Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Companies / Company-results/  ICICI Bank Q3 net profit up 14%; NPAs increase
BackBack

ICICI Bank Q3 net profit up 14%; NPAs increase

Net interest income increased 13% to Rs4,812 crore from Rs4,255 crore last year

Net interest margin (NIM) or the difference between the yield the bank earns on advances and the cost of deposits improved to 3.46% from 3.32% a year ago. Photo: Ramesh Pathania/Mint Premium
Net interest margin (NIM) or the difference between the yield the bank earns on advances and the cost of deposits improved to 3.46% from 3.32% a year ago. Photo: Ramesh Pathania/Mint

Mumbai: ICICI Bank Ltd, India’s largest private sector bank by assets, on Friday said fiscal third quarter net profit rose 14% to 2,889 crore from 2,532 crore a year ago on higher demand for loans from individuals to buy homes and vehicles.

The bank’s profit was slightly lower than the 2,906 crore forecast by 37 analysts polled by Bloomberg because it had to set aside more money to cover an increase in bad loans.

Net non-performing assets (NPAs) rose to 1.27% of the bank’s loan book versus 0.94% a year ago while gross NPAs were at 3.40% versus 3.05% last year, as a result of which provisions and contingencies jumped 41% to 980 crore from 695 crore last year. The increase in NPAs was mostly because of restructured loans turning into NPAs, said Chanda Kochhar, managing director and chief executive officer at ICICI Bank.

In the first nine months of this fiscal year ending March, ICICI Bank added 5,147 crore of NPAs— 2,300 crore of which came from previously restructured loans.

Retail loan growth continued to be the saving grace for the bank like it has been all through this fiscal year as demand from individuals to buy homes and vehicles increased by a brisk 26% year-on-year and ensured that its book outpaced the industry average.

Net interest income (NII), or the difference between the interest a bank earns on loans and that it pays for deposits, increased 13% to 4,812 crore from 4,255 crore last year. Non-interest income, including fees and commissions, in the quarter rose 10% from 2,801 crore to 3,092 crore.

Higher demand for retail loans also meant that the bank’s net interest margin (NIM), or the difference between the yield on advances and the cost of deposits, improved to 3.46% from 3.32% a year ago.

The strong growth in retail loans was much faster than the mere 4% growth in the corporate loan book year-on-year. Kochhar said of the 6,000 crore of loans it advanced in the quarter ended December, “almost all loans" were part of the retail portfolio.

The bank’s total loan book grew 13% to 3.75 trillion in the quarter ended December, led by retail loans and also as the overseas loan book grew 4% in US dollar terms, Kochhar said.

Overseas loans make up 25% of the bank’s loan book, mostly loans to companies. Domestic corporate loans make up 29% of the bank’s loans while small and medium enterprises corner 4.5%. Retail loans make up 41% of the bank’s loans.

Silky Jain, an analyst at Nirmal Bang Securities Pvt. Ltd, said the results were a disappointment and government policy implementation will be key for any improvement in banking asset quality from here on.

“The management has guided that the next quarter is also likely to be weak with a higher restructuring pipeline of around 2,300 crore. An improvement in overall economy and faster implementation of reforms by the government would be the key factor from here on which will result in improvement in asset quality," Jain said.

Kochhar said ICICI Bank will continue to have a “calibrated approach" towards lending to companies in the next few months.

“The positive impact of the improvement in sentiment will only be seen after a lag after the steps taken by the government to revive the GDP (gross domestic product) growth results in improving cash flows for companies," Kochhar said.

Shares of ICICI Bank lost 4.95% to close at 361.15 apiece on Friday on BSE while the benchmark Sensex lost 1.68% to close at 29,182.95 points.

The banking index Bankex lost 3.14% to close at 22,715.52 points.

Among its subsidiaries, profit at both ICICI Prudential Life Insurance Co. Ltd and ICICI Lombard General Insurance Co. Ltd increased even as Kochhar said the bank is weighing all options, including listing these companies in the stock market.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 30 Jan 2015, 02:34 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App

Chat with MintGenie