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ICICI Bank, India's second-largest private lender, concluded its third quarter (Q3FY25) with another solid performance, characterized by a notable increase in net profit and a sustained focus on maintaining stable asset quality. The bank's management emphasized its confidence in maintaining this stability, even within the potentially volatile unsecured retail segment, a sector where other lenders are experiencing increased loan defaults. This confidence is noteworthy, considering the broader industry trend of rising delinquencies and non-performing assets (NPAs) in unsecured lending, particularly in micro-finance portfolios. The bank's proactive measures to mitigate risks within its personal loan portfolio, which remained flat during the quarter, appear to have borne fruit, with indications suggesting stabilization and further improvement in the coming quarters.
The bank's Q3 results showcase a strong performance across key financial metrics. A nearly 15 percent year-on-year (YoY) rise in net profit is a significant achievement, reaching Rs 11,792 crore. This robust growth is further underscored by a 9 percent YoY increase in net interest income, reaching Rs 20,371 crore. While the net interest margin (NIM) experienced a slight dip from 4.27 percent in the previous quarter to 4.25 percent, and a more pronounced fall from 4.43 percent a year ago, it remains within a healthy range, reflecting the bank's efficient management of interest income and expenses. The bank's proactive approach to risk management is evident in its stable asset quality, with the gross NPA ratio declining to 1.96 percent from 1.97 percent in the previous quarter and a substantial drop from 2.3 percent a year ago. The net NPA ratio remained constant at 0.42 percent, slightly lower than the 0.44 percent recorded a year earlier.
Despite the challenges presented by the broader macroeconomic environment and the increasing delinquencies within the unsecured retail lending space, ICICI Bank's management expressed unwavering optimism regarding future growth prospects. The bank highlighted the strong performance of its corporate sector portfolio (20 percent of the total portfolio), citing its positive contribution to overall financial health. The bank's previous provisioning and loss absorption strategies have also significantly impacted its current financial strength. This strategic approach demonstrates a proactive and forward-looking strategy that effectively mitigates risk while positioning the bank for sustained growth. The bank's emphasis on maintaining stable asset quality, even amidst sector-wide challenges, suggests a robust risk management framework that effectively navigates potential headwinds. This commitment to responsible lending practices is essential for long-term sustainability and reinforces confidence among investors and stakeholders.
Looking ahead, ICICI Bank anticipates that the corrective measures implemented in the unsecured retail segment will lead to tangible improvements in asset quality. While the bank acknowledges the rise in delinquencies and NPA additions across the system, it has clearly outlined its strategy to address these challenges and maintain a healthy portfolio. This approach, coupled with the bank's strong performance in the corporate sector and its effective risk management strategies, positions ICICI Bank for continued success in the coming quarters. The bank's proactive management, coupled with its commitment to stable asset quality, indicates a strong foundation for future growth and further strengthens its position as a leading player in India's financial services sector. The results underscore the importance of strategic planning and prudent risk management in navigating an evolving and increasingly complex financial landscape.
Source: ICICI Bank clocks another steady quarter, expects stable unsecured retail portfolio ahead