ICICI Bank shares surge 8%, hit over six-month high
ICICI Bank shares jump as much as 8.57% to a high of Rs345.50 a share—a level last seen on 1 February after the bank clarifies that it has made full disclosures about its loans and NPAs
Mumbai: Shares of ICICI Bank Ltd on Thursday surged as much as 8.6% after the lender clarified to exchanges that it has made full disclosures about its loans and non performing assets in its annual report, investor presentations and analysts calls. However, the bank was silent on its accounting policy changes from previous year, which required by accounting standard norms. ICICI Bank shares soared as much as 8.57% to a high of Rs345.50 a share—a level last seen on 1 February. At 11.16am, the ICICI Bank stock was trading at Rs 334.20 on BSE, up 5% from previous close.
Earlier on 7 August, Mint reported that ICICI Bank management wrote off unsecured portions of doubtful corporate loans totalling ₹5,000-5,600 crore for fiscal year 2016-17, according to a note Chanda Kochhar sent to the bank’s board in early April.
The change in accounting policy that enabled these “technical write-offs” was cleared by the bank’s board only in the new financial year, and never communicated to shareholders, as required by banking and market regulators. Thanks, in part, to the changed policy, ICICI Bank managed to keep its 2016-17 bad loan ratios low, the Mint report added.
“The bank classifies loans as non-performing (sub-standard/ doubtful/ loss) and makes provisions for them as per RBI guidelines. Write-offs are generally made out of existing provisions against existing NPAs. The write-offs do not impact loan classification, additions to NPAs, the profit & loss account or the net NPA ratio of the Bank”, the bank said in a clarification to exchanges.
‘The Significant Accounting Policies, which are part of the audited financial statements in the Annual Report of the Bank, have always mentioned that ‘Loss assets and the unsecured portion of doubtful assets are provided/written-off as per the extant RBI guidelines’ (for fiscal 2016, the disclosure has been made on page 137 and for fiscal 2017, the disclosure has been made on page 146 of respective Annual Reports). Detailed disclosures on write-offs are made in the financial statements (for fiscal 2017, the disclosures have been made in Note 18 on pages 170-171 of the annual report). Further, the Bank has also made disclosures regarding write-off amounts in the Management’s Discussion & Analysis, investor presentation and analyst call. The Bank has also disclosed the provision coverage ratio both including and excluding prudential/ technical write-offs”, the clarification added.
ICICI Bank is facing series of probe after, the Central Bureau of Investigation registered a preliminary enquiry against Chanda Kochhar’s husband Deepak and businessman Venugopal Dhoot to verify alleged conflict of interest in a Rs3,250 crore loan made by ICICI Bank to Dhoot’s Videocon group. ICICI Bank had extended the loan as part of a Rs40,000 crore loan by a consortium of 20 banks in 2012.
Securities Exchange Board of India also asked ICICI Bank to clarify on reports of this alleged corporate governance breach. The tax department had in April issued notices to Deepak Kochhar to look into the flow of about Rs 325 crore from two Mauritius-based firms to NuPower Renewables, which he once co-owned with Dhoot.
Following which in May the board instituted a fresh inquiry into the allegations and asked its chief executive Chanda Kocchar to go on indefinite leave till probe is over. The bank announced retired supreme court judge BN Srikrishna would head the inquiry and appointed Sandeep Bakhshi as the chief operating officer for a five year term.
On 27 July, the lender reported loss for the first time ever to Rs 120 crore from a profit of Rs 2049 crore on account of rising bad loans and treasury losses. Its gross non-performing assets (NPAs) rose to ₹53,464 crore as on 30 June, compared with ₹43,147 crore in the year-ago quarter. Gross NPAs, as a percentage of total advances, were at 8.81% in the June quarter compared to 7.99% in corresponding period of last year.
Fresh loan slippages stood at ₹4,036 crore, the lowest in the last 11 quarters, compared with ₹15,737 crore in the previous quarter.
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