ICICI Bank Q4 Results: Profit Rises 26% Even As Provisions Nearly Triple

ICICI Bank Ltd. reported a growth in profit for the March ended quarter even as provisions rose, partly on account of economic disruptions caused by the spread of Covid-19.

India’s second-largest lender’s net profit rose 26 percent year-on-year to Rs 1,221 crore in the quarter ended March, it said in an exchange filing. That compares with the Rs 3,510-crore consensus estimate of analysts tracked by Bloomberg. In the year-ago quarter, the bank had reported a net profit of Rs 969 crore.

The bank’s net interest income, or the core income from operations, rose 17 percent on a yearly basis to Rs 8,926 crore. This is above the Rs 8,320-crore forecast. The net interest margin rose to 3.87 percent from 3.77 percent in the previous quarter.

Asset Quality

Headline asset quality improved during the last quarter of the financial year gone by and the bank increased its safeguard against bad loans.

Gross non-performing assets (NPA) ratio stood at 5.53 percent compared to 5.95 percent in the previous quarter. Net NPA ratio was at 1.41 percent versus 1.49 percent last quarter.

Gross addition to the NPA pool during the January-March period was Rs 5,306 crore, compared with Rs 4,363 crore reported in October-December. The increase in bad loan additions was largely due to a healthcare company from West Asia and a shipping company from Singapore.

The bank set aside Rs 5,967 crore in provisions during the quarter, nearly three times that in the previous quarter when it made provisions of Rs 2,083 crore.

“The Bank has made Covid-19 related provision of Rs 2, 725 crore. This additional provision made by the Bank is more than requirement as per the RBI guideline dated April 17, 2020,” the lender said.

Sandeep Batra, president, ICICI Bank disclosed that as per Reserve Bank of India (RBI) guidelines, the bank would have had to make provisions worth about Rs 600 crore in the January-March quarter. The banking regulator requires banks to set aside 10 percent provisions for accounts which have opted for the moratorium.

As many as 32 percent of the bank’s customers across retail and corporate loans have opted for the moratorium, said Batra in a press conference that was conducted over a conference call. This represents about 30 percent of the bank’s total loan book in value.

Growth In Loans & Deposits

The bank saw steady growth in loans and deposits.

Total deposits increased by 18 percent year-on-year. Term deposits rose 28.6 percent year-on-year to Rs 4.23 lakh crore. Average low-cost current account savings account (CASA) deposits stood at 42.3 percent of total deposits as on March 31, as compared with 44.6 percent a year ago.

According to Batra, the additions to deposits have continued to remain strong even in April, despite the nation-wide lockdown.

Domestic loan growth stood at 13 percent year-on-year, led by 16 percent growth in retail loans. Credit card loans dropped to Rs 15,654 crore on March 31, compared with Rs 16,307 crore in December 2019. On a year-on-year basis though, credit card loans rose 27 percent. The bank said average credit card spends in March fell 26 percent from the average in January and February.

Loans to small and medium enterprises rose 27.5 percent year-on-year to Rs 22,851 crore. Domestic wholesale loans grew 5 percent from a year ago to Rs 1.6 lakh crore.

As of March 31, the share of loan accounts rated BB and below fell to about Rs 16,600 crore, as compared with Rs 17,500 crore a year ago. This was largely due to accounts slipping into NPA category, the bank said.