A huge decline in provisions on account of lower non-performing loans and a healthy growth in income helped ICICI Bank's net profit rise 22 per cent to Rs 1,503 crore in the quarter ended September 30, 2011, from Rs 1,236 crore in the same quarter last year.
For the half year period from April to September 2011, the bank's net profit increased to Rs 2,835 crore, up 25 per cent from Rs 2,262 crore in the corresponding period last year.
The bank's provisions were down 50 per cent to Rs 319 crore in the September-ended quarter (Rs 641 crore in Q2 of FY2011). The fall in provisions was on account of lower NPAs and also because unsecured retail loans now form a very small percentage of the loans portfolio, said Ms Chanda Kochhar, CEO and Managing Director, ICICI Bank. While it is unlikely that provisions could come down from these levels, there will not be any shocks, she said.
The bank's net interest margin was stable at 2.6 per cent and cost of funds went up by 80 basis points in the quarter.
ICICI Bank has resumed growth and this is evident in the advances growth, said Ms Kochhar.
On the retail advances front, there was some moderation, which was partly due to the rise in interest rates. “The growth is coming from housing, car and commercial vehicle loans,” Ms Kochhar said.
On the corporate side, the loan growth was mainly on account of projects sanctioned in the past and working capital loans. There was also demand from corporates who borrowed to refinance their old, more expensive loans.
In the second quarter, the bank restructured Rs 745 crore worth of loans, a majority of which were loans to microfinance institutions. There could be some restructuring, Ms Kochhar said, but by and large the asset quality seems to be under control.
About 50 per cent of ICICI Bank's loans to the power sector were to projects that are already operating. “I don't think there will be huge NPAs. We are monitoring it,'' she said.
ICICI Prudential Life Insurance Company posted a net profit of Rs 350 crore, against Rs 15 crore last year.
ICICI Lombard General Insurance Company posted a net profit of Rs 56 crore (Rs 104 crore) mainly due to higher sourcing costs and lower investment income.
Shares of ICICI Bank closed at Rs 930.5, down 0.26 per cent, on the BSE, on Monday.