ICICI Bank Q1 profit down 8% as bad loans rise
Mumbai: ICICI Bank Ltd on Thursday reported an 8.2% decline in June quarter net profit as an increase in bad loans and slower credit growth countered a decline in the pace of accretion of stressed assets.
Net profit in the fiscal first quarter fell to Rs2,049 crore from Rs2,232.35 crore a year ago. The bank had been expected to post a profit of Rs2,001.50 crore, based on a poll of 20 analysts by Bloomberg. On a consolidated basis, net profit rose to Rs2,605 crore from Rs2,516 crore in the same period.
Bad loans jumped to R43,147.64 crore, an increase of 1.4% from three months ago. In the quarter, the bank added Rs4,957 crore to its non-performing asset (NPA) stock, the smallest rise in seven quarters. NPAs made up 8.84% of ICICI Bank’s total loans, compared with 8.74% in March.
Despite the addition in bad loans, provisions and contingencies dropped 10% to Rs2,608.7 crore during the quarter from Rs2,898.22 crore in the March quarter. On a year-on-year basis, provisions rose 3.74% from Rs2,514.52 crore a year ago.
The quarter also saw loan recoveries and upgrades worth Rs2,775 crore, mainly on account of reclassification of its exposure to Jaiprakash Associates Ltd after the company sold its cement assets to UltraTech Cement Ltd and paid creditors.
Chief executive officer Chanda Kochhar reiterated the bank’s guidance that incremental bad loans in the financial year to March will be lower than the last financial year.
“As far as NPAs are concerned, actually the trend is very positive,” Kochhar told reporters on a conference call, adding the bank had been selective in lending to corporate entities and was growing its retail loans faster.
The bank said it had outstanding loans of Rs6,889.46 crore and non-fund exposure of Rs351 crore to nine out of 12 accounts the Reserve Bank of India has asked banks to refer to the National Company Law Tribunal for initiating insolvency proceedings.
The management clarified that the bank had set aside Rs2,828 crore to cover the risk of default by these borrowers. The remaining provisioning of Rs650 crore against these accounts will made over the next three quarters.
Advances remained largely unchanged at Rs4.64 trillion from a quarter ago. While ICICI Bank’s domestic loan book grew by 10.9%, with retail loans increasing 19%, its international loan book fell by 20%.
Net interest income, or the core income a bank earns by giving loans, increased 8.36% to Rs5,589.84 crore from Rs5,158.52 crore last year. Non-interest income, including that from fees and commissions, fell 1.21% to Rs3,387.91 crore from Rs3,429.26 crore in the same period last year.
Reuters contributed to this story.