ICICI net soars five-times, but bad loans continue to persist

Largest private sector lender ICICI Bank today reported a five-times jump in March quarter net at Rs 2,082.75 crore, but the asset quality woes which had dented its bottomline year-ago, continued to persist.
On a standalone basis, profit soared to Rs 2,024.64 crore from Rs 701.89 crore in the year-ago period but was down from Rs 2,441 crore in the December quarter.
The bottomline was helped massively by dipping into a specially made provision in the past and the bank used Rs 1,528 crore of the money during the reporting quarter, managing director and chief executive Chanda Kochhar told reporters during an earnings concall.

She said the entire Rs 5,100 crore set aside in the past to protect the bottomlines has been completely utilised by the March quarter.
Total slippages for the reporting quarter was over Rs 11,000 crore, including a Rs 5,378 crore to a cement company which is bound to be acquired soon, while the bank wrote off a high Rs 5,386 crore of assets as per a laid down policy and recovery and upgrades were at Rs 1,400 crore.
Kochhar said a part of the loan will be upgraded once the cement company's (JP Cements, which has been acquired by the Birla's led UltraTech Cement and is pending regulatory approvals) sale is completed.

Its 'drilldown' account list, which included low-rated accounts from five stressed sectors, has come massively narrowed to Rs 19,000 crore from Rs 44,000 crore at the start of the fiscal, she said, adding Rs 20,000 crore of this went down as NPAs as of March.

The gross non-performing assets ratio shot up to 7.89 per cent from 5.21 per cent in the year-ago period and 7.20 per cent in the December quarter. The total provisions went down to Rs 2,898.22 crore from Rs 3,326.21 crore in the year- ago period and provision coverage ratio dipped to 53.6 per cent from 61 per cent in the year-ago period.

However, Kochhar said NPA additions in fiscal 2018 will be "significantly lower" and the bank also expects resolutions of the already classified assets which can result in write-backs on NPAs during the year.
"We are watching the progress and it depends on the external environment. You also need to understand that it is five sectors. Work on resolution is on but we will have to watch it on a case-by-case basis," she said.
She said RBI's supervision found Rs 5,105 crore divergences in fiscal 2016, where the bank hadn't classified certain accounts as NPAs, but 40 per cent of them were recognised as NPAs in the first quarter of fiscal 2017 itself.

Driven by an 18.5 per cent growth in its retail loan book, domestic advances grew 14 per cent during the year, which it expects to move up to 15-16 per cent in fiscal 2018 with the bulk of the incremental loans coming in from small loans itself.
The share of retail in the overall loanbook has now grown to 51.8 per cent.
The corporate loan segment--which has contributed a bulk of the stress that has hurt its profit and is struggling due to the lingering economic woes--grew at 5.8 per cent, while there was a conscious 20 per cent reduction in overseas assets in the year gone-by.

During the reporting quarter, the core net interest income rose 10.3 per cent to Rs 5,962 crore, while the non- interest income grew marginally to Rs 3,017 crore.
The overall net interest margin improved to 3.96 per cent from 3.73 per cent a year ago on an increase in the proportion of low-cost current and saving account deposits to 46.5 per cent at an average level for the quarter.
Kochhar said high NPAs restricted the net interest margin and the bank expects to maintain the number at above 3 per cent in fiscal 18. The core tier-I capital adequacy stood at 14.35 per cent as of end March.

Among the subsidiaries, its life insurance arm's profit inched up to Rs 408 crore in the quarter from Rs 403 crore, general insurance arm's bottomline shot up to Rs 180 crore from Rs 119 crore.
The home finance subsidiary, which is speculated to be on the block, had a post tax profit of Rs 58 crore in the quarter from Rs 44 crore a year ago.
The bank board recommended a Rs 2.5 divided and also announced a bonus issue of one share for every 10 shares held, which Kochhar claimed reflects the board's view on the performance of the bank.

The bank scrip closed 1.16 per cent lower at Rs 272.75 on the BSE as against a 0.09 per cent correction in the benchmark Sensex.