ICICI Bank Ltd’s earnings conference calls with reporters and analysts are a routine affair, where the management details its numbers and takes questions.

But the call following the lender’s fourth-quarter results was slightly off the beaten track as the management gave clear guidance for the next two years on various parameters.

What it didn’t give is any more comment on the controversy surrounding managing director and chief executive officer Chanda Kochhar. Perhaps the extended guidance was meant to reassure investors that all would be well.

Repeated questions to Kochhar on the allegations of conflict of interest involving her and Videocon Industries Ltd netted no answers. It seems that the board has put the episode behind it as the issue was not even discussed at the meeting on Monday.

What Kochhar did give were clear metrics that the lender is targeting by March 2020. ICICI Bank wants to achieve a 60% share of retail loans in its overall book, and a net bad loan ratio of 1.5%. The bank would also focus towards a 25% growth in loans to small businesses.

The lender is sanguine that the cases referred under the Insolvency and Bankruptcy Code (IBC) will fetch a reasonable value, especially those of steel firms. The guidance should cheer investors as they can expect where the energies would be focused on and what results to expect.

The guidance was also meant to soften the blow given by the bank’s March quarter numbers, which were frankly horrible.

Core income languished and the boost to other income was from one-time factors such as stake sale in subsidiaries. The loan growth of 15% was a small succour, unsurprisingly driven by retail.

The key yardstick was obviously asset quality and here, the numbers did look bad, as expected. Gross bad loans rose to form 8.84% of the total loan book. On a net basis, bad loans formed 5.03% of the book.

The ugliest number was the quantum of slippages, which came in at a massive Rs15,737 crore. Analysts had expected large slippages, but the reported number was even worse.

Out of this, more than 60% came because of the Reserve Bank of India putting an end to the various dispensation schemes that aided banks in classifying restructured loans as standard. Some of these were also part of ICICI Bank’s watch list and hence, the list itself shrivelled to just Rs4,000 crore from around Rs19,000 crore.

So, is the pain over?

The answer is yes, if the management is to be believed. The management is optimistic that its exposure of about Rs19,000 crore to the accounts referred under IBC will fetch value. The slippages are a one-time hit.

Nevertheless, the bank’s provisions rose 129% and the coverage ratio was around 60%. It has 50% coverage for the cases referred under the insolvency code.

The ICICI Bank stock trades at a modest multiple of 1.7 times its estimated book value for FY19, but enjoys a “buy" call from analysts. Has the market put the controversy surrounding Kochhar behind it, just like the board?

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