ICICI Bank profit down 34% on lower income
Gross NPA additions declined to ₹4,674 cr in fiscal second quarter from ₹4,976 cr a quarter ago
MUMBAI: ICICI Bank Ltd on Friday said its net profit for the September quarter fell 33.7% from a year ago due to lower other income owing to a base effect as expected by the Street.
However, contrary to expectations of analysts, ICICI Bank did not report higher additions to bad loans in the quarter, like its peers Axis Bank and Yes Bank, on account of a divergence between the Reserve Bank of India’s (RBI) and the bank’s assessment of bad loans.
In the case of ICICI Bank, the RBI’s inspection—a risk-based supervision for fiscal 2017—is yet to be completed.
“We still await the final report from the RBI. The inspection process is going on and the report has not come out as yet. It always comes out for us in Q3 and we will disclose it at that time,” said Chanda Kochhar, managing director of ICICI Bank in a postearnings media conference call.
Pending RBI inspection, Kochhar did not divulge further details on the same but said that the bank retains its earlier guidance that additions to non-performing assets (NPA) category this fiscal will be lower than previous year.
“Unlike other corporate lenders who have reported divergences in asset quality as on end of FY2017, in their Q2FY2018 results, the ICICI bank has not reported any divergences in their Q2FY2018 results as management has clarified that their RBI Audit is likely to be completed in Q3FY2018. However the likelihood of divergences cannot be ruled in future for corporate lenders, given the total divergence across the industry is quoted at around ₹40,000 crore,” said Anil Gupta, vice president - sector head (financial sector ratings) at ICRA.
The gross NPA additions declined to ₹4,674 crore in fiscal second quarter from ₹4,976 crore a quarter ago and ₹8,029 crore a year ago. Of the total loan slippages, ₹256 crore came from the drill down list of accounts, which are internally classified as below investment grade.
The list has come down to ₹19,590 crore as on September 30.
However, gross bad loans rose to ₹44,488.54 crore at the end of September, up 36.7% from ₹32,547.50 crore a year ago and ₹43,147.64 crore a quarter ago.
As a percentage of total loans, gross non-performing assets (NPAs) were at 7.87% at the end of September compared to 7.99% three months earlier and 6.12% in the year-ago quarter. The bank said that it has exposure 18 accounts part of the RBI’s second list comprising accounts to be referred for insolvency proceedings. The outstanding exposure to these accounts is ₹10,476 crore, and 98.7% of the amount is classified as NPA.