Wrapup 1: Top private Indian banks report strong Q2 profit rise as loan growth continues

Indian Bank

21/10/2023 14:32

By Siddhi Nayak
       MUMBAI, Oct 21 (Reuters) - Two of India's top private
banks - ICICI Bank  ICBK.NS  and Kotak Mahindra Bank  KTKM.NS  -
reported a sharp increase in net profits for the July-September
quarter, as strong growth in the economy helped drive consumer
loans.
    ICICI Bank, the country's second largest private lender,
posted a 35.8% rise in standalone net profit year-on-year,
significantly beating analysts' forecast with a record 102.61
billion rupees ($1.23 billion) in the second financial quarter.
    The bank's net interest income - the difference between
interest earned and paid - rose nearly 24% to 183.08 billion
rupees, while asset quality also improved.
    A 19% on-year growth in the bank's loan portfolio helped
offset a drop in net interest margin (NIM) from the previous
quarter, the bank's executive director said at a post-earnings
media call, adding that the drop in NIM should moderate in the
coming quarters.
    Kotak Mahindra Bank  KTKM.NS , the fourth largest Indian
bank by market capitalisation, reported a 21% rise in loans for
the second quarter, which contributed to a 24% increase in
standalone net profit.
    Indian banks have consistently clocked double-digit loan
growth over the past few months due to rising demand for credit,
amid increased consumer spending.
    The upcoming festive season is expected to further boost
customer spending, helping sustain the demand for retail loans.
    However, the banking regulator has been concerned about a
sharp rise in unsecured loans - mostly personal loans and credit
cards.
    While these loans carry a higher risk, they are also a big
contributor to profit margins as they entail higher interest
rates. 
    Delinquencies in the unsecured lending portfolio are
increasing, but that is not a cause of concern as yet, Dipak
Gupta, managing director and CEO of Kotak Mahindra Bank said on
Saturday.
    The situation was similar at a third, but mid-sized private
lender, Yes Bank  YESB.NS , which reported a 47% increase in net
profit for the second quarter, also helped by an increase in
loan demand.
    "Although concerns (in the unsecured book) remain, they are
not currently significant," said the bank's MD Prashant Kumar. 

 (Reporting by Siddhi Nayak; editing by Clelia Oziel and Tomasz
Janowski)
 ((Siddhi.Nayak@thomsonreuters.com; +91 22 6921 7848; Reuters
Messaging: Twitter: https://twitter.com/siddhiVnayak))