ICICI Bank posts record Q2 profit, outperforms market expectations

ICICI Bank announced a record Q2 net profit of Rs 10,261 crore ($1.23 billion), marking a 35.8% increase from the previous year, propelled by business growth, improved margins and a reduction in bad loans. The surge surpassed analysts’ expectations, reflecting the bank’s robust performance under the leadership of Sandeep Batra. The bank’s deposits and loan book expanded by 18.8% and 19.3%, respectively, while its gross non-performing assets ratio declined to 2.48%. Its net interest income rose by 23.8%, further contributing to the strong quarterly performance.

In line with InvestingPro data, the bank has been trading at a low P/E ratio relative to near-term earnings growth, standing at 11.05, and a PEG ratio of 0.03, indicating a potentially undervalued stock. This is further supported by the bank’s strong operating income margin of 42.42%.

Despite the overall positive results, ICICI Lombard General Insurance reported a minor 2.2% dip in Q2 net profit. Excluding tax provision reversals, the insurance arm’s profits would have risen by 19%. An interim dividend was declared following a 25% pre-tax profit increase, indicating an improved combined ratio despite catastrophe losses. The company’s solvency ratio also showed an upward trend.

InvestingPro Tips highlight that ICICI Bank has consistently increased its earnings per share and has raised its dividend for 3 consecutive years, with a notable dividend growth of 42.86%. This is a strong signal for potential investors, as it indicates the bank’s ability to generate and distribute sustainable profits.

In contrast to the Q2 results, ICICI Bank’s Q3 results were closely watched by investors and Dalal Street for potential impacts of rising interest rates on net interest margin (NIM), loan growth, and asset quality. The bank reported a NIM of 4.5%, lower than Kotak Mahindra’s consistent figure of 5.22%, but higher than HDFC’s new inclusion at 3.6%.

ICICI’s domestic loan portfolio saw a year-over-year growth of 19.3% to Rs 10.74 trillion, slightly lower than the June quarter’s growth of 20.6%. Meanwhile, Kotak Mahindra maintained an 18% growth rate in advances. ICICI continued to improve its asset quality with net non-performing assets at just 0.43%.

Prior to the release of the Q3 results, ICICI Bank’s share price stood at Rs 932.5, nearing its July high of Rs 1,008. The bank’s performance and stock activities are monitored regularly by Equitymaster, which provides insights into member stock activities and SEBI Research Analyst registration details.

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