ICICI Bank Ltd.’s (IBN Quick QuoteIBN - Free Report) net income for the second quarter of fiscal 2025 (ended Sept. 30, 2024) was INR 117.5 billion ($1.4 billion), up 14.5% from the prior-year quarter.

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Results were driven by a rise in net interest income (NII), non-interest income, and growth in loans and deposits. However, higher operating expenses and provisions were the undermining factors.

IBN’s NII & Fee Income Improve, Expenses Rise

NII grew 9.5% year over year to INR 200.5 billion ($2.39 billion). The net interest margin was 4.27%, down 26 basis points.

Non-interest income was INR 65 billion ($775 million), up 10.8% year over year. Fee income increased 13.3% year over year to INR 58.9 billion ($703 million).

In the reported quarter, IBN recorded a treasury income of INR 6.8 billion ($81 million), up significantly from the prior-year quarter.

Operating expenses totaled INR 105 billion ($1.25 billion), up 6.6% year over year.

ICICI Bank’s Loans & Deposits Increase

As of Sept. 30, 2024, ICICI Bank’s total advances were INR 12,772.4 billion ($152.42 billion), up 4.4% sequentially. Growth was primarily driven by a solid rise in business banking loans and retail loans.

Total deposits grew 5% sequentially to INR 14,977.6 billion ($178.73 billion).

IBN’s Credit Quality: Mixed Bag

As of Sept. 30, 2024, the net non-performing assets (NPA) ratio was 0.42%, which declined from 0.43% in the prior-year period. Recoveries and upgrades (excluding write-offs and sales) of NPAs were INR 33.19 billion ($396 million) in the reported quarter.

In the fiscal second quarter, there were net additions of INR 17.54 billion ($209.3 million) to gross NPA. Gross NPA additions were INR 50.73 billion ($605 million), while gross NPA written-off was INR 33.4 billion ($398 million).

Provisions (excluding provision for tax) increased substantially year-over-year to INR 12.3 billion ($147 million). As of Sept. 30, 2024, the bank held a total contingency provision of INR 131 billion ($1.56 billion).

Capital Ratios Strong For ICICI Bank

In compliance with the Reserve Bank of India's guidelines on Basel III norms, ICICI Bank's total capital adequacy was 16.66%, and Tier-1 capital adequacy was 15.96% as of Sept. 30, 2024. Both ratios were well above the minimum requirements.

Our Take on IBN

ICICI Bank’s quarterly performance was impressive, driven by increased consumer loan demand, improved deposit balances and growth in NII and non-interest income. These factors are anticipated to continue to support the bank’s financials. However, elevated expenses and weak asset quality amid macroeconomic uncertainties are significant near-term challenges.

ICICI Bank currently carries a Zacks Rank #4 (Sell).
 
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Performance of Other Foreign Banks

Deutsche Bank (DB Quick QuoteDB - Free Report) reported third-quarter 2024 earnings attributable to its shareholders of €1.5 billion ($1.6 billion), up 41.7% year over year.

Results were positively impacted by solid growth in Investment Bank revenues and the partial release of Postbank-related litigation provisions. However, DB has increased its provision of credit loss forecast for 2024.

Barclays’ (BCS Quick QuoteBCS - Free Report) third-quarter 2024 net income attributable to ordinary equity holders of £1.56 billion ($2.03 billion) grew 23% year over year.

An increase in revenues (driven by solid investment banking performance), stable operating expenses (showing the success of cost-efficiency initiatives) and a solid balance sheet supported the results. Also, BCS recorded a fall in credit impairment charges in the quarter.