During this quarter, gross additions to NPAs continued to decline. They were at `4,674 crore compared to `4,976 crore in the first quarter and `8,029 crore in the year-ago period. The net NPAs actually declined during the quarter in absolute terms and the net NPA ratio declined from 4.86% to 4.43%
ICICI Bank, which reported a 34% year-on-year drop in its standalone net profit at Rs 2,058 crore in the September quarter owing to lower other income, expects new NPA additions to be substantially lower this year, MD & CEO Chanda Kochhar told reporters in the post-earnings call. She expects the bank’s domestic loan growth to be around 15% during the fiscal. Edited excerpts:
What is your outlook on the non-performing assets of the bank?
We had said at the beginning of the year that we expect additions to NPAs during this year to be substantially lower than the additions last year, and we continue to hold that view. During this quarter, gross additions to NPAs continued to decline. They were at Rs 4,674 crore compared to Rs 4,976 crore in the first quarter and Rs 8,029 crore in the year-ago period. The net NPAs actually declined during the quarter in absolute terms and the net NPA ratio declined from 4.86% to 4.43%. Our provision coverage ratio improved to 59.3%, which means that the balance sheet has been further strengthened.
Do you see a rebound in your loan growth?
We expect our overall domestic loan growth to be in the region of 15% and that will be backed by retail growth of 18% to 20%. Our domestic loan portfolio grew by 12.8% on a year-on-year basis. This was backed by a growth of 18.6% in the retail portfolio. This growth was strong across all products. We also saw an uptick in the domestic corporate loan growth. If we exclude the net NPAs, the restructured loans and the loans that we have internally rated below investment grade, then our growth in the domestic corporate portfolio was 14%. The SME portfolio also grew by 6%. However, there were certain reductions in some parts of our balance sheet. The net NPAs, the restructured loans and loans internally rated below investment grade in key sectors declined 30.9% year-on-year. The net loans of overseas branches declined 21% on a year-on-year basis. Therefore, the overall loan grew at 6.3% y-o-y.
How have the recoveries been this quarter?
The bank made significant recoveries from the non-performing loans during the quarter. The recoveries and upgrades from NPLs aggregated to Rs 1,029 crore during the quarter. The bank’s capital position continued to remain strong with a tier-I capital adequacy ratio of 14.85% as on September 30. During the quarter, net interest margins remained stable on a sequential basis, fee income continued to grow, loan growth was healthy and asset quality trend improved.
Is there any divergence in terms of asset quality?
We are still awaiting the final report from the RBI. The inspection process is going on. For us, the report always comes in the third quarter.
What is the status of the resolution of the stressed accounts?
On the first list, the progress is very good. Out of the 12 cases, 11 cases have been admitted to the NCLT. Interim Resolution Professionals have been appointed and many have gone through the stage of inviting expressions of interest as well. I think between January and March, we would get to see how the resolutions pan out. With regards to the accounts in the second list, the resolutions are being discussed at various forums such as the joint lenders’ forum. It is a little early to comments on the progress. We will know by December.