India’s largest private sector lender, ICICI Bank on Friday reported a standalone net profit of Rs 3,018 crore in the December quarter, an increase of 4% year-on-year (y-o-y). Profit growth was hit by a jump in provisions at Rs 2,844 crore, which almost trebled on a y-o-y basis.
Its net interest income, or the difference between the bank’s interest earned and expended, stood at Rs 5,453 crore in Q3 FY16, 13% more compared to the same quarter of FY15. On the margin front too, the bank saw an improvement as its net interest margin (NIM) rose 7 basis points (bps) y-o-y to 3.53% .
As far as credit growth is concerned, ICICI Bank’s corporate credit grew at 15% y-o-y but retail assets, which constituted 44% of its loan portfolio as on December 31, saw a 24% y-o-y growth. This took its growth in domestic advances to 20% compared to the same period last year.
Chanda Kochhar, MD and CEO, ICICI Bank said that even in the coming quarter, addition to bad loans could be similar to Q3. “The increase really is mainly on account of loans to steel companies.
Well some cases related to the power sector could be there in the March quarter,” she added.
She said of Rs 6,544 crore loans that slipped in the third quarter, more than 60% were because of the Reserve Bank of India’s (RBI) reclassification and almost the entire provisions of Rs 2,844 crore were owing to bad loans in the December quarter.
“But I think that the challenge remains regarding the larger projects of the larger groups are facing delayed cashflows and that is coupled with the fact that commodity prices have been so low. That has caused cashflow pains for some of the leveraged groups,” Kochhar explained.
Kochhar said that the growth in the corporate book is mostly from refinance of highly rated corporate debt. “Our focus has been to look at the those refinancing of highly rated corporates and through that we have achieved a very healthy growth of 15%,” Kochhar said.
Its asset quality suffered in Q3 owing to a 33% sequential rise in gross non-performing loans. In the December quarter, Rs 6,544 crore loans were classified as NPA, of which Rs 1,355 crore were restructured loans that turned NPA in the quarter.
Kochhar said that more than 60% of the bad loans in December quarter have been owing to the Reserve Bank of India (RBI) directive to review certain accounts and their classification over two quarters.
Total deposits increased by 15% y-o-y to Rs 4.07 lakh crore and the bank’s current accounts savings account ratio stood at 40.7%.
ICICI Bank shares on the BSE closed at Rs 232.95 on Thursday, down 1.69%.