ICICI Bank on Wednesday reported a 32% year-on-year (y-o-y) rise in provisions in Q3 FY18. In an interaction with reporters, the bank’s MD and CEO Chanda Kochhar said provisions will remain at an elevated level because the bank still has to make provisions for the next round of NCLT cases and for ageing as well. Excerpts:

Why has your other income dropped in Q3?

In the third quarter of FY17, there was a treasury income of almost Rs 900 crore and there were exchange gains on overseas operations of Rs 82 crore. So, both these items did not exist in the third quarter of this year. If you exclude that and the treasury performance then on a pure operating basis, the core operating profit has in fact gone up.

What is the outcome of RBI’s annual risk-based supervision?

The annual risk-based supervision of the bank by the Reserve Bank of India (RBI) for FY17 concluded during the quarter. The observations regarding the asset classification and provision do not require additional disclosure in terms of the RBI circular. They were below the threshold by the central bank, which is 15%.

Which areas have your corporate loan growth originated from?

This growth in corporate assets is either due to the increase in working capital requirement following higher capacity utilisation from some of the companies or from the refinancing of debt by many high-rated companies. Eighty eight percent of our disbursements is to A- and above companies.

What is your credit growth outlook?

We expect that for us, the domestic loan growth will continue to be above 15%, within which the retail growth will continue to be above 18-20%.

How have your margins fared in Q3?

If you look at net interest margin (NIM) on a year-on-year (y-o-y) basis there is no fall. It was 3.12% in the same quarter last year and it is 3.14% now. Domestic margins were 3.51% and is 3.53% now. If you look at it sequentially, there is some amount of reduction but at the time of Q2 we had said that there was some refund from income tax in Q2, which is not there in Q3.

In a way, NIMs have been quite stable and this is in spite of the fact that as some accounts become NPA, we have to de-recognise the income there.

What is your outlook on stressed asset resolution?

Cases to the NCLT in the first round and in the second round have been referred. For the first round cases, for about three or four of them, the bids have also been received but for most of these cases, the 270-day deadline get over between April and May. So, we will see the final outcomes of what kind of resolutions we get, in the first quarter of FY19. It is apparent that the operating plants are generating good amount of interest, so we should see some good set of recoveries there.

We have said that provisions will remain at an elevated level because you still have to make provisions for the next round of NCLT cases, and the ageing provisions will also continue.

Since inception, how much have you recovered or upgraded from the drilldown list?

About Rs 7,000 crore has been either recovered or upgraded from the drilldown list, since the beginning.

What are your capital-raising plans?

In the last 15 months, we have done a lot of monetisation of our holdings in subsidiary companies, and we have a very strong capital adequacy ratio. So, we would not need any equity issuance in the immediate future.