ICICI Bank CEO Chanda Kochhar Explains Q1 Results

ICICI Bank, India's second largest lender by assets reported a better-than-estimated 17 per cent year-on-year (y-o-y) jump in its net profit for the June quarter to Rs 2,655 crore and its net interest income grew 18 per cent y-o-y to Rs 4,492 crore in the same quarter.

Chanda Kochhar, CEO and MD of ICICI Bank explaining the bank's performance in the June quarter said the following things: (Watch)

On Loan and Deposit Growth

The growth in profit is backed by sustained growth in business as well as our strong performing parameters.

Our retail portfolio during the quarter grew by 26 per cent. As we have mentioned in past we have been calibrating our growth on the corporate side so our domestic corporate portfolio grew by about 8 per cent, our international portfolio grew by about 8 per cent in dollar terms and 10 per cent in rupee terms. All this has led to about 17 per cent growth in our domestic advances and 15 per cent growth in our overall advances.

This loan growth was supported by a healthy growth in the deposit base. Our CASA (Current Account Savings Account) deposits also grew 15 per cent on y-o-y basis. During the quarter we added Rs 3,603 crore to our savings account deposits and our CASA ratio was 43 per cent as on June 30.

Reflecting the strong funding franchise as well as the growth in our business, out net interest income grew by 18 per cent on a y-o-y basis.

On Profitability

Our net interest margin was very healthy at 3.4 per cent during the quarter compared to 3.27 in the same quarter last year.

On Other Income

Our non-interest income also grew by 15 per cent in this quarter. Fee income grew 8 per cent on a y-o-y basis. We had treasury gains of Rs 388 crores, about Rs 416 crore of dividends from our subsidiaries and Rs 103 crore of exchange rate gains on repatriation of retained earnings from our overseas branches.

On Cost Efficiency

We continued to maintain our focus on operating efficiencies, our cost to income ratio which has always been very strong improved even further to 38.4 per cent in this quarter.

These trends in our operating metrics translated to a18 per cent y-o-y growth in our operating profit for this quarter and the operating profit was Rs 4,517 crore in this quarter.

On Provisions and Asset Quality

The additions to both gross NPAs and to restructure loans were lower in this quarter on a sequential basis. During the first quarter of FY15 the bank added Rs 1,195 crore to gross NPAs compared to Rs 1,241 crores in the fourth quarter of last year. Similarly additions to restructured loans were Rs 1,394 crores in this quarter compared to Rs 2,156 crores in the fourth quarter of last year. Our net NPA ratio was 0.87 per cent as on June 30.

During the first quarter the bank made provisions of Rs 726 crores but this also includes the provisions on account of exposure to clients having un-hedged foreign currency exposures.

On Subsidiary Performance

For the life insurance subsidiary, the retail rated premium growth for us was 36 per cent compared to about 8-9 per cent for the industry as a whole. We have seen a robust growth in the business as well as the market share in the life insurance segment. This life insurance subsidiary made a profit of Rs 382 crore in the first quarter of FY15.

The general insurance subsidiary company made a profit of Rs 72 crores in the first quarter of FY2015.

Our asset management subsidiary achieved a 65 per cent y-o-y growth in profit to Rs 61 crores and securities and broking firm again saw huge increase in profit to Rs 61 crores in this quarter compared to Rs 13 crores in the same quarter last year.

On Return on Equity

The consolidated profit after tax for the ICICI group was Rs 2,832 crores for the first quarter of FY15 which represents a return on equity of 14.6 per cent.

On Branch Network

The bank continued to focus on our customer service franchise and on expanding our distribution network. We have a branch network of 3,763 branches as on June 30, which is the largest branch network among the private sector banks and ATMs of 11, 447.

On Capital Adequacy Ratio

The bank's capital adequacy ratio as per the RBI guidelines on Basel III continued to remain very strong. Including the profits for the first quarter of FY15 the capital adequacy ratio for the bank on Basel III norms is 17.39 per cent and the tire 1 ratio is 12.62 per cent.