5 key takeaways from ICICI Bank results

After a decade low growth in profit by HDFC Bank, its main competitor ICICI Bank has also disappointed with a lower than expected set of numbers. Against an expectation of a net profit of Rs 2,811 crore for March 2014 quarter, the bank posted Rs 2,652 crore.

 

Following are the five key takeaways from ICICI Bank’s results

 

1) As against HDFC Bank, ICICI Bank managed to post higher profit growth, both on QoQ and YoY basis. Against a profit of Rs 2,304.07 crore in March 2013 quarter and Rs 2,532.21 crore in December 2013, the bank posted a profit of Rs 2,652.01 crore. This however, was possible because of a lower tax outgo in March 2014. On a pre-tax basis, ICICI Bank’s March 2014 profit was lower than its previous quarter.

 

2) ICICI Bank has managed to register growth in its retail business as compared to wholesale business for HDFC Bank. Its retail business grew by 25 per cent and wholesale by 8 per cent.

 

3) An interesting feature of March 2014 results is that in the break-up of its profit, treasury income is the highest contributor to its profit. At 1,735.18 crore contribution of treasury to its profit before tax was almost 43 per cent as compared to 31 per cent last year and 32 per cent in the previous quarter.

 

4) ICICI Bank has done reasonably well on other operational parameters. Its cost to income ratio at 38.2 per cent was better than 40.5 per cent in the previous year. A 16 per cent growth in its current and savings account (CASA) saw it touch 42.9 per cent which helped the bank improve its net interest margin from 3.11 per cent to 3.33 per cent.

 

5) Concerns on quality of assets remain. Fresh slippages have increased to Rs 1,241 crore from Rs 1,230 crore while restructured loans at 2,156 crore was higher than Rs 2,050 crore in the previous quarter. Net NPA at 0.97 per cent is higher than 0.77 per cent in March 2013 and 0.94 per cent in December 2013. ICICI Bank’s management said that they are currently at the peak of bad load addition and NPA addition in FY15 will be lower than FY14. Going forward, the management expects to grow its loan book at 2-4 per cent higher than the sector growth rate while at the same time maintaining its net interest margin.