ICICI Bank Q1 Results: Stake sales help report 36% rise in net profit

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July 26, 2020 7:00 AM

Bottom line was cushioned by Rs 3,092-cr income from stake sale in its subsidiaries

The bank further plans to raise money from stake sale in its subsidiaries in the current financial year.The bank further plans to raise money from stake sale in its subsidiaries in the current financial year.

Private-sector lender ICICI Bank on Saturday reported a 36% year-on-year (y-o-y) rise in its net profit at Rs 2,599 crore in the June quarter, despite an additional provisioning of Rs 5,550 crore following the Covid-19 pandemic. The bottom line was also cushioned by Rs 3,092 crore income from the stake sale in its subsidiaries. ICICI Bank had sold 3.96% stake in ICICI Lombard for Rs 2,250 crore and 1.5% stake in ICICI Prudential Life for Rs 840 crore during June quarter. The bank further plans to raise money from stake sale in its subsidiaries in the current financial year.

Sandeep Batra, president, ICICI Bank, said the lender would sell around 4% stake in its subsidiary, ICICI Securities, in the current financial year. “In ICICI Securities, we have holding of around 79%, and we have to reach the 25% minimum threshold within a year. So, we will be required to sell about 4% stake in ICICI Securities,” he said. He also said the bank would sell its stake in other subsidiaries such as ICICI Life Insurance and ICICI General Lombard, depending on any strategic opportunity.

Total provisions of the bank more than doubled to Rs 7,594 crore, compared with Rs 3,496 crore in the same quarter last year. Currently, 17.5% customers have availed moratorium, compared to 30% in April 2020.

Batra added that the objective of making higher provisioning was to completely cushion the balance sheet from Covid-19 shock.

Rakesh Jha, group chief financial officer, specified that it did not mean there would be no provisions in the future. “The normal provisions will of course come in the future as well,” he added.

The bank’s net interest income (NII) rose 20% y-o-y to Rs 9,280 crore, compared to Rs 7,737 crore in the same quarter last year. NII is the difference between interest earned and interest expended. The fee income for the bank stood at Rs 2,104 crore in June 2020, compared to Rs 3,039 crore to June 2019.

Net interest margin (NIM) stood at 3.69% in the June quarter, down 18 basis points (bps) from 3.87% in the previous quarter. “The decline in NIMs was in line with the expectation of decline in margins, as guided by the management earlier,” said Batra. It reflects the higher liquidity with the bank due to strong deposit inflows and limited credit demand due to the lockdown, the lender said in its release.

Total advances at the bank grew 7% y-o-y to Rs 6.31 lakh crore, with retail assets registering 11% y-o-y growth in the June quarter. Total deposits increased by 21% y-o-y to Rs 8.01 lakh crore and the bank’s current account savings account (CASA) ratio stood at 41%, down from 43.4% a year ago.

ICICI Bank’s gross non-performing assets (NPA) ratio at the end of the June quarter stood at 5.46%, down 7 bps from 5.53% at the end of March, while the net NPA ratio decreased 18 bps sequentially to 1.23 % from 1.41% as on March 2020. The fund-based and non-fund based outstanding to borrowers rated BB and below was Rs 17,110 crore compared to Rs 16,668 crore at March 31, 2020.

The provision coverage on non-performing loans, excluding cumulative technical write-offs, increased to 78.6% at June 30, 2020, from 75.7% at March 31, 2020 .

The bank’s total capital adequacy at June 30, 2020 was 16.32% and tier-1 capital adequacy was 14.93% compared to the minimum regulatory requirements of 11.08% and 9.08% respectively. The lender has already taken board approval to raise Rs 15,000 crore. The modalities of the capital raising will be decided after taking shareholders’ approval at the annual general meeting to be held next month.

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