ICICI Bank Q2 net up 2.37% at Rs 3,102 crore

Stock up 3%; asset quality of Rs 32,500-cr loans on watch list

ICICI Bank posted 2.37 per cent rise in net profit at Rs 3,102 crore for the September quarter, in line with market expectations.
 
The non-interest income, mostly comprising gains from selling share of life insurance subsidiary through public offer, contributed to the bottom line.
 
ICICI Bank shares rose by three per cent to Rs 278 a share at the close of trading hours on the BSE on Monday, reflecting performance expectation from market. The lender announced the results after trading hours.
 

Its standalone net profit was Rs 3,030 crore for the three months ended September 2015 (Q2FY16). The net interest income was flat Rs 5,253 crore in the quarter under review against Rs 5,251 crore in Q2FY16.
 
Its non-interest income covering sale of shares and investments, fees and commissions grew three-fold to Rs 9,120 crore.
 
The gains from sale of shares of ICICI Prudential Life Insurance Company in the initial public offering stood at Rs 5,682 crore. The bank sold approximately 12.63 per cent shareholding in the IPO.
 
Provisions for bad loans stood at Rs 7.082 crore for Q2FY17 against Rs 942 crore a year ago.
 
Chanda Kochhar, managing director and chief executive, said the bank further strengthened its balance sheet by making additional provisions of Rs 3,588 crore ($539 million). The first component in additional provisions was Rs 1,678 crore for standard loans. It provided Rs 395 crore for entire loss on sale of NPA during the six months ended September 2016. While Reserve Bank of India norms allow to make provisions over many quarters, the bank decided to recognise the amount upfront, Kochhar said. The third component was a floating provision of Rs 1,515 crore. The provision coverage ratio stood at 59 per cent. The gross non-performing assets (GNPAs) were Rs 32,178 crore (6.82 per cent) up from Rs 15,857 crore (3.77 per cent). The pool of bad loans (GNPAs) were at Rs 27,193 crore (5.87 per cent) in June 2016.
 
The slippages during the second quarter were about Rs 8,000 crore, out of which 80 per cent was from the watch list (below-investment grade loans with high prospects for slippage) and restructured book.
 
The outstanding watch list stood at Rs 32,490 crore down from Rs 44,000 crore at the start of the financial year. The bank expects repayments from the proceeds of two large asset sales (JP group’s sale of cement plants and Essar group’s sale of oil refinery to Rosneft) to bring down the size of the watch list in six to nine months, the ICICI Bank CEO said. 
 
Total advances increased 11 per cent to Rs 4,54,256 crore in September 2016 from Rs 4,09,693 crore a year ago. Its retail loan book continued to show strong growth at 21 per cent. Its share in bank’s loan portfolio rose to 48 per cent at the end of September 2016, against 44 per cent a year ago. 
 
Kochhar said the retail loan book was growing at a faster pace than that of the corporate loan book.
 
Capital adequacy ratio (CAR) at the end of Q2 FY17 stood at 16.14 per cent in September 2016; it was 16.15 per cent. The Tier-1 capital adequacy was 12.72 per cent at the end of Q2FY17, significantly higher than the regulatory requirements.