ICICI Bank (IBN) Q3 Earnings rise on higher demand

ICICI Bank (IBN Free report) released the results of the third-quarter fiscal year 2023 (ending December 31, 2022). Revenue was INR83.12 billion ($1.01 billion), up 34.2% from the year-ago quarter.

The results were due to the increase in interest income (NII) and non-interest income, higher interest rates, and growth in loans and deposits. However, provisions were raised during the quarter. In addition, the high costs are shown to be harmful.

NII & Fee Income Increase, Expense Increase

NII grew 34.6% year-on-year to INR164.65 billion ($2 billion). The interest rate is 4.65%, up 69 basis points (bps) year over year.

Non-interest income (excluding revenue) was INR49.87 billion ($0.61 billion), up 1.8% year-on-year. Fee income rose 3.7% to INR44.48 billion ($0.54 billion).

In the reported quarter, IBN recorded a net income of INR0.36 billion ($4.4 million), down 59.1% from the year-ago quarter.

Operating expenses totaled INR82.17 billion ($1 billion), up 16.1% year-on-year.

Loans & Savings Advances

As of December 31, 2022, ICICI Bank’s total assets were INR9,740.47 billion ($117.6 billion), up 19.7% year-on-year. The growth was due to a steady increase in loan balances, commercial bank loans and SME loans.

Total deposits grew by 10.3% year-on-year to INR11,220.49 billion ($135.5 billion).

Credit Status: Mixed Paper

As of December 31, 2022, the total non-performing assets (NPA) was 0.55%, down from 0.85% last year. The recovery and improvement (excluding write-offs and sales) of NPAs was INR46.04 billion ($0.56 billion) during the quarter.

In the fiscal third quarter, there were net additions of INR11.19 billion ($0.14 billion) in total NPAs. Total NPA additions were INR57.23 billion ($0.70 billion), while total NPA eliminations were INR11.62 billion ($0.14 billion).

Provisions (excluding provisions for taxes) increased by 12.5% ​​from the previous quarter to INR22.57 billion ($0.27 billion). This includes an additional contingency provision of INR15.00 billion ($0.18 billion) made on a precautionary basis in the reported quarter.

Strong Budget

In compliance with the Reserve Bank of India’s Basel III norms, ICICI Bank’s capital ratio is 18.33% and Tier-1 capital is 17.58% as on December 31, 2022 .Both rates were greater than the minimum requirement.

Our Idea

ICICI Bank’s performance in the quarter was impressive on strong growth in demand for personal loans. The increase in interest income is a major downside, which is expected to continue to support the company’s financial performance. However, rising spending and economic concerns are a major concern.

ICICI Bank currently carries a Zacks Rank #4 (Buy).

You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

US Bank Performance

Washington Federala (WAFD Free report) first quarter fiscal 2023 (ending December 31, 2022) earnings of $1.16 per share beat the Zacks Consensus Estimate of $1.11. The figure reflects a year-on-year increase of 63%.

The results were supported by the loan balance and the increase in interest income. However, the large increase in provisions for bad debts, increase in expenses and decrease in other income became a problem for WAFD.

Bank of New York Mellon Corporationa (BK Free report) its fourth-quarter 2022 adjusted earnings of $1.30 per share beat the Zacks Consensus Estimate of $1.22. The bottom line reflects an increase of 25% from last year’s quarter. Our profit margin is $1.09.

BK’s results contributed to the increase in interest income. However, asset balances witnessed a decline, and this is a negative situation. High expenses and low income affect BK’s results.

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