ICICI Bank reported a 33 per cent drop in net profit at ₹2,058 crore in the quarter ended September 30 compared with ₹3,102 crore in the year-ago period.
While the earnings were way below street expectations, the bank’s decline in profit was largely due to base effect of a one-time exceptional gain in the previous accounting period.
It had notched up a gain of around ₹5,600 crore on account of a stake-sale in its life insurance arm ICICI Prudential Life Insurance Company last year.
This year, during the September quarter, the bank made a gain of about ₹2,000 crore through stake-sale in ICICI Lombard General Insurance, when the latter went public recently.
The bank’s net interest income has, however, increased by 9 per cent on year-on-year basis to ₹5,709 while net interest margin remained stable sequentially at 3.27 per cent during the July-September quarter this year.
Its fee income also increased by 9 per cent on year-on-year basis to ₹2,570 crore.
Talking to newspersons during a conference call, ICICI Bank MD and CEO, Chanda Kochhar, said that the growth strategy was in place with priorities around improving the portfolio mix quality and strong retail franchisee-based growth. “Our domestic loan portfolio grew by 12.4 per cent on year-on-year basis, and the retail portfolio grew by 18.6 per cent,” she said, adding that the bank expects 15 per cent growth in domestic loans in the current financial year, driven by 18-20 per cent growth in retail loans.
On bad loans, Kochhar said that non-performing assets (NPAs) were declining quarter-on-quarter sequentially.
“We expect additions to NPA in the current fiscal will be lower than in the previous year,” she said.
Divergence report The bank is still awaiting a report on divergence on NPAs from the RBI, which will give a clear picture on the bank’s actual NPA position.
In respect of the 12 accounts which RBI directed banks to refer to NCLT under IBC, banks have to make higher provisioning. ICICI Bank is required to make an additional ₹651 crore as per the RBI’s guidelines during FY18. The bank has made the entire provisioning in the September quarter.
Other competitor banks such as Axis Bank and YES Bank have already shared their divergence report, with gross bad loan divergence for FY17 at ₹5,633 crore and ₹6,355 crore, respectively.
Banking analysts feel that ICICI Bank is in a better position now as the divergence report is likely to be out in the third quarter and slippages are under control.