ICICI Bank’s pre-tax profit jumps 247%

Q2 numbers beat estimates; asset quality improves

Private sector lender ICICI Bank on Saturday reported a jump of 247 per cent in its profit before tax (PBT) for the July-september 2019 quarter (Q2), posting ~4,367 crore, compared to ~1,256 crore in the year-ago quarter. However, net profit dipped by 27.9 per cent to ~655 crore in Q2FY20, as against ~909 crore in the corresponding quarter of FY19.

Excluding the impact of a one-time additional charge of ~2,920 crore on account of the re-measurement of the accumulated deferred tax (DTA), net profit would have been ~3,575 crore on a standalone basis, the bank said in a statement.

The bank’s net interest margin (NIM) improved to 3.64 per cent in Q2FY20 from 3.33 per cent a year ago. Net interest income (NII) increased by 26 per cent to ~8,057 crore from ~6,418 crore in the year-ago quarter.

Deposits grew by 25 per cent to ~6.96 trillion at the end of September 2019 from ~5.59 trillion a year ago. The lowcost current account savings account (CASA) deposits grew at 14.6 per cent and term deposits by 34.9 per cent on a YOY basis. The share of CASA deposits in the total deposit pool was 46.7 per cent in September 2019, as against 45.2 per cent in June 2019 and 50.8 per cent in September 2018.

Commenting on the slow CASA growth, the management said, “CASA is seeing lower growth across the industry as people are preferring more fixed deposits. Term deposits are growing strongly, but we are committed to push CASA.”

Its total advances increased by 13 per cent year-on-year to ~6.13 trillion at end of September 2019 from ~5.44 trillion at the end of September 2018. The domestic loan growth at 16 per cent YOY was driven by retail.

Retail loans grew by 22 per cent YOY, while SME loan book grew by 29.9 per cent.

The bank’s asset quality improved with the Gross NPA ratio decreasing from 8.54 per cent in Q2FY19 to 6.37 per cent at end of Q2FY20. The net non-performing asset (NPA) ratio decreased from 3.65 per cent in September 2018 to 1.6 per cent in September 2019. Provisions (excluding taxes) declined by 37 per cent to ~2,507 crore in Q2FY20 from ~3,994 crore in Q2FY19.

The bank’s exposure to weak accounts — BB and below-rated corporates — inched up a bit to ~16,074 crore in September 2019 (Q2FY20) from ~15,355 crore in

June 2019 (Q1FY20).

In a concall with analysts, the bank management said, “The addition in the slippages from the BB and below-rated corporates will be higher than the earlier quarter trends.”

The bank also said slippages from the retail loan book had increased because the size of the book had increased and it was proportionate. Commenting on the telecom sector, the management said, “The total exposure to the sector is only 1.8 per cent of the loan book and it is with the top two players.”

Siddharth Purohit, a banking analyst at SMC Global Securities, said “The numbers are very good and clearly beat street expectations. Loan growth is a little low, but the slippages numbers look good and provisions were also better than expected. Loan growth needs to pick up or else it will impact the NIMS.”