Jet Airways classified as NPA in Q4: ICICI Bank1 min read . Updated: 07 May 2019, 01:21 PM IST
- ICICI Bank shares decline after net profit fell 50% in the fourth quarter
- The bank made sufficient provisions for classification of Jet Airways as NPA
Mumbai: ICICI Bank shares opened at ₹400.90 on Bombay Stock Exchange (BSE), 0.5% down from its previous close after the private sector lender reported a 50% fall in net profit for the full financial year. At 12 pm the bank's shares were trading at ₹399.80 on the BSE.
In a call with analysts on Tuesday, the management said Jet Airways was classified as non-performing asset (NPA) in the fourth quarter of 2018-19. However they clarified that the bank had made sufficient provisions against the same. In addition, the bank also classified the fund-based exposure of ₹276 crore towards Infrastructure Leasing & Financial Services (IL&FS) as NPA and made a provision of ₹146 crore against the same.
The management also said that it expects some slippages in the kisaan credit card portfolio, which forms 3% of the total loan book.
Brokerage firm Nomura expects overall slippage of ₹29,000 crore over 2020-21, with credit cost improving to 90 basis points in the current financial year from 120 basis points last year.
Nomura expects the bank to improve its margins by 10 basis points for the current financial year. The management guided for an improvement in margins from 3.4% levels of FY19, but does not expect international margins to improve materially, given large NPA and no growth in the book, the brokerage firm in its report said.
Philip Capital for instance expects high credit growth, recovery of NPA and margin improvement to trigger earnings upgrade for the bank stock.
Brokerage firm Elara Capital expects strong loan growth of 18% year on year in the current financial year given that ICICI Bank has improved its retail asset and liability franchise significantly and with likely stabilisation in its overseas loan book. The brokerage firm also expects higher balance sheet growth could lead to reduction in CASA composition.
“We estimate gross slippages ratio at 220bp and credit cost at 170bp vs guidance of 120-130bp. We arrive at a Return on Assets (ROA) of 98bp & 127bp in FY20 & FY21, respectively," Elara Capital said in its report.