ICICI Bank Q2 net profit plunges 34% as bad loans rise

28 October, 2017, 01:18 | Author: Nina Hammond
  • Image used for representational purpose only

Country's largest private lender ICICI Bank witnessed improvement in asset quality during the second quarter of FY18 as it awaits the Reserve Bank of India's report on divergences to be reported in the third quarter.

ICICI, among the three domestic banks considered "too big to fail" by the country's central bank, reported a net profit of 20.58 billion rupees ($316.51 million) in the quarter ended September 30, missing analysts' expectations of 24.91 billion rupees.

Analysts on average had expected a net profit of 24.91 billion rupees, according to Thomson Reuters data.

Private sector lender ICICI Bank reported a 34% decline in its net profit to ₹2,058.2 crore for the quarter ended September 30 as compared with ₹3,102.3 crore in the year ago. In the quarter gone by too, the bank booked a one-time gain that was much smaller.

Although, fee income rose by 9 percent to Rs 2,570 crore.

In the year-ago quarter, the lender had gained Rs5,682.03 crore by selling a stake in its life insurance arm. "It is for basically strengthening our provision coverage ratio, from 51 per cent previous year it has increased to 54.75 per cent now", Canara Bank MD and CEO Rakesh Sharma told reporters here. Of the total loan slippages, Rs256 crore came from accounts that are internally classified as below investment grade.

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Total income of the city-headquartered bank during July-September quarter stood at Rs 11,994.64 crore, down from Rs 12,187.12 crore in the same quarter a year ago. The year-on-year growth in domestic advances was 13 percent driven by healthy retail loans.

Provisions and contingencies fell 36.42% to Rs4,502.93 crore from Rs7,082.69 crore a year ago.

The management in an analyst call said about Rs 2,986 crore of the Rs 6,355 crore is upgraded from March to date with an approval of the Board and statutory auditors, while another Rs 1,715.85 crore has been repaid.

She said in addition to the exposure to 9 of the 12 accounts in the first list of IBC accounts given by RBI, it has exposure to 18 more accounts in the newer list speculated to consist 30 accounts.

The divergence reported in 2016-17 is also higher than the divergence reported in 2015-16 when RBI had red-flagged Rs 4,925.6 crore of loans as NPAs when the bank had reported a gross NPA of Rs 748.9 crore.

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