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ICICI Bank's fourth-quarter results for fiscal year 2025 showcase a robust financial performance, exceeding expectations and demonstrating the bank's strength in a competitive market. The 18% increase in net profit, reaching Rs 12,630 crore, is a significant achievement, driven primarily by strong growth in interest income and other income streams. This growth underscores the bank's effective strategies in managing its assets and liabilities, optimizing its revenue generation, and maintaining a healthy balance sheet. The exceeding of Bloomberg estimates further validates the positive trajectory and market confidence in ICICI Bank's operational and financial management. The bank's ability to generate such substantial profits amidst the dynamic economic landscape highlights its resilience and adaptability, critical factors for sustained success in the banking sector. This performance can be attributed to a combination of factors, including effective risk management, strategic investments, and a customer-centric approach that has helped the bank maintain a strong market presence and attract a diverse customer base. The rise in interest income, a core component of the bank's revenue, reflects its ability to effectively deploy its resources and generate returns on its lending activities. The increase in other income, which includes fees, commissions, and other non-interest sources, demonstrates the bank's diversification of revenue streams, reducing its dependence on traditional lending and enhancing its overall profitability. This diversification is a key strategic advantage, allowing the bank to weather economic fluctuations and maintain a stable financial performance. The bank's Net Interest Income (NII), the difference between interest earned and interest paid, rose by 11% year-on-year to Rs 21,193 crore. This growth is a critical indicator of the bank's profitability from its core lending operations. The Net Interest Margin (NIM), which represents the difference between the interest income a bank receives and the interest it pays out, relative to its interest-earning assets, was stable at 4.41%. The stability of NIM is crucial because it indicates that the bank has maintained its profitability despite potential fluctuations in interest rates and market conditions. An improved NIM on a sequential basis from 4.25% in Q3FY25 signifies enhanced efficiency in managing interest-bearing assets and liabilities. The bank has strategically managed its cost of funds and lending rates to boost profitability. Sandeep Batra, executive director of ICICI Bank, attributed the sequential growth in NIM to the impact of cash reserve ratio reduction and some interest on tax refund during the third quarter. This explanation provides insight into the specific factors that contributed to the improved NIM, highlighting the bank's ability to leverage regulatory changes and optimize its financial performance. Batra's statement emphasizes the bank's proactive approach to maximizing opportunities and increasing risk-calibrated profit, demonstrating a commitment to sustainable and responsible growth. The bank's full-year NIM stood at 4.32% in FY25, reinforcing its consistent performance throughout the fiscal year. This consistent performance is a testament to the bank's robust financial management and its ability to maintain profitability across different quarters.
The growth in total advances and deposits provides further insight into the bank's overall performance and its position in the market. The 13% year-on-year increase in total advances, reaching Rs 13.42-lakh crore as of March 31, indicates strong demand for credit and the bank's ability to effectively deploy its resources in the lending market. The retail loan portfolio, which accounts for over 53% of the total domestic loan book, recorded a 8.9% year-on-year growth to Rs 7.17-lakh crore. This growth demonstrates the bank's continued focus on retail lending and its ability to attract and retain retail customers. However, the moderation in retail loan portfolio growth compared to the previous year's 19.4% indicates a shift in market dynamics or a change in the bank's lending strategy. The slowdown in the unsecured segment, as highlighted by Batra, suggests a cautious approach to risk management and a focus on maintaining asset quality. The growth rates for personal loans and credit cards were 4.2% and 11.7%, respectively, reflecting the bank's selective approach to lending in these segments. Unsecured loans accounted for 13% of ICICI Bank's total loan book, indicating a relatively low exposure to higher-risk lending. This conservative approach to risk management is a key factor in maintaining the bank's financial stability and resilience. The domestic corporate and other loans rose by 12% to Rs 2.80-lakh crore, while the business banking portfolio surged 34% year-on-year to Rs 2.63-lakh crore as of March 31. This growth indicates the bank's strong performance in the corporate and business banking segments, reflecting its ability to attract and serve larger corporate clients and smaller businesses. Batra's statement that the bank is not concerned about retail versus wholesale loan growth and that it would like to grow its overall book in a risk-calibrated fashion underscores the bank's strategic approach to lending. This approach emphasizes the importance of balancing growth with risk management and ensuring that the bank's lending activities are sustainable and responsible. The total outstanding deposits of the bank rose by 14% year-on-year to Rs 16.10-lakh crore as of March 31, indicating strong deposit growth and the bank's ability to attract and retain deposits. The low-cost current account savings account (CASA) deposits accounted for 38.4% of the lender’s total deposits. CASA deposits are a valuable source of funding for the bank, as they typically have lower interest rates than term deposits. Batra's emphasis on growing the total quantum of deposits rather than driving any particular type of deposits like CASA or term deposits suggests a focus on overall deposit growth and a balanced approach to funding the bank's lending activities. A well-diversified deposit base is essential for maintaining the bank's liquidity and financial stability.
The improvement in asset quality is a significant positive development, reflecting the bank's effective risk management and its ability to manage and resolve non-performing assets (NPAs). The gross non-performing assets (GNPA) ratio improved to 1.67% in Q4FY25 as against 2.16% a year ago, indicating a significant reduction in the proportion of loans that are not performing. Similarly, net NPAs, or bad loans, came down to 0.39% from 0.42% at the end of March 31, 2024, further highlighting the improvement in asset quality. These improvements in asset quality are crucial for maintaining the bank's financial stability and profitability. The reduction in NPAs frees up capital that can be used for lending and other productive activities. The gross NPA additions were Rs 5,142 crore in Q4FY25 compared to Rs 6,085 crore in the previous quarter, indicating a decrease in the rate at which new NPAs are being added. Of this, retail & rural loans slippages were Rs 4,300 crore while Rs 803 crore came from corporate & business banking. This breakdown provides insight into the sources of NPA additions, highlighting the relative contributions of different loan segments. The bank’s recoveries and upgrades of NPAs, excluding write-offs and sale, stood at Rs 3,817 crore in Q4FY25, indicating the bank's success in recovering and upgrading NPAs. These recoveries and upgrades are essential for reducing the overall level of NPAs and improving asset quality. The net additions to gross NPAs were Rs 1,325 crore, reflecting the difference between new NPA additions and recoveries and upgrades. Batra's statement that the bank will be closely monitoring its portfolio to identify early any build of up stress but at this point in time, the portfolio is quite stable underscores the bank's proactive approach to risk management. This proactive approach is essential for preventing the accumulation of NPAs and maintaining asset quality. For the full year, ICICI Bank’s net profit rose by 16% to Rs 47,226 crore in FY25, reinforcing the bank's strong financial performance throughout the fiscal year. This sustained profitability is a testament to the bank's robust business model and its ability to generate consistent returns. ICICI Bank’s board also recommended a dividend of Rs 11 per share, which is subject to approvals. This dividend recommendation is a positive signal for investors, indicating the bank's confidence in its financial performance and its commitment to returning value to shareholders. In conclusion, ICICI Bank's Q4FY25 results demonstrate a strong financial performance, driven by growth in interest and other income, improved asset quality, and effective risk management. The bank's ability to exceed expectations and maintain its profitability in a competitive market underscores its strategic strengths and its commitment to sustainable growth.