The Hindu Business Line : Higher volumes on retail assets boost ICICI Bank's growth

Higher volumes on retail assets coupled with re-pricing of mortgage loans have been principal factors behind ICICI Bank's 30-per cent growth in earnings for the September quarter. Despite about 250 basis point hike in interest rates for home loans and several other classes of retail assets over the last 12-18 month period, the growth in the bank's retail assets has not slowed down.

On the contrary, retail assets, for the September quarter have increased by 57 per cent, on an already large base. Further, retail assets as a proportion of total advances have also risen to 69 per cent from 65 per cent a year ago. While ICICI Bank is almost half the size of SBI in terms of total assets, its retail assets are about 45 per cent higher than that of the latter.

Stable margins

While the volumes have remained robust, upward revision in interest rates on consumer assets (by 50-100 basis points) effected in June has been instrumental in driving the net interest income up by 30 per cent. Despite raising fresh short-term deposits at eight per cent and the deposit base notching a year-on-year growth of 57 per cent, the net interest margins have remained stable at about 2.4 per cent.

What is more important is that it has a higher proportion of retail loans (about 85 per cent) in its total mortgage portfolio. Further, about 85 per cent of its retail lending is linked to floating rates, which explains the reason for 64 per cent rise in its interest income alone.

ICICI Bank's strong showing on fee income and an improvement in low-cost deposit base has been other highlights for the quarter. Significant pick-up in volumes of remittances among others has pushed up its fee income by 62 per cent. The share of low-cost deposits has increased to 23 per cent from 21 per cent last year.

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