The net profit of the Industrial Credit and Investment Corporation of India (ICICI) shot up by a hefty 123 per cent to Rs 223 crore in the first quarter of 1997-98 from Rs 100 crore in the first quarter of 1996-97.
The ICICI now joins Infosys Ltd in declaring audited quarter results. The Housing Development Finance Corporation and Crompton Greeves have declared unaudited quarterly results.
ICICIs chief executive officer K V Kamath told Business Standard: The massive rise in the profits and business of ICICI is a continuation of the trend of the last quarter of the previous year. The benefit of the huge medium-term loans disbursed will be reflected in the bottomline in the next quarter.
The profit for quarter one (Q1) 98 includes net capital gains of Rs 47 crore as compared with Rs 5 crore for Q1 97. With the BSE sensex registering a smart growth during the quarter, disinvestment decisions were executed at peak market levels, taking advantage of favourable market movements.
Says Kamath: The benefits of capital gains will continue to accrue to ICICI during the year.
In a press note, the ICICI sounded a word of caution, stating: Since this is the first time an exercise of this nature is being carried out on a quarterly basis, comparison of Q1 97 result may not be strictly appropriate. Q1 97 results apart from not being audited, have not been adjusted for alignment of accounting practices of the erstwhile SCICI Ltd, with those of the ICICI.
Kamath has, however, stated that figures of both the quarters are of the merged entity.
The fund-based income of the ICICI jumped 33 per cent to Rs 1,160 crore in Q1 98 up from Rs 870 crore in Q1 97. The net capital gains zoomed 840 per cent to Rs 47 crore (Rs 5 crore) and the non-fund based income jumped 68 per cent to Rs 37 crore (Rs 22 crore) to take the total income to Rs 1,244 crore (Rs 897 crore).
The financial expenses rose 29 per cent to Rs 906 crore (Rs 702 crore), other expenses escalated Rs 39 crore (Rs 29 crore) and provisions and write offs spiralled 122 per cent to Rs 55 crore (Rs 25 crore), which took the total expenses up by 32 per cent to Rs 1,000 crore (Rs 756 crore).
The profit before tax of the ICICI rose by 73 per cent to Rs 244 crore (Rs 141 crore) and after providing for tax at Rs 21 crore (Rs 41 crore) the profit after tax stood at Rs 223 crore (Rs 100 crore).
There has been an increase in the ratio of non-performing assets to total assets from 6.8 per cent as on March 31, 1997, to 7.8 per cent as on June 30, 1997. The ICICI press note said that this is attributed primarily to the fact that there was a bunching of cases which were added to the list in the first quarter of the current financial year, which may otherwise have been spread more uniformly throughout the entire financial year as the asset base increases. That apart some of the NPA turn into performing assets during the year, Kamath said.
Profit for Q1 98 has been arrived at in accordance with accounting principles as applied for the compilation of annual accounts. While the classification of assets has been done in accordance with Reserve Bank of India guidelines, write offs and provision have been pro-rated for the quarter.
Speaking of the quarterly results, Kamath said that the first quarter results represent a turnaround from the usual trend. Generally, the first quarter is sluggish for financial intermediaries. Despite the relatively sluggish growth in the economy and limited credit offtake, the ICICI recorded a growth of 107 per cent in approvals and 32 per cent in disbursements during Q1 97.
The growth was largely sparked by the introduction of the yield curve based pricing. The medium-term prime rate announced in April, 1997, received an enthusiastic response from the industry. Kamath said that Rs 1,000 crore were disbursed and Rs 1,700 crore sanctioned through the medium-term prime rate.
Of the total approvals and disbursements, about 60 per cent related to project finance. The two strategic business divisions infrastructure and oil and gas showed signification growth, accounting for about 40 per cent of total approvals and disbursements.
