Net income climbed to a record 23.5 billion rupees ($382 million), or 20.33 rupees a share, for the three months ended Sept. 30, from 19.6 billion rupees, or 16.91 rupees, a year earlier, Mumbai-based ICICI said in an exchange filing today. That surpassed the 21.4 billion rupee median of 43 analyst estimates compiled by Bloomberg.
ICICI, led by Chief Executive Officer Chanda Kochhar, expanded its loan book by 16 percent in the quarter as lower corporate lending rates helped win more companies after central bank measures to bolster the rupee caused money-market rates to surge. An increase in low-cost retail deposits allowed the bank to expand lending margins.
“The sharp expansion in margins surprised everybody,” Nitin Kumar, Mumbai-based banking analyst at Quant Broking Ltd., said by phone. “The large share of low-cost deposits and retail lending is helping them.”
Shares of ICICI rose 0.1 percent to 1,022.2 rupees in Mumbai. The stock slumped 10 percent this year, less than the S&P BSE Bankex Index’s 13 percent drop.
Net interest margin, a measure of lending profitability, expanded to 3.3 percent from 3 percent a year earlier, the lender said in an e-mailed statement.
“We expect the margins to remain above 3.3 percent for the financial year,” Kochhar said in a conference call with reporters today. “An increasing share of retail deposits will help in margin improvement.”
Comparatively lower lending rates helped ICICI weather the surge in interbank borrowing costs that followed the Reserve Bank of India raising the price at which it supplies cash to lenders on July 15.
The three-month interbank offered rate has climbed 131 basis points since to 9.52 percent today. It touched a four-year high of 11.59 percent on Sept. 4. ICICI’s base rate, below which the bank doesn’t lend, is set at 10 percent.
The bank’s net interest income, or revenue from lending minus payments on deposits, rose 20 percent to 40 billion rupees.
Low-cost deposits, comprising of funds in current and savings accounts for which ICICI pays a lower rate of interest than on bulk deposits, formed 43.3 percent of the bank’s funding as of Sept. 30, the statement shows. That compared with 40.7 percent a year earlier.
Total outstanding loans at ICICI increased by 16 percent to 3.2 trillion rupees at the end of September from a year earlier. Loans to individuals grew by 22 percent, while those to companies rose 11 percent, Kochhar said on the conference call. Lending to individuals accounted for 36 percent of ICICI’s total loans at the end of September, she said.
Loans at Indian lenders grew almost 18 percent in the 12 months to Oct. 4, fortnightly central bank data show. That compares with an 18.2 percent expansion in the year to Sept. 6, which was the fastest pace in 15 months.
The bank’s net bad-loan ratio widened to 0.85 percent from 0.78 percent a year earlier, according to the statement. Bad loans at Indian lenders swelled to 3.9 percent of total loans as of June. 30, the highest in at least six years, data compiled by the central bank show.
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