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ICICI Bank profit down 66% year-on-year

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ICICI Bank’s gross NPA ratio at the end of September stood at 6.37%, 12 bps lower than 6.49% at the end of June, while the net NPA ratio decreased 17 bps sequentially to 1.6% from 1.77% as on June 30.

 

ICICI Bank on Saturday reported a 66% year-on-year (y-o-y) drop in standalone net profit to Rs 655 crore in the September quarter of FY20, as the lender took a one-time hit of Rs 3,021 crore to account for a lower deferred tax asset benefit as a result of a cut in the tax rate.

 

The bank’s net interest income (NII) rose 25.5% y-o-y to Rs 8,057 crore. NII is the difference between interest earned and interest expended. Net interest margin (NIM) — a key measure of profitability — stood at 3.64%, up three basis points (bps) from 3.61% in the previous quarter.

 

Additions to gross non-performing assets (NPAs) decreased to Rs 2,482 crore in the September quarter from Rs 2,779 crore in the June quarter. ICICI Bank’s gross NPA ratio at the end of September stood at 6.37%, 12 bps lower than 6.49% at the end of June, while the net NPA ratio decreased 17 bps sequentially to 1.6% from 1.77% as on June 30. On September 30, 2019, the fund-based and non-fund based outstanding to borrowers rated BB and below was Rs 16,074 crore, up from Rs 15,355 crore on September 30, 2018. They constituted 2.62% of the bank’s loan book.

 

Sandeep Batra, ED-designate, ICICI Bank, said rise in the BB and below book was a result of the slowdown in the economy. “Our portfolio will capture any risk. Many names in public would be covered in our list too,” he said.

 

The bank is unsure about the impact of the recent court ruling on telecom companies’ adjusted gross revenue (AGR). “Banks will have to assess it and see how specific telcos assess it. Telecom sector exposure is 1.8% of our total book and it is mostly to the two top names,” Batra said. ICICI Bank’s exposure to the non-banking finance company (NBFC) sector is Rs 26,000 crore and to housing finance companies (HFCs) is Rs 15,000 crore.

 

Recoveries and upgrades of NPAs were to the tune of Rs 1,263 crore, while loans worth Rs 1,328 crore were written off. The provision coverage ratio on NPAs, excluding cumulative technical write-offs, increased to 76% in September 2019 from 59% in September 2018.

 

Total advances at the bank grew 13% y-o-y to Rs 6.13 lakh crore. Retail assets saw a 22% y-o-y growth, with 50% of the bank’s total loan book being made up of retail loans. Excluding non-performing and restructured loans, the growth in domestic corporate loans was about 7%. While the bank had earlier this month participated in the loan outreach programmes conceptualised by the government, it refused to share details of sanctions made through this route.

Total deposits increased by 25% y-o-y to Rs 6.96 lakh crore and the bank’s current account savings account (CASA) ratio stood at 42.2%, down from 47.1% a year ago.

Average CASA deposits rose 11% y-o-y in Q2FY20. Term deposits increased 35% to Rs 3.71 lakh crore. Batra said the bank’s CASA ratio could come down further. “For us term deposits is going to be the focus,” he said.

The bank’s total capital adequacy ratio (CAR) as per RBI guidelines on Basel III norms was 16.14% and its tier-1 capital adequacy (CET-1) ratio stood at 14.62% on September 30, as compared to the minimum regulatory requirements of 11.08% and 9.08%, respectively. ICICI Bank shares on the BSE closed at Rs 469.10 on Friday, up 3.18% from their previous close.

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