Non-interest income grows 26.4%, helps lender post highest-ever profit in a quarter
The country’s largest private sector lender, ICICI Bank, on Thursday reported a net profit of R2,709 crore for the three months to September 2014, an increase of 15% over the R2,352 crore it had reported in the same period last year.
Net profit, ICICI Bank’s highest ever in a quarter, was bolstered by a healthy growth in its non-interest income, up 26.4% on a year-on-year basis. However, asset quality deteriorated slightly with net non-performing loans (NPLs) moving up 24 bps y-o-y and 10 bps sequentially. The bank’s provisions were also up from R726 crore in Q1FY15 to R850 crore in Q2.
Net interest income — or the difference between the bank’s interest earned and expended — stood at R4,657 crore in the quarter under review, 15.1% more than R4,044 crore reported in the same quarter of FY14. On the margin front, too, the bank saw an improvement with its net interest margin (NIM) rising 11 bps to 3.42% on a y-o-y basis, and sequentially margins were up by 2 bps.
Corporate credit grew only 5% y-o-y in the quarter, lower than the 7.7% it had reported in Q1FY15. However, retail assets, which constituted 40% of the loan portfolio as on September 30, saw a growth of 25% on a y-o-y basis. This took its growth in domestic advances to 15% compared to the same period last year.
Chanda Kochhar, ICICI Bank MD & CEO, said the improvement would be gradual with demand for working capital requirements increasing first. “I do think improvement will take place, but how long it will take depends on the recovery in the economic growth itself,” Kochhar said.
She added that as far as corporates and SMEs were concerned, the bank continued to adopt a calibrated approach and that growth in the corporate loan book had come mainly from the working capital side.
Giving a sense of the problems being faced by the banking sector with regard to NPAs and recoveries, Kochhar said owing to the challenging operating environment, the banking sector has continued to see additions to NPAs and restructured assets. “We had said at the beginning of the year itself that the additions to NPAs and restructured assets would continue during the year. But what we have also seen is that since the slowdown has been prolonged, banks have also witnessed slippages from the restructured portfolio to NPAs,” Kochhar said.
The lender saw slippages of R1,693 crore during the quarter, of which nearly R800 crore were due to slippages from restructured assets. It also sold assets worth R290 crore to asset reconstruction companies (ARCs) in the quarter. Total deposits at the bank rose 14% y-o-y to R3,52,055 crore and the bank’s current accounts savings account (Casa) ratio stood at 43.7%, a marginal improvement from 43% in the previous quarter.
The ICICI Bank scrip closed at R1,611.5 on the BSE, up 0.47% from the previous close.