ICICI Bank, the largest private sector bank by assets, on Thursday indicated the gross additions to its bad loans will be lower than last year on expectations of a revival in the economy and reversal in the fortunes of many companies that are stressed. The gross addition to the non-performing assets (NPAs) at Rs 1,195 crore was lower than the preceding quarter's Rs 1,241 crore and Rs 1,116 crore touched a year-ago period.
However, the net restructured book of the bank swelled to Rs 11,265 crore at the end of the first quarter ended June 30, 2014, higher than the Rs 10,558 crore it reported at the end of March 2014, and Rs 5,915 crore reported in the year-ago period.
The bank also wrote off Rs 392 crore of bad loans and upgraded and recovered Rs 356 crore of loans during the quarter, lower than the preceding quarter when the upgraded or recovered loans stood at Rs 416 crore.
Retail customers have a reason to cheer with the bank being bullish on retail loans, particularly the auto and home loans.
Chanda Kochhar, chief executive officer and managing director, ICICI Bank, said in a media conference call, "The profitability of the bank came from the growth in business and the strong operating parameters. We also adopted a calibrated approach to growing our corporate and SME portfolio. Our retail book reported healthy growth on the back of jump in mortgage and auto loans."
For the quarter ended June 30, the bank reported 17% year-on-year growth in its net profit at Rs 2,655 crore boosted by big retail growth and robust dividends of nearly Rs 416 crore from subsidiaries and Rs 100 crore of capital repatriated from overseas subsidiaries.
The retail growth was led by home loans that increased 54.1% to Rs 74,225.2 crore, while auto loans grew 20.3% to Rs 27,851.6 crore. Unsecured loans of the bank, consisting of personal loans and credit cards, also reported higher growth of 3.4% at Rs 4,664.8 crore and 2.6% at Rs 3,567.2 crore, respectively.
Total advances of the bank increased by 15% to Rs 3,47,067 crore during the quarter under review. The year-on-year growth in domestic advances was higher at 17% and the bank continued to report strong growth in retail loans which grew 26% to Rs 1,37,200 crore. Loans to companies during the quarter grew only by 7.7% to Rs 1,05,518.4 crore.
Net interest margins or NIMs, a key measure of the banks operational efficiency, rose 18% (Rs 4,492 crore) during the quarter.
NIM improved to 3.40% during the quarter higher than the 3.27% reported in the year ago period. The cost to income ratio reduced to 38.4 % from 39.4% in the year-ago period. Non-interest income went up 15% to Rs 2,850 crore from Rs 2,484 crore in the year-ago period.
The bank made a provision of Rs 726 crore in the first quarter higher than Rs 593 crore made in the year-ago period. This included Rs 55 crore of provision made on the un-hedged forex exposures. And for the whole year, the bank expects to make a total provision of Rs 225 crore for the un-hedged forex exposures.
ICICI Bank's infrastructure bonds of Rs 500 crore is open for subscription from July 31 to August 5.