Capital repatriation from Canadian subsidiary, dividends from insurance subsidiaries and tax write-backs during the quarter helped the bank report profit.
Stress in corporate book continued to haunt India's largest private sector lender ICICI Bank as it reported a 76% drop in its January-March net profit to Rs 701.89 crore, an 11-year low.
Capital repatriation from Canadian subsidiary, dividends from insurance subsidiaries and tax write-backs during the quarter helped the bank report profit.
Taking the performance of the bank into account, the top management has decided to forgo their performance-linked bonus during the financial year.
"We have decided that the senior management would not receive performance bonus for FY2016. Performance bonus would, however, be paid to employees in the grades of deputy general manager and below," Chanda Kochhar, managing director and CEO, ICIC Bank, said in a concall.
The bank has put Rs 44,000 crore of its corporate loans from power, iron and steel, cement and mining on the watch list and set aside Rs 3,600 crore as contingency provision, in a measure of prudence. This is over an above the Rs 3,300 crore of provisions for its bad loans.
Global brokerage Jefferies said it expects more trouble for the bank in the next five quarters.
Loans on the watch list are much higher than the quantum of loans that the Reserve Bank of India (RBI) had flagged off in its asset quality review (AQR). During the financial year the bank added Rs 17,000 crore to its gross NPAs. At the end of the fourth quarter the gross NPAs were Rs 26,221 crore, about 5.82% of its advances, a jump from 3.78% a year ago and 4.72% at the end of the preceding quarter.
During the quarter, about Rs 7,000 crore of fresh slippages were added, of which 60% came out of the AQR, while Rs 2,700 crore came in from restructured assets slipping into NPAs.
This led to a near three-fold spike in provisioning as per the norms to Rs 3,326.21 crore from Rs 1,344.73 crore in the year-ago period.
Kochhar said, "We feel it was a prudent measure to create contingency fund. The weak global economic environment, a sharp downturn in the commodity cycle and the gradual nature of the domestic economic recovery have adversely impacted the borrowers in certain sectors such as iron and steel, mining, power, rigs and cement."
The bank said as much as 60% of the Rs 7,000 crore fresh slippages came in from the AQR. The bank which has shifted its focus to growing its retail book saw this segment growing by 3% over the previous quarter comprising 47% of its total loan book.
However, the bank's advances growth declined to 16% in the quarter under review from 20% in the preceding quarter. The retail portfolio constituted about 47% of the loan portfolio of the bank.
Net interest income, the difference between interest earned and interest expended, climbed 6% to Rs 5,404 crore Other income rose 46% to Rs 5,109 crore. Net interest margin, a key indicator of bank's profitability, slipped on a sequential basis to 3.37% as compared to 3.53% in the quarter ended December.
The Board approved an initial public offering for the its life insurance arm ICICI Life. The management said the company will now tap the market at an appropriate time.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Chanda")
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}