Sources said the major part of recovery is likely on account of the resolution of Essar Steel.
Second-largest private lender ICICI Bank registered a 158% year-on-year (YoY) jump in December quarter net profit to Rs 4,146 crore, compared to Rs 1,605 crore in the corresponding quarter last year, driven by a healthy rise in net interest income, recoveries and lower provisions. Core operating profit (before provisions and tax and excluding other income) grew by 24% year-on-year to Rs 7,017 crore.
The bank’s net interest income (NII) during the quarter grew by 24.3% to Rs 8,545 crore. The provisions and contingencies for the quarter dropped sharply by 50.9% at Rs 2,083 crore, compared to Rs 4,244 crore in the same quarter last year. The pre-provision operating profit jumped 22.8% to Rs 7,548 crore compared to the corresponding quarter last fiscal.
However, December quarter registered slippages of Rs 4,363 crore for the bank. Explaining about the fresh slippages, Sandeep Batra, President, ICICI Bank, said, “Our exposure for a broking company has been classified as non-performing asset (NPA) and fully provided on a prudent basis. There is an addition in corporate NPA due to a south India-based company.”
The major part of fresh slippages is due to these two accounts, the management added during the conference call after results. The asset quality improved sequentially with gross non-performing assets (GNPA) as a percentage of gross advances falling 42 bps to 5.95% and net NPA declining 11 bps to 1.49% in quarter ended December 2019. In absolute terms, gross NPAs fell 4.8% sequentially to Rs 43,453 crore. Similarly, net NPAs also fell close to 5% to Rs 10,388 crore in December quarter, compared to Rs 10,916 crore in the previous quarter.
“Recoveries, upgrades and other deletions excluding write-offs from non-performing loans were Rs 4,088 crore in Q3FY20,” ICICI Bank said in a release. Its fund-based and non-fund based outstanding to borrowers rated BB and below (excluding non-performing assets) was Rs 17,403 crore during the quarter, higher compared to Rs 16,074 crore as of September 2019. Sources said the major part of recovery is likely on account of the resolution of Essar Steel.
An improvement in the other income also came to the bank’s aid. Other income increased 17.8% to Rs 4,573.98 crore YoY as fee income grew by 17% to Rs 3,596 crore YoY. The net interest margin (NIM) of the bank improved 37 bps to 3.77%, compared to 3.4% in the same quarter last year. Sequentially, NIMs improved 13 bps, compared to 3.64% in the September quarter. The domestic advances grew 16% YoY and retail loan grew 19% YoY, the bank said. Total deposits increased by 18% to Rs 7.16 lakh crore, with CASA deposits growth of 15% and term deposits 24% YoY.
The bank also clarified on its telecom exposure.
Sandeep Batra, President, ICICI Bank, said, “Exposure to telecom is 1.8%, of which most of the exposure is from the top two telecom players. We have not made any extra provisions for it. The bank is waiting for outcome of legal developments.”