India's ICICI Bank climbs on record Q2 profit

BENGALURU (Reuters) -Shares of India's second-largest private lender ICICI Bank rose on Monday, after the bank posted a record-high quarterly profit.

The lender's stock rose as much as 1.3%, landing it among the top gainers on the Nifty Private Bank and blue-chip Nifty 50 indices.

ICICI Bank is the third-heaviest stock on the Nifty 50 index and has the largest weightage in the Nifty Private Bank index.

The company's standalone net profit rose 35.8% to a record 102.61 billion rupees ($1.23 billion) in the second quarter from a year earlier. Analysts had expected a profit of 96.26 billion rupees, according to LSEG data.

The profit beat was driven by lower credit costs, according to analysts. Credit costs, or expenses charged to the borrower on a loan, were at 0.2% of average loans in July to September, compared to 0.5% in the earlier quarter.

Lower credit costs result in a larger demand for loans.

"Loan growth of 18% year-on-year was led by unsecured loans (personal and credit cards) and business banking or small and medium enterprises," Jefferies said.

Despite net interest margin (NIM), an indicator of the bank's profitability, climbing year-on-year to 4.53%, it compressed sequentially from 4.78% in the earlier quarter.

ICICI Bank reported a similar sequential decline but year-on-year growth in NIM in the June quarter as well.

"We expect margin normalisation to continue (for ICICI Bank) due to some moderation in unsecured loan growth amid central bank's rebuke and continued funding cost catch-up," Emkay Research said.

Jefferies estimates further NIM contraction of 20 basis points over the next two quarters.

ICICI Bank's shares were last up 0.7%, taking their year-to-date climb to 5.4% compared to the Nifty Private Bank index's 4% rise.

($1 = 83.1800 Indian rupees)

(Reporting by Varun Vyas in Bengaluru; Editing by Sonia Cheema and Janane Venkatraman)