India’s second-biggest lender, ICICI Bank, posted a 17.4% jump in profit in the fourth quarter, with a higher cost of funds weighing on the bottom line.

What Happened: ICICI Bank’s net profit posted a standalone net profit of ₹10,707.53 crore in the quarter ended March 31, compared with ₹9121.87 crore in the same quarter last year. Analysts, on average, had expected the figure to come in at ₹10,465 crore.

The company posted a net interest income of ₹19,092.8 crore in the quarter, up 8.1% from ₹17,675.79 crore earned a year ago. This was higher than analyst estimates of ₹18,981.14 crore.

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Net interest margin, a key indicator of profitability, came in at 4.4%, which was marginally higher than with analyst expectations of 4.3%.

The company’s board also recommended a dividend of ₹10 per share.

The bank’s gross non-performing asset (NPA) came in at 2.16%, down from 2.81% clocked a year ago. On the other hand, net NPA for the quarter stood at 0.42% compared with 0.48% last year.

Banks in India are currently facing persistent pressure to attract deposits at low costs and are resorting to acquiring funds at higher costs to fulfill the increasing demand for credit, which is crimping their profit margins.

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