ICICI Bank on Monday reported a sedate set of numbers for the three months to September with the asset quality deteriorating sequentially. The standalone net profit of R3,102 crore in Q2FY17 saw an increase of just 2.3% year-on-year (y-o-y) after a multifold jump in other income to R9,120 crore.
India’s largest private sector lender reported a gain of Rs 5,682 crore from the sale of a 12.63% stake in ICICI Prudential Life Insurance Company (ICICI Life). Had it not been for this other income, the profits might have been smaller since the bank had set aside extra provisions of `3,588 crore.
Excluding the sale of the stake in ICICI Prudential, the non-interest income grew by 14% year-on-year (y-o-y) in Q2.
The bank’s net interest income, or the difference between the bank’s interest earned and expended, stood at `5,253 crore in Q2 FY17, a tad more than the same quarter of FY16. Its net interest margin — a key measure of profitability — stood at 3.13% for the quarter and was 3.16% in the previous quarter.
The bank’s loan book grew 16% year-on-year in the three months to September slower than the near 17% y-o-y reported in the June quarter. In Q2FY17, ICICI Bank’s retail assets, which constituted 47.9% of its loan portfolio as on September, saw a 21% y-o-y growth while the corporate portfolio grew 8.5% y-o-y.
Chanda Kochhar, MD and CEO, ICICI Bank said slippages in the quarter amounted to `8,000 crore, almost 80% is originated from the the watchlist, which the bank now calls the ‘drill-down list’ and the restructured book. “It was `44,000 crore in the beginning of the fiscal year and we have seen a reduction in expsoure of `2,036 crore by collections. Upgradations to investment grade have been `425 crore and `9,000 crore have been classified as NPA taking the closing closing balance at `32,490 crore,” she explained.
Kochhar added that the bank has reduced its international book and that is why even after the domestic loan book has grown by 16%, the overall growth appears to be 11%. “Even in the domestic growth, retail portfolio has grown by 21% and the corporate portfolio has grown by 8.5%,” she said.
Its asset quality deteriorated in Q2 owing to a 18.3% sequential rise in gross non-performing loans. As a percentage of total advances, the gross NPAs stood at 6.82%, 95 basis points (bps) higher than the previous quarter. She said that, of its total slippages, `1,231 crore originated from the restructured book. The bank has also made additional provisions of `3,588 crore in the September quarter of which `1,678 crore was for standard assets and floating provisions amounted to `1,515 crore.
“Our focus has been towards resolution and towards decreasing concentration risks and I think we are making good progress in that direction. As I have always said some of these resolutions take time to fructify. We will ensure that we resolve most of these in the most productive manner,” she said. Total deposits increased by 17% y-o-y to `4.49 lakh crore and the bank’s current accounts savings account ratio stood at 45.7%.