NII growth remains weak in Q1FY22; provisioning weigh on profitability
NII grew at 8.6% YoY due to weak interest income despite -8.4% YoY contraction in interest cost. High growth low yielding assets, excess liquidity and interest reversal impacted interest income leading to 10 bps QoQ decline in NIM to 4.1%. Fee income de-grew by 23% QoQ as localized lockdown impacted business activity weighing particularly on third party products sale income. C/I ratio declined to 35% from 37.2% in the previous quarter. Provisioning rose by 24.1% YoY & 2.9% QoQ to Rs4,831 cr due to increase in slippage thereby impacting bottom line during quarter. Net profit grew by 16.1% YoY & -5.6% QoQ in Q1 to Rs7,730 cr.
Business growth remains strong; retail credit growth improves
Advances grew by 14.4% YoY led by wholesale segment which expanded by 18.1% YoY. Retail credit growth also improved to 10.2% YoY from 6.7% in the previous quarter. Incremental retail demand growth trend is looking strong with Bureau data indicates current demand for retail loans has reached at 80% of 4QFY21 level. Deposits grew by 13.2% YoY with CASA share stood at 45.5%.
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