ICICI Bank, India's largest private sector lender, on Thursday reported a 8% drop in its net profit to Rs 2,050 crore for the quarter ended June 30, 2017, on account of slower growth in advances and rise in bad loans.
Gross non-performing loans as a percentage of total loans rose 7.99% to Rs 42,552 crore, from 7.89% by March-end, and 5.28% a year earlier. The additions during the quarter were about Rs 4,976 crore, but the bank had recoveries of about Rs 2,775 crore and wrote off loans worth Rs 1,500 crore. The watch list of the bank increased by Rs 1,000 crore to Rs 20,100 crore on account of some electricity companies whose ratings fell after a court ruling.
Chanda Kochhar, managing director and chief executive officer, ICICI Bank, said in a media concall, "The bank is having a focused approach to growth. We are bringing down the exposure to stressed sectors. We also expect lower additions to the bad loans as recoveries pace up. The bank is also exercising caution while lending to iron & steel, mining, telecom, where the bank has also increased their provisions above regulatory requirements."
The bank has exposure in nine accounts that RBI had identified to be sent to National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code with a total exposure of Rs 6,889 crore. The bank has already undertaken provisions of Rs 2,828 crore on these accounts and another Rs 650 crore of provisioning remains which will be undertaken in the next three quarters.
However, there was not a very significant jump in provisioning and contingencies, which rose 3.75% to Rs 2,608.74 crore in the quarter from Rs 2,514.52 crore a year ago. On a quarter-on-quarter basis, the figure dropped 10% from Rs 2,898.22 crore in the March quarter.
Darpin Shah, assistant vice-president, institutional research, HDFC Securities, told DNA Money, "The asset quality was stable during the quarter over the preceding quarter with gross NPAs at Rs 43,100 crore. The restructured book fell 44% over the preceding quarter to Rs 2,370 crore, the bank has also made a bulk of provisions to accounts referred by RBI to the IBC 2016."
Net interest income (NII), or the core income a bank earns by giving loans, increased 8.36% to Rs 5,589.84 crore from Rs 5,158.52 crore last year. Non-interest income, including from fees and commissions, fell 1.21% to Rs3,387.91 crore from Rs 3,429.26 crore in the same period last year.
Total advances increased 3% to Rs 4,64,075 crore, led by an 18.6% growth in its retail book to Rs 2,47,500 and a 2.8% growth in corporate loans to Rs 1,24,372 crore over the previous year. The overseas book accounted for 15% of loans. The total loan book of the bank was at Rs 4,64,075 crore. On Thursday, the stock closed 1.02% down at Rs 307.05 on BSE.
IN SLOW LANE
- The watch list of the bank increased by Rs 1,000 crore to Rs 20,100 crore
- It was on account of some electricity companies whose ratings fell after a court ruling
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However, there was not a very significant jump in provisioning and contingencies, which rose 3.75% to Rs 2,608.74 crore in the quarter from Rs 2,514.52 crore a year ago. On a quarter-on-quarter basis, the figure dropped 10% from Rs 2,898.22 crore in the March quarter.
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