ICICI Bank net up 22% on lower provisions

ICICI Bank posted a 22 per cent increase in net profit to Rs 1,395 crore in the three months ended September 30, aided by a sharp fall in provisions for bad loans. The bank’s shares rose 6.5 per cent on the Bombay Stock Exchange to Rs 1,161.65, after profit figures exceeded analysts’ expectations.

Provisions fell 40 per cent to Rs 641 crore from Rs 1,071 crore a year before, even as gross non-performing assets (NPAs) rose to Rs 10,141.2 crore from Rs 9,200 crore. Gross NPAs rose to 5.03 per cent of the loans from 4.7 per cent.

On a standalone basis, net profit grew 19 per cent to Rs 1,236 crore, compared with Rs 1,040 crore a year earlier.

The figures for June-September are, however, not comparable with the previous quarters, as they include the assets of Bank of Rajasthan (BoR), which merged into ICICI Bank effective August 12. The merger added advances of Rs 6,528 crore and deposits of Rs 13,483 crore, including low-cost current account-savings account deposits of Rs 4,680 crore, the bank said.

Net interest income, that is, the difference between the interest earned on loans and that paid on deposits, rose 8.25 per cent to Rs 2,204 crore in June-September from Rs 2,036 crore a year ago. Non-interest income grew 12.8 per cent to Rs 1,722 crore from Rs 1,527 crore a year ago, on the back of 15 per cent growth in fee income. The bank saw Rs 250 crore loans slip into the NPA category, most of which came from BoR’s books, Managing Director and CEO Chanda Kochhar said. She declined to specify the details of each entity’s contribution.

Advances grew 1.75 per cent on a year-on-year basis to Rs 1,94,201 crore, but were 5.3 per cent higher than at the end of the June quarter.

RBI targets by March
The bank aims to finish 2010-11 with 18-20 per cent loan growth, in line with the credit growth estimate of the Reserve Bank of India (RBI) for the banking system. The bank has achieved a provision coverage ratio of 69 per cent, excluding technical write-offs. It has time till March 2011 to achieve the RBI-stipulated ratio of 70 per cent.

On the BoR merger, Kochhar said, “The front-end and employee integration been completed. We have started the back-end integration and should finish it by the end of the year.”

The bank’s life insurance subsidiary, ICICI Prudential Life, reported a profit after tax of Rs 15 crore, before accounting for a surplus of Rs 254 crore in the non-participating policyholders’ funds, which would be transferred at the end of the financial year. The non-life insurance arm, ICICI Lombard, reported a profit after tax of 104 crore compared to Rs 51 crore a year before, while profits from the mutual fund business fell to Rs 15 crore from Rs 45 crore in the September 2009 quarter.