ICICI Bank net profit up 17% at Rs 2,655 cr

ICICI Bank, India’s largest private sector lender, reported a 17 per cent growth in its standalone net profit to Rs 2,655 crore in the April-June quarter, compared with Rs 2,274 crore in the year-ago quarter, on the back of both higher core and fee income.

The profit numbers were slightly higher than a Bloomberg consensus estimate of Rs 2,592.8 crore. However, the stock closed lower by 1.1 per cent to Rs 1,473 a share on the BSE on Thursday, while overall indices were down 0.74 per cent.

Net interest income, the difference between interest earned and expended, was up 18 per cent to Rs 4,492 crore in the June 2014 quarter, compared to Rs 3,820 crore in the year-ago period.

Non-interest income, which includes treasury and fee income, commission, etc. was up 15 per cent to Rs 2,850 crore from a year ago.

Chanda Kochhar, managing director and CEO of ICICI Bank, said the lender had seen healthy growth from retail advances. “The retail portfolio grew by 26 per cent. Home loans grew 25 per cent and automobile loans at 46 per cent. We believe retail will continue to grow in excess of 20 per cent for the year.”

The margins had also improved to 3.40 per cent compared to 3.27 per cent a year ago on the back of the focus on retail. Kochhar said that for the entire year (FY15), margins are expected to be in the range of 3.3-3.4 per cent.

Advances increased 15 per cent to Rs 3,47,067 crore, while total deposits were also up 15 per cent to Rs 3,35,767 crore. The savings deposits rose 16 per cent to Rs 1,02,736 crore. As of June 30, 2014, low-cost current account and savings account deposits accounted for 43 per cent of total deposits.

During the quarter under review, ICICI Bank’s non-performing assets (NPAs) increased marginally on a sequential basis, while gross NPAs rose to Rs 10,843.30 crore against Rs 10,505 crore in the March quarter. Net NPAs also increased to Rs 3,428 crore in the June quarter from Rs 3,297 crore in the fourth quarter of FY14.

The bank’s provisions increased significantly by 22.42 per cent to Rs 726 crore against Rs 593 crore in the same period a year ago. The management said these provisions include money set aside for unhedged foreign exposure of its clients.

In the April-June 2014 quarter, ICICI Bank restructured loans of Rs 1,394 crore compared to Rs 2,156 crore in the March 2014 quarter and Rs 1,000 crore in the June 2013 quarter.

Kochhar said, “There is still some amount of restructuring to be done this year. But the yearly additions to NPAs and restructured assets should be lower than FY14.”

Saday Sinha, banking analyst, Kotak Securities said that ICICI Bank results were above expectations. “The positive surprise came on lower new impairment (Rs 2,600 crore as against Rs 3400 crore in previous quarter). Reported headline NPLs remained stable with gross and net NPAs remaining at 3.05% and 0.99% (in absolute terms grew only 3-4% quarter on quarter),” he added.

The lender has also managed to improve its cost to income ratio to 38.4% in first quarter from 39.4% in the same period last year.

The capital adequacy ratio (Basel III) was 17%. If, the profits for Q1 were included the CAR would have been 17.39% with tier I pegged at 12.62%.