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ICICI Bank consolidated net up 22%

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ICICI Bank, India’s largest private sector lender, on Thursday said its consolidated net profit for the quarter ended December 2012 increased 22 per cent to Rs 2,645 crore compared to the corresponding period of the previous year, owing to an improvement in the banking and life insurance businesses.

On a standalone basis, profit after tax rose 30 per cent to Rs 2,250 crore compared to the year-ago period. Higher interest income, a better net interest margin and treasury gains aided the growth in earnings.

On Thursday, the stock touched a 52-week high on the National Stock Exchange. However, it closed at Rs 1,189.35, a fall of 1.9 per cent over its previous close.

“The biggest highlight for this quarter was the fact that on a consolidated basis, our return on equity crossed the 15 per cent mark. Now, it is 15.7 per cent. In 2009, we had indicated we would improve our return on equity from eight per cent to 15 per cent. We have achieved it because of our profit numbers,” said Managing Director and Chief Executive Officer Chanda Kochhar.

The bank’s net interest income, or the difference between interest income and interest expenditure, rose 29 per cent year-on-year to Rs 3,499 crore. Net interest margin improved 37 basis points to 3.07 per cent compared to the year-ago period.

Gains from treasury operations were estimated at Rs 251 crore, compared to a loss of Rs 65 crore in the corresponding period of the previous year. At the end of December, the cost-to-income ratio narrowed 200 basis points to 39.5 per cent.

The bank’s provisions increased eight per cent to Rs 369 crore. Sequentially, however, these fell 27 per cent, as asset quality remained stable. While the net non-performing asset ratio was 0.64 per cent, provision coverage ratio stood at 77.7 per cent. At Rs 4,169 crore, net restructured loans were almost flat compared to the previous quarter.

Advances increased 16 per cent year-on-year to Rs 2,86,766 crore. While domestic corporate loans increased 20 per cent, retail loans grew 17 per cent.

“We have the capability to grow a little faster than the system. We expect the pace of retail loan growth to accelerate further and touch 20 per cent in the coming quarters,” Kochhar said. Currently, retail advances account for about 34 per cent of the bank’s loan book.

Deposits rose about 10 per cent from a year earlier to Rs 2,86,418 crore. As of December-end, the share of low-cost current account and savings account deposits to the bank’s total deposits stood at 40.9 per cent.

At the end of the quarter ended December, ICICI Bank’s capital adequacy ratio was 19.53 per cent.

Kochhar ruled out any plan to raise fresh capital in the near term. She expressed confidence the bank’s margins would remain at current levels and said the lender was yet to decide on revising lending rates.

During the quarter, insurance subsidiaries maintained their profitability. While ICICI Prudential Life Insurance’s net profit stood at Rs 397 crore, ICICI Lombard General Insurance reported a profit after tax of Rs 95 crore.

“We expect the bank to continue to relatively perform much better than the industry average...It is still trading cheaper than some of its peers like HDFC Bank, though profitability has shown consistent structural improvement. So, we continue to maintain the stock as one of our top picks,” said Vaibhav Agrawal, vice-president of research at Angel Broking.

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