ICICI Bank on Monday reported a 18% sequential rise in bad loans in Q2 FY17. In an interaction with reporters, the bank’s managing director and CEO Chanda Kochhar said the bank’s watchlist, now being called its drill-down list, stands at R32,490 crore and said that the bank expects repayments from two large deals to bring down the list. Excerpts…
What is the current status of your watchlist?
The addition to the NPA book during the quarter was `8,000 crore and if you look at the non-retail addition – corporate — then almost 80% is out of the drill-down list of the amount that has been restructured. It was `44,000 crore in the beginning of the financial year and we have seen a reduction in exposure of `2,036 crore by collections and upgrade to investment grade by `425 crore and `9,000 crore have been classified as NPA. So the closing balance is `32,490 crore. The slippage from the restructured book to NPA is `1,231 crore and the current restructured advances were at `6,336 crore.
How was the demand for credit?
As I said our retail portfolio has grown by 21%, and while our overall portfolio growth appears only 11%, the domestic book has grown by 16%. So we have in fact reduced our international book and that is why even after the domestic book is 16%, the overall growth appears 11%. Even in the domestic growth, retail portfolio has grown by 21% and the corporate portfolio as it appeared has grown by 8.5%. If we look at the growth from non-NPA and non-drill down list book then actually the growth is actually close to 20%. So, we will have to look at our portfolio growth in a manner that on one hand we are reducing our exposure to certain sectors, and on the other hand, we are taking repayments from certain cases and some of the cases have been moved to NPA. However, on the good quality book, our growth has been around 20%.
What is your outlook on stressed asset resolutions?
Basically the two large deals that have been announced, the sale of the cement plant by Jaiprakash Associates and the sale of refinery by Essar Group, could take six to nine months to finally conclude, but we expect huge reduction to take place in the drill-down list. We have received some amount already and I just want to assure that it is not a small amount. We expect that these two to three deals will bring down our exposure and some other resolutions that we are working on will help us.
What is the reason behind your additional provisions?
The NIM is at 3.13% for the quarter which was 3.16% in the previous quarter. The additional provisions for the standard assets are for SDR and restructured loans. The loss on sale of NPAs to asset reconstruction companies which RBI has allows to be amortised we have actually done it upfront. We have made floating provision of `1,515 crore. This is mainly to strengthen the balance sheet as we always want to do it till the extent possible. 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.