2023-10-21 13:32:13
Two of India’s leading private banks – ICICI Bank and Kotak Mahindra Bank – reported a sharp rise in net profits for the July-September quarter as strong growth in the economy helped boost consumer lending.
ICICI Bank, the country’s second-largest private lender, reported a 35.8% year-on-year rise in standalone net profit, significantly beating analysts’ forecasts with a record Rs 102.61 billion ($1.23 billion). dollars) for the second financial quarter.
The bank’s net interest income – the difference between interest earned and paid – rose nearly 24 per cent to Rs 183.08 billion, while asset quality also improved.
19% year-on-year growth in the bank’s loan portfolio helped offset decline in net interest margin (NIM) from the previous quarter, the bank’s executive director told a conference press release following the publication of the results, adding that the decline in the MNI should ease over the coming quarters.
Kotak Mahindra Bank, India’s fourth-largest bank by market capitalization, recorded a 21% rise in loans in the second quarter, which contributed to a 24% increase in its standalone net profit.
Indian banks have consistently reported double-digit loan growth in recent months, driven by rising demand for credit and increased consumer spending.
The upcoming holiday season is expected to further boost consumer spending, which will help support demand for personal loans.
However, the banking regulator is concerned regarding the sharp increase in unsecured loans, mainly personal loans and credit cards.
While these loans carry higher risk, they also contribute significantly to profit margins because they involve higher interest rates.
Defaults in the unsecured loan portfolio are increasing, but it is not yet a cause for concern, Dipak Gupta, managing director and CEO of Kotak Mahindra Bank, said on Saturday.
The situation was similar at a third mid-sized private lender, Yes Bank, which reported a 47% increase in net profit for the second quarter, also thanks to an increase in loan demand.
“Although concerns (over unsecured loans) remain, they are not significant at present,” said the bank’s managing director, Prashant Kumar. (Reporting by Siddhi Nayak; Editing by Clelia Oziel and Tomasz Janowski)
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