Synopsis: ICICI Bank is set for strong performance with robust loan growth, excellent asset quality, and leading return ratios. The bank's strategic focus on quality underwriting, diversification, and customer-centric innovations has helped it surpass system credit growth. Key drivers include growth in retail and SME segments, digital advancements, and risk management.
The bank is well-positioned to deliver superior performance, characterized by healthy loan growth, strong asset quality, and industry-leading return ratios.
While margins are expected to stay stable in the near term, operating leverage is emerging as a key driver for earnings growth.
ICICI Bank has been showing impressive growth and strategic development, surpassing system credit growth with a strong focus on quality underwriting and diversification.
This performance is driven by a combination of robust loan growth, technological advancements, and a strategic focus on risk management and customer-centric innovations.
ICICI Bank has consistently outpaced system credit growth, primarily driven by higher growth in retail and SME segments, while wholesale growth remains modest.
The bank's focus on building a diversified and granular portfolio has resulted in a compound annual growth rate (CAGR) of approximately 17% in loans over FY22-24.
This growth is supported by data analytics-driven processes for onboarding, credit assessment, and customer monitoring.
Notably, the share of unsecured loans, including credit cards and personal loans, stands at around 14% of the total portfolio, with a significant proportion extended to existing customers, particularly in the salaried segment.
Looking ahead, ICICI Bank continues to focus on risk-calibrated core pre-provision operating profit (PPoP) while maintaining sectoral agnosticism.
The growing activity in SME, business banking, and retail segments is expected to drive overall growth.
The bank plans to tighten its underwriting standards in unsecured lending, supporting sustained growth and portfolio quality.
Healthy Liability Momentum:
ICICI Bank has achieved industry-leading deposit growth of approximately 20% in FY24.
Strategic initiatives in digital banking and branch network expansion are expected to sustain this healthy momentum.
The bank's deposit growth has been bolstered by continuous improvements in digital platforms and process simplifications, offering a seamless banking experience to customers.
The bank has introduced several digital innovations, including powerful functionalities and seamless access to digital channels.
New products such as iLens and Insta Export Packing Credit, along with enhancements to InstaBIZ and Merchant Stack tools, have enabled customized solutions, data-driven cross-sell and up-sell opportunities, and improved customer acquisition and engagement.
Stable NIMs:
Despite a slight compression in net interest margins (NIMs) over the past year, ICICI Bank has maintained a stable deposit profile.
The management aims to keep funding costs under control, with a conservative loan-to-deposit ratio of 82.3% on the domestic book.
The bank's core fees grew by approximately 16% in FY24, driven by strategic initiatives across retail, SME, and business banking segments.
Efficient use of data analytics has enhanced digital transactions, and a gradual recovery in the corporate portfolio is expected to further boost fee growth.
The bank's focus on leveraging technology to increase volumes in retail and SME segments aims to improve productivity and ensure a favorable "Return on Effort."
Robust Asset Quality:
ICICI Bank has significantly improved its asset quality, with a best-in-class provision coverage ratio (PCR) of approximately 81%.
Combined with contingent provisions of around INR 131 billion, this will help keep credit costs low.
The bank has enhanced its credit filters and pricing for new personal loans as a risk measure, ensuring that slippages remain under control.
In conclusion, ICICI Bank is well-positioned to maintain superior performance, driven by healthy loan growth, strong asset quality, and industry-leading return ratios.
Strategic initiatives in digital banking, diversification, and risk management, along with a focus on customer-centric innovations, have enabled the bank to consistently outperform system credit growth.
With robust asset quality, efficient operating leverage, and stable net interest margins, ICICI Bank is poised for sustained growth.
Continued emphasis on digital innovations and strategic expansion will support its trajectory, ensuring financial stability and enhanced profitability in the competitive banking sector.
