cent). HDFC also lends for construction finance (11 per cent) and lease rental discounting (7 per cent).

With an outstanding loan book of ₹,52,167 crore as of December 2020, HDFC is India’s largest housing finance company. HDFC’s non-performing assets (proforma) are contained at less than 2 per cent. In addition to that, the company’s provisions (cumulative including those related to covid) cover up to 2.56 per cent of the loan book exposure.

As at the end of December 31, 2020, HDFC’s capital adequacy ratio stood at 20.9 per cent, well above the regulatory requirement of just 14 per cent.

HDFC also has several financial subsidiaries –prominent ones among them are HDFC Bank, HDFC Asset Management Company, HDFC Life Insurance, HDFC Credila and HDFC Ergo. Its consolidated profits at the end of the first nine months of FY21 stood at ₹1,33,900 crore.

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Sensex and Nifty ends flat amidst high volitality, financials underperform, BFSI News, ET BFSI

Personal Finance

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Domestic equity market benchmarks BSE Sensex and Nifty 50 traded flat on Friday. Benchmark indices erased most of the intraday gains and ended on flat note on April 16 amid high volatility. At close, the Sensex was up 0.06% at 48,832.03, and the Nifty was up 0.25% at 14,617.90.

Except financials all other sectoral indices ended in the green. ICICI Bank, SBI Bank, Bajaj Finance were among top index laggards.BSE Midcap and Smallcap indices outperformed broader indices today as recent fall in the space made investors to do bargain trading in quality midcap and small cap space.

The Nifty Bank Index ended flat at 31,977 down by 0.42%. Amongst the biggest losers were- ICICI Bank at Rs 566 (-1.43%) followed by Bandhan Bank at Rs 322 (-1.09%), RBL Bank at Rs 187 (-1.03%), SBI at Rs 339 (-0.82%), Kotak Mahindra at Rs 1,764 (-0.54%). Amongst biggest gainers were IDFC First Bank at Rs 54 (2.29%) followed by AU Small Finance Bank at Rs 1,077 (2.05%), Induslnd Bank at Rs 862 (0.54%).

Nifty Financial Services ended also flat at 15,362 losing 0.16%. Amongst the biggest losers were – Bajaj Finance at Rs 4,616 (-0.94%) followed by REC at Rs 127 (-0.78%), Power finance at Rs 109 (-0.32%). List of gainers included- Muthoot Finance at Rs 1,168 (1.31%) followed by HDFC at Rs 2,574 ( 1.06%), Chola Invest at Rs 540 (0.99%), Bajaj Finserv at Rs 9,824 (0.87%).

Other key takeaways

Gold prices recover in India, back above Rs 47,000
Gold prices recovered in Indian markets on Friday, after closing above Rs 47,000 per 10 gram for the first time since February 23, 2021, in the previous session. Although MCX gold June futures were trading weak, down Rs 85 or 0.18 per cent at Rs 47,090 per 10 grams, against the previous close of Rs 47,175.

MCX silver was trading at Rs 68,407 per kg, down Rs 169 or 0.25 per cent, as compared to a previous close of Rs 68,540 per kg. On April 13, MCX gold hit Rs 47,000 mark in intraday after nearly two months. Last year in August, MCX gold touched a record high of Rs 56,191 per 10 grams.

Rupee Close
Indian rupee extended the early gains and ended near the day’s high at 74.35 per dollar, amid buying saw in the domestic equity market. It opened higher by 13 paise at 74.79 per dollar against Thursday’s close of 74.92 and traded in the range of 74.28-74.79.

Rising domestic cases above 2-lac per day, widening India’s trade deficit, and the recent rebound in the crude oil could be a headwind for the Rupee. Overall, the short-term range for the USDINR is likely to be from 74.20-75.50.

Dow closes above 34,000 for first time
The Dow industrials closed above 34,000 for the first time on Thursday as the blue-chip benchmark and S&P 500 posted fresh record highs on a tech stock rally fueled by falling bond yields and strong March US retail sales, according to Reuters. The Dow Jones Industrial Average 0.9 per cent, the S&P 500 gained 1.11 per cent, and the Nasdaq Composite added 1.31 per cent.



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ICICI Bank, PhonePe partner to issue FASTag

Banking & Finance

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Private sector lender ICICI Bank and digital payments platform PhonePe have partnered to issue FASTag using UPI on the PhonePe App.

“This integration allows over 28 crore registered PhonePe users to order and track the ICICI Bank FASTag conveniently on the app,” the companies said in a statement on Thursday.

Also read: Retail payments: Half-a-dozen consortiums set to apply for NUE licence

PhonePe users, who may be customers of any bank, will have a fully digitised experience as they don’t have to visit physical stores or toll locations to buy a FASTag. ICICI Bank is the first bank to partner with PhonePe for the issuance of FASTag.

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ICICI Bank and PhonePe partner to issue FASTag, BFSI News, ET BFSI

Banking & Finance

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Private lender ICICI Bank and digital payments platform PhonePe have tied –up for the issuance of FASTag using UPI on the PhonePe App.

This integration allows over 280 million registered PhonePe users to order and track the ICICI Bank FASTag conveniently on the app.

ICICI Bank is the first bank to partner with PhonePe for the issuance of FASTag.

Sudipta Roy, Head – Unsecured Assets, ICICI Bank said, “This collaboration enables millions of PhonePe customers to easily apply for a new FASTag and get it delivered free of cost at their doorstep. The association comes in handy, even for users, who are not customers of ICICI Bank, as it allows them to order and later recharge with the convenience of UPI. With this, ICICI Bank has achieved another feat in the FASTag ecosystem.”

Roy added, “Our market leadership in value and volume of average daily transactions on FASTag is a testimony of the trust that customers have shown in our rollout. We believe that our latest tie-up with PhonePe will go a long way to make the availability of FASTag even more convenient, digital and frictionless.”

Deep Agrawal, Head – Payments, PhonePe said, “We have already seen a phenomenal response from our users recharging FASTag on our platform, with millions of customers recharging daily on the app. In fact, FASTag recharge has witnessed a 145% growth over the last 3 months indicating increased intercity travel as markets opened up post the lockdown.”

“We are confident that with PhonePe’s reach, superior payment and user experience, we will enable millions of consumers to purchase and use FASTag across the country,” said Agarwal.

Denny Thomas, Head NETC & AEPS, NPCI said, “The partnership of PhonePe and ICICI Bank will definitely increase the adoption of NETC FASTag and facilitate its doorstep delivery to the customers. We believe that this initiative will further deepen the penetration of FASTag across the country and provide the users with a seamless recharge experience through the PhonePe app.”



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HDFC Bank Vs ICICI Bank…who is speeding up?, BFSI News, ET BFSI

Banking & Finance

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HDFC Bank suffered at least the fourth outage on Tuesday in the last three years as customers experienced downtime on their internet and mobile banking with services not accessible to them for several hours.

This led to an almost 4% drop in the bank’s shares in afternoon trade on Wednesday in a market, which saw across the board sell-off due to Covid worries. At the same time, the drop in ICICI Bank was just 2%.

While it has a lot of catching up to do, ICICI Bank is fast narrowing the gap with HDFC Bank and larger peers.

Why is ICICI Bank surging

Experts said the worst is behind ICICI Bank. It has gone through a period of tremendous amounts of credit cost related issues and write-offs taking place. Secondly, it is focusing more to be a retail bank which is contributing to growth. On top of it, ICICI was trading at a substantial discount in terms of its valuation to its larger peers. The discount is also narrowing down and has contributed to this outperformance.

ICICI Bank’s performance has now become comparable with HDFC Bank’s (industry best) and as comfort on asset quality/ credit-cost improves, this should translate into stable growth in net profits as well, experts said.

It has improved the velocity (pace and direction) of operating profit over the past two years reflecting improved topline and cost efficiencies. An improvement in velocity of ICICI Bank’s operating profit growth & steady credit cost will bring down volatility in earnings, which has been a key reason for a 55% discount in valuation versus HDFC Bank. Lower volatility can reduce Beta, which can bridge the valuation gap by half. The rest reflects the gap in growth & ROE – this can be partly bridged with improved growth in clients/ CASA. Brokerage Jefferies has raised its price target to Rs 780 and hold it among its top picks in the sector.

ICICI Bank versus HDFC Bank

ICICI Bank trades at 55% discount to HDFC Bank in terms of valuations – ICICI Bank at 1.9x FY22 adjusted PB and HDFC Bank at 3.4x. This reflects a combination of HDFC Bank’s better growth, ROE and lower Beta. With a lower volatility in earnings, HDFC Bank’s Beta is at 1 whereas ICICI’s is around 1.2-1.3. Brokerage Jefferies said that consistency in earnings growth/ asset quality will help ICICI Bank bring down Beta closer to 1. This can lift-up the theoretical PB from 1.9x now to 2.5x – closing the gap with HDFC Bank by 30%.

CASA deposits

ICICI Bank has seen steady growth in CASA deposits. During Q3, ICICI Banks saw average CASA growth of 19% YoY whereas HDFC Bank saw 30% YoY growth.

Jefferies sees an improvement in earnings and profitability from FY22 as credit costs stabilise alongside steady growth in topline. It has raised its price target on the bank to Rs 780 (from Rs 700) and target multiple to 2.4x Mar-23E adjusted PB.

At a valuation of Rs 1.7-1.8 lakh crore, ICICI Bank has a big branch network and stability and clean up that has been brought about in the business in the last three years under the new leadership, while HDFC has a market cap of close to about Rs 8 lakh crore.



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Make new arrangements for recurring credit, debit card transactions as new norms kick in from April 1

Banking & Finance

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Starting April 1, customers will have to make alternative arrangements for recurring transactions for utilities and bill payments such as registering the biller on internet or mobile banking.

This is because most banks and payment companies have been unable to meet RBI norms to process e-mandate on cards for recurring transactions.

However, UPI and Rupay AutoPay facilities are unlikely to be disrupted. Sources said that most banks are live on it but it is unclear as to how many merchants are live on it.

Most large banks and payment players have already been informing customers that they would have to make alternative arrangements for auto debit through debit and credit cards.

Apart from payments for utilities like phone and electricity bills, even recurring payments to service providers such as Amazon Prime and Netflix will have to be made directly.

According to bankers, while they have made arrangements to comply with RBI norms, many merchants are yet to adhere to them.

“We are currently building a solution in adherence to the regulatory requirements. Therefore, effective April 1, 2021 any standing instruction for recurring transactions on your Card account will not be approved by American Express,” American Express said in a communication to customers, adding that to avoid any disruption in delivery of goods and services, starting April 1, 2021 customers should make payments directly to the service providers for bills as and when they become due.

Visa declined to comment on the issue when approached by BusinessLine.

“..as per regulatory guidelines, recurring merchant transactions based on Standing Instructions on your ICICI Bank Cards will be disabled effective April 1, 2021. To continue making payments against your regular utility bills, kindly register your biller through iMobile Pay or Internet Banking. For other standing instruction transactions, you may re-register or initiate transactions at regular intervals,” ICICI Bank said in a similar message to customers.

Recently, the Internet And Mobile Association of India (IAMAI) had also warned that millions of e-mandates set up by customers could fail from April 1, 2021.

The RBI had issued two circulars (August 2019 and December 2021) to banks, ‘non-bank prepaid payment instrument issuers’, and ‘authorised card payment networks’ for processing of e-mandates. The deadline to comply with it is March 31, 2021.

Under the new norms, banks will be required to inform customers in advance about recurring payment due and it would be carried following nod from the customer. For recurring payments above ₹5,000, banks are required to send a one-time password to the customer as per the new guidelines.

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