ICICI Bank Q4 net profit jumps 188% on lower provisions, but misses estimates
NEWDELHI: ICICI Bank Ltd, India’s second largest lender by assets, on Wednesday reported an almost three-fold rise in March quarter net profit, helped by lower provisions despite a surge in bad loans, and announced a bonus issue of one share for every 10 held by investors.
Net profit rose to ₹2,024.6 crore in the three months from ₹701.9 crore a year ago, a 188% increase. The profit fell short of the ₹2,142.60 crore forecast based on estimates of 22 analysts polled by Bloomberg.
The bank’s bad loans jumped to ₹42,551 crore at the end of the March quarter, a 11.73% increase from three months earlier. As a percentage of total customer assets, gross non-performing assets (NPAs) stood at 7.89% at the end of March, compared with 7.2% in the previous quarter and 5.21% a year ago. Customer assets includes loans and credit substitutes such as bank guarantees. Gross non-performing loans made up 8.74% of total loans, compared to 7.9% in December.
During January to March, ₹11,289 crore of fresh loans turned bad, compared to an average ₹7,000 crore in the previous two quarters. The jump was primarily owing to one cement account of ₹5,378 crore, ICICI Bank said in an investor presentation.
This relates to the bank’s exposure to Jaiprakash Associates Ltd’s cement assets that are being purchased by UltraTech Cement Ltd. Two weeks ago, Yes Bank Ltd and IndusInd Bank Ltd also reported a sharp rise in quarterly loan provisioning due to their exposure to the same account. In the presentation, ICICI added that it “expects part of the loan to be upgraded on conclusion.”
“Going forward, we believe that NPA addition will be significantly lower, some resolutions to get completed during the year and some upgrades from NPAs,” said CEO Chanda Kochhar.
Despite the addition to NPAs, the bank’s provisions in the March quarter totaled ₹2,898 crore, against ₹ 3,326 crore a year ago. Net interest income, or the core income a bank earns by giving loans, rose 10.32% to ₹5,962 crore in the March quarter.