ICICI Bank’s Q1 net profit drops 8%

Private lender ICICI Bank reported an eight per cent drop in profit at ~2,049 crore in the quarter ended June, over ~ 2,232 crore in the same quarter a year before. Net interest income, the difference between interest earned and expended, rose eight per cent to ~ 5,590 crore. The net interest margin was 3.27 per cent, up from 3.16 per cent a year before. Other income for the quarter was ~3,388 crore, as against ~3,429 crore earlier.

The stock closed one per cent down at ~307 on the BSE exchange. The bank announced these results after close of trading hours.

On the drop in net profit, Chanda Kochhar, managing director and chief executive, said non-interest income had included an exchange rate gain related to overseas operations of ~206 crore. This is no longer permitted to be accounted as income by the Reserve Bank of India (RBI).

Also, it had a quarterly dividend of ~204 crore from subsidiary ICICI Prudential Life Insurance Company in the same quarter last year. The latter company has moved to dividend payments on a half-yearly basis, following its initial public offering of equity last September.

The gross non-performing assets (GNPA) ratio was 7.99 per cent at end-June, slightly up from 7.89 per cent at end-March. Its GNPA at end-June 2016 was 5.28 per cent. Kochhar said overall addition to GNPA in the current financial year would be less than last year. Net NPA declined marginally to 4.86 per cent, from 4.89 per cent in end-March. It was 3.01 per cent at end-June 2016.

Total deposits increased by 15 per cent to ~486,254 crore. The share of low cost current and savings accounts (Casa) in total deposits improved to 49 per cent, from 45 per cent at end-June 2016. This was led by Casa deposits increasing by 24 per cent year-onyear to ~238,024 crore. Total advances increased three per cent to ~464,075 crore.

Kochhar said the share of international business in total credit had come down to 15 per cent and might decline further, as the domestic book is expanding at a faster pace. Also, the bank is not extending new loans in the global business.

Year-on-year growth in domestic advances was 11 per cent. The Bank has continued to leverage its strong retail (small depositors and borrowers) franchise, resulting in yearly growth of 19 per cent in the retail portfolio. The latter was 53 per cent of the loan portfolio at end-June.

The capital adequacy ratio was 17.69 per cent and the tier- I CAR was 14.59 per cent at endJune.