The country’s largest private sector lender, ICICI Bank, on Friday reported a standalone net profit of Rs 702 crore for the March quarter, a fall of 76% year-on-year (y-o-y), owing to the creation of a collective contingency reserve of Rs 3,600 crore for possible bad loans along with provisions of Rs 3,326 crore.
Had it not been for a deferred tax write-back of Rs 2,199 crore, the bank would have reported a loss in Q4 FY16.
Chanda Kochhar, MD and CEO, said the additional reserves were created as a buffer against vulnerabilities in five sectors – iron & steel, mining, power, rigs and cement. “In general, towards our exposure in these sectors, we have created these kinds of collective reserves,” she said.
According to Kochhar, the bank will “work towards resolution of exposures in the context of the challenges facing the corporate sector”.
The lender’s net interest income, or the difference between interest earned and expended, stood at Rs 5,404 crore in the reviewed quarter, 6% higher y-o-y.
ICICI Bank’s retail assets, which constituted 47% of its loan portfolio as on March 31, saw a 23% Y-o-Y growth. This took its growth in domestic advances to 16% compared to the same period last year.
The asset quality suffered in Q4 owing to a 24% sequential rise in gross non-performing loans. As a percentage of total advances, the gross NPAs stood at 5.82%, 110 basis points higher than the previous quarter.
Kochhar said of Rs 7,000 crore loans that slipped in the March quarter, Rs 2,700 crore have originated from the restructured book. “I am stating that we have completed RBI’s asset quality review (AQR) exercise. As I said that slippages were also the result of the AQR exercise and have also been across sectors and part of it were restructured assets which have now been reclassified as NPAs,” she explained.
Kochhar said the bank expects its loan book to grow 18% and retail to grow 25%. “On the domestic corporate side, the growth is expected to be between 5-7% given the fact that we want to focus on lending to higher rated corporates and reducing the concentration risk to our portfolio,” she added.
Total deposits increased by 17% y-o-y to Rs 4.21 lakh crore and the bank’s current accounts savings account (CASA) ratio stood at 40.7%.
The bank also said that it had approved a plan of an initial public offering (IPO) for its life insurance division and will start the process following the board approval.
Shares of ICICI Bank closed at Rs 236.6 on Friday, down 1.48%, on the BSE.
To seek shareholders’ nod for NCDs or bonds to raise up to Rs 25,000 crore
ICICI Bank on Friday said the board of directors has approved seeking consent of the shareholders for an enabling resolution which would be valid for a period of one year to invite subscription for non-convertible debentures or bonds on a private placement basis for an amount of up to Rs 25,000 crore.
“ICICI Bank Ltd has informed BSE that the Board of Directors of the Bank at its meeting held on April 29, 2016 has approved seeking consent of the shareholders at the forthcoming annual general meeting for an enabling resolution which would be valid for a period of one year to invite subscription for non-convertible debentures or bonds on a private placement basis,” the bank said in a regulatory filing.