ICICI Bank Q3 net dips 32%, higher provisioning weighs

Private sector lender ICICI Bank on Wednesday reported a 32% year-on-year (y-o-y) decline in its standalone net profit to Rs 1,650 crore for the December quarter of FY18, owing to higher provisions and lower other income. Its provisions for the quarter at Rs 3,570 crore were up 32% from the same period last year. Chanda Kochhar, MD & CEO of the bank, said that the provisions will remain at an elevated level because the bank still has to make provisions for the next round of NCLT cases, and the ageing provisions will also continue. Its net interest income (NII), or the difference between the bank’s interest earned and expended, stood at Rs 5,705 crore in Q3 FY18, 6% higher than the same quarter of FY17. Its net interest margin (NIM) – a key measure of profitability – stood at 3.14% for the quarter against 3.12% in the same quarter last year. Its domestic margins rose to 3.53% in Q3 FY18 from 3.51% in Q3 FY17.

Kochhar said the annual risk-based supervision of the bank by the Reserve Bank of India (RBI) for FY17 concluded during the quarter. “The observations regarding the asset classification and provision do not require additional disclosure in terms of the RBI circular. They were below the threshold by the central bank, which is 15%,” she said. As far as credit growth is concerned, ICICI Bank’s retail assets, which constituted 54% of its loan portfolio in December-end, saw a 22% y-o-y growth and its corporate loan book grew 4.2% y-o-y.

Its total advances grew 10% y-o-y to Rs 5.05 lakh crore. The bank said that excluding non-performing loans, restructured loans and loans to companies included in its drilldown exposures, growth in the domestic corporate portfolio was around 15%. “We expect that, for us, the domestic loan growth will continue to be above 15%, within which the retail growth will continue to be above 18-20%,” the chief executive said.

She said that the growth in corporate assets is either due to the increase in working capital requirement, following higher operating capacities of companies, or from the refinancing of debt by many high-rated companies. “Eighty eight percent of our disbursements is to A- and above companies,” she added. The drilldown list – the bank’s watchlist – stood at Rs 19,062 crore in Q3, down from Rs 44,065 crore in the beginning of FY17. The bank’s asset quality deteriorated in the December quarter, on a y-o-y basis, with gross NPA ratio rising 62 basis points to 7.82% and net NPA rising 24 bps y-o-y to 4.2%. However, sequentially, the bank’s asset quality improved slightly as its gross NPA ratio fell 5 bps.

The bank said it has outstanding loans and non-fund facilities to 18 such borrowers amounting to Rs 10,061 crore and Rs 1,335 crore, respectively. It added that 98.6% of the loans amounting to Rs 9,915 crore are to borrowers classified as non-performing as on December 31. The bank has set aside Rs 3,663 crore for those accounts, which amounts to 36.4% provision coverage. It added, of the 18 accounts, insolvency proceedings have been initiated in 16 accounts under the Insolvency and Bankruptcy Code (IBC).

Total deposits increased 11% y-o-y to Rs 5.17 lakh crore and the bank’s current accounts savings account (CASA) ratio stood at 50.4%. ICICI Bank shares on the BSE closed at Rs 352.95 on Wednesday, up 0.10% from its previous close.