ICICI Bank disappoints, Q3 net down at 4.4 per cent as provisions soar

By: | Published: January 28, 2016 8:28 PM

ICICI Bank today report a surprise 4.4 per cent fall in December quarter consolidated net profit at Rs 3,122 crore, as its provisions for stressed accounts rose three-fold after the RBI asked banks to recognise asset quality stress of large accounts.

ICICI Bank CEO Chanda Kochhar told reporters that 60 per cent of the jump in gross NPA was due to the one-time review of asset quality stress undertaken by the RBI. (Reuters)ICICI Bank CEO Chanda Kochhar told reporters that 60 per cent of the jump in gross NPA was due to the one-time review of asset quality stress undertaken by the RBI. (Reuters)

ICICI Bank today report a surprise 4.4 per cent fall in December quarter consolidated net profit at Rs 3,122 crore, as its provisions for stressed accounts rose three-fold after the RBI asked banks to recognise asset quality stress of large accounts.

The country’s largest private sector lender warned of NPA pains in the March quarter as well.

The bank saw its gross non-performing assets (NPA) grow nearly three-fold to Rs 6,544 crore during the reporting period that also pushed total provisions to Rs 2,844 crore from Rs 980 crore a year ago.

Accordingly, gross NPA rose to 4.72 per cent from 3.90 per cent.

On a standalone basis, however, the post-tax profit rose 4 per cent to Rs 3,018 crore on the back of a 13 per cent growth in core net interest income (NII) at Rs 5,453 crore and a whopping 36 per cent jump in non-interest income at Rs 4,217 crore, largely due to the sale of its stake in insurance arms during the quarter.

Managing Director and CEO Chanda Kochhar told reporters that 60 per cent of the jump in gross NPA was due to the one-time review of asset quality stress undertaken by the RBI, after which it asked lenders to upfront recognise 150 accounts as non-performing and fully provide for them.

Net non-performing assets in Q3 rose to Rs 10,014 crore from Rs 6,828 crore in the September quarter, while net non-performing asset ratio rose to 2.03 per cent from 1.47 per cent in the previous quarter.

The restructured advances constituted Rs 1,355 crore of the overall slippages this quarter, and the total recast book now stands at Rs 11,294 crore.

The steel sector, which accounts for 4.5 per cent of its loans, contributed the most for the spurt in the asset stress, she said.

The RBI has given banks two quarters to identify the assets as non-performing, and Kochhar said the bank expects a similar spurt in stress in the March quarter as well, especially in loans to the power sector which accounts for 5.5 per cent of the asset book.

Unlike its smaller rivals like Axis Bank, ICICI Bank was not able to dip into a counter-cyclical buffer to protect its bottomline as it does not have such a reserve, Kochhar said.

Vaibhav Agrawal of Angel Broking described the numbers as highly disappointing, despite a steady growth in NII at 13.3 per cent and a 15.8 per cent growth in advances.

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