ICICI Bank on Friday reported a 12% growth in Q1 net profit and a drop in bad loan addition. In an interaction with reporters, the bank’s managing director & CEO, Chanda Kochhar...
ICICI Bank on Friday reported a 12% growth in Q1 net profit and a drop in bad loan addition. In an interaction with reporters, the bank’s managing director & CEO, Chanda Kochhar, said that the improvement in asset quality was a result of focused recovery efforts and added that the bank was recovering quite actively from NPAs accounts or even before they turn into NPAs. Excerpts:
What are your expectations on credit growth?
We had said that we expect to grow our domestic book between 18% and 20% and we still kind of maintain that guidance because, currently, our growth has been about 17% on the domestic advances. The growth in the corporate book is partly working capital and partly regular funding to highly-rated corporates, including PSUs. In fact, the current demand is only from the highly-rated private sector and public sector entities. I can’t share the names, but it is really towards that.
What is your restructuring pipleline?
As far as restructuring is concerned, a large part of that was the applications made by companies before March 31; so, all that has been completed. As of now, we really do not have any major pipeline, but some few projects here or there could come up during the year. I would say there is currently a lot of stability.
The addition to NPAs during this quarter was Rs 1,672 crore compared to Rs 3,260 crore in Q4FY15. So, it was almost half the addition we saw in the previous quarter.
What measure did you take to check NPAs?
We had said in the last quarter itself that the increase was on the acount of some lumpy accounts. Of course, over and above that, we have been working very hard and in a very focussed manner in terms of improving recoveries. We have been working very closely with promoters and actually getting them to sell assets and recover loans out of that and monitoring the quality of assets. The third thing is that we have been working on reducing the concentration of loans and making them more and more granular, starting from actually increasing the proportion of retail assets, which are at 43% of the total loan book. Even within the SME and the corporate portfolio, we are actually reducing concentration. We have been recovering quite actively from cases which are either NPAs or before they turn into NPAs.
Going ahead, how do you expect asset quality to move?
I think, overall the asset quality for the bank would largely depend on how the economy moves. Some of the positive trends that I am seeing now are that mining activities have increased and production from Coal India has risen.
There is much higher activity from the heavy commercial vehicles side, mainly to do with transporting of all mined commodities.