ICICI Bank beats Q4 profit estimates on strong loan growth, but margin shrinks

By Siddhi Nayak

MUMBAI (Reuters) -ICICI Bank, India's second-largest private lender, reported a better-than-expected 17.4% increase in fourth-quarter net profit on Saturday, helped by robust loan growth even as its lending margin shrunk.

The lender's standalone net profit, excluding subsidiaries, rose to a record 107.08 billion rupees ($1.28 billion) in the January-March quarter from 91.22 billion in the same period a year earlier.

That exceeded analysts' average estimate of 103.05 billion rupees, according to LSEG data.

Net interest income, or the difference between interest earned on loans and paid on deposits, increased by 8.1% to 190.93 billion rupees.

But net interest margin (NIM) -- a key gauge of profitability -- was 4.40%, lower than 4.90% a year earlier, and 4.43% reported in the previous quarter.

Executive director Sandeep Batra said that the bank was focused on "risk-calibrated operating profit".

"Our objective is to maximise overall profitability, which includes all levers such as NIM, expenses, fees and provisions," he said in a media call.

NIMs should be rangebound going forward, unless there is a change in the central bank's repo rate, Batra added.

Indian lenders have been shoring up their deposit base amid tightened liquidity conditions in the banking system and healthy demand for retail loans. That has put pressure on margins.

ICICI Bank's total loans grew by 16.8% during the quarter, while deposits grew 19.6%. Earlier this week, peers Axis Bank and IndusInd Bank also reported strong growth in loans and deposits for the fourth quarter.

ICICI Bank's asset quality improved, with its gross non-performing assets (NPA) ratio at 2.16% as of end-March, versus 2.30% at the end of December.

The bank opened 623 branches in the last financial year and will aim to open a "similar number of branches" this year, Batra said.

Elsewhere, it remains focused on building a resilient technology infrastructure, he said, adding that the bank's IT spend increased to 9.5% of total expenses in 2023-24, from 5.6% in 2018-19.

($1 = 83.4000 Indian rupees)

(Reporting by Siddhi Nayak; editing by Clelia Oziel)