Icicibank vs HDFC Bank Q3 FY24

ICICI Bank reported a strong Q3 FY24 with PAT growing 23.6% YoY to ₹102.72 billion, driven by robust loan growth of 18.5% YoY and stable asset quality. Core operating profit rose 10.3% YoY to ₹146.01 billion, while NIM compressed to 4.43% due to lagged deposit repricing. Management expects further NIM moderation in Q4 but at a slower pace. Retail and SME loans grew 21.4% and 27.5% YoY respectively, while personal loan growth moderated after tightening credit parameters. Contingency provisions remain high at ₹131 billion (1.1% of loans). Key risk: continued margin compression from deposit repricing and competitive intensity in lending.

Guidance read

Full-year NIM expected similar to last year: Management expects FY24 NIM to be similar to FY23, implying further compression in Q4 but at a lower pace than Q3. Headcount additions to moderate: Employee additions will not continue at the pace of previous 4-5 quarters; Q3 saw only 1,700 additions vs ~10,000 in H1. Personal loan growth to moderate further: Growth in personal loans may continue to moderate from current levels due to tighter credit parameters and pricing actions.

Risk read

Key risks include Margin compression from deposit repricing — NIM declined 22bps YoY to 4.43% and may compress further in Q4 as deposit costs continue to rise, albeit at a slower pace.; Unsecured loan delinquencies — Analyst raised concerns about rising delinquencies in unsecured loans; management acknowledged trimming higher-risk cohorts but did not quantify impact.; KCC portfolio NPA seasonality — Gross NPA additions from Kisan Credit Card portfolio were ₹6.17 billion in Q3, with higher additions typical in Q1 and Q3 each fiscal year..

Promise ledger

Of 2 tracked promises, management 0 met, 0 close, 2 missed.

HDFC Bank reported a 33.5% YoY PAT growth to INR 164 billion, driven by strong advances growth of 4.9% QoQ and stable NIM at 3.4%. However, deposit growth lagged at 1.9% QoQ, with retail deposits growing 2.9% while non-retail deposits declined. The LDR rose above 110%, and LCR fell to 110%, signaling funding constraints. Management emphasized a focus on profitable growth, aiming to improve CASA ratio and replace borrowings with deposits. They guided for deposit growth to outpace loan growth by 300-400 bps to reduce LDR. Key risks include persistent liquidity tightness, elevated LDR, and slower-than-expected branch expansion (target of ~1,000 vs earlier 1,500). The bank plans to enhance cross-sell metrics disclosure to track synergy realization from the HDFC merger.

Guidance read

Deposit growth to outpace loan growth by 300-400 bps: Management expects deposit growth to exceed loan growth by 300-400 basis points to reduce the LDR over time. Cost-to-income ratio to progressively decline to mid-30s: The bank aims to reduce cost-to-income from ~40% to mid-30% over the medium term through digital efficiencies and margin improvement. Branch network to reach ~1,000 additions in FY24: Revised target from 1,500 to ~1,000 branches for FY24, with 570 branches in pipeline. Cross-sell metrics to be disclosed from next quarter: Management will start reporting penetration of savings accounts, credit cards, and consumer durable loans among new mortgage customers.

Risk read

Key risks include Elevated LDR and tight liquidity — LDR above 110% and LCR at 110% limit balance sheet flexibility; system liquidity turned negative for the first time in 3.5 years.; Slower deposit growth constraining loan growth — Deposit growth of 1.9% QoQ lagged loan growth of 4.9%, forcing reliance on borrowings and investment sales.; Branch expansion falling short of target — FY24 branch additions likely to be ~1,000 vs original target of 1,500, potentially limiting deposit mobilization.; Margin pressure from rising cost of funds — CASA ratio declined and term deposit rates remain elevated; management did not commit to a timeline for margin improvement..

Promise ledger

Of 1 tracked promise, management 0 met, 1 close, 0 missed.