India's largest private sector lender ICICI Bank's April-June quarter standalone profit fell sharply by 25 percent year-on-year to Rs 2,232.4 crore, dented by jump in provisions, but was ahead of estimates.
Net interest income, the difference between interest earned and interest expended, grew only by 0.9 percent to Rs 5,158.5 crore on year-on-year basis, which missed analysts' expectations. Profit was estimated at Rs 2,127.7 crore and net interest income Rs 5,342.6 crore for the quarter, according to average of estimates of analysts polled by CNBC-TV18.
Advances for the quarter increased by 12 percent year-on-year to Rs 4.49 lakh crore with retaining strong retail loan growth of 22 percent (that constituted about 46 percent of total loan portfolio), the private sector lender said, adding deposits grew by 15 percent to Rs 4.24 lakh crore with CASA deposits growth of 18 percent.
Net interest margin remained under pressure, falling to 3.16 percent in June quarter from 3.37 percent in March quarter. Provisions for bad loans during the quarter shot up significantly by 163.2 percent on yearly basis to 2,514.5 crore but sequentially fell 24.4 percent from Rs 3,326.2 crore.
Provision coverage ratio declined to 57.1 percent in June quarter from 61 percent in preceding period. Profit for the quarter was partly supported by other income and lower tax cost. Non-interest income (other income) for April-June quarter increased 14.7 percent to Rs 3,429.3 crore and operating profit grew by 3.5 percent to Rs 5,214.7 crore compared with year-ago period while tax expenses plunged 57.7 percent to Rs 467.9 crore.
Asset quality weakened further in Q1FY17 as gross non-performing assets as a percentage of gross advances increased to 5.87 percent from 5.82 percent and net NPAs rose to 3.35 percent from Rs 2.98 percent on sequential basis. In absolute terms, gross NPAs were up by 3.7 percent at Rs 27,193 crore and net NPAs jumped 16 percent to Rs 15,041 crore on a QoQ basis. Slippages stood at Rs 8,249 crore (against Rs 7,003 crore in Q4FY16) and bad loan watchlist at Rs 38,723 crore for the quarter ended June 2016 (against Rs 44,000 crore QoQ), ICICI Bank said.
Slippages were far ahead of analysts’ estimates of around Rs 5,000 crore. While addressing press conference, Chanda Kochhar, Managing Director and Chief Executive Officer, said slippages from the restructured assets were at Rs 1,321 crore (against Rs 2,724 crore QoQ) and Rs 4,559 crore from the watchlist accounts. Net loans to companies whose facilities have been restructured were Rs 7,241 crore during the quarter compared with Rs 8,573 crore in preceding period.
Kochhar said some S4A accounts (scheme for sustainable structuring of stressed assets) will happen in coming quarters and 30 percent of non-watchlist slippages will be upgraded by FY17. The bank sold Rs 2,230 crore worth of stressed assets to asset reconstruction companies and recoveries during the quarter were Rs 800 crore.
Consolidated profit declined 22 percent to Rs 2,516 crore in the quarter ended June 2016 from Rs Rs 3,232 crore for Q1FY15. Consolidated assets grew by 14 percent from Rs 8.2 lakh crore to Rs 9.39 lakh crore on yearly basis. Chanda Kochhar said the bank would look to unlock value in subsidiaries. Recently it sold 9 percent stake in general insurance business and 2 percent in life insurance for Rs 2,200 crore.
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