ICICI Bank — the country’s largest private sector lender — reported a 32% decline in net profit to ₹1,650 crore for the quarter ended December 31, due to lower treasury income. This is the lowest profit the bank has recorded in the last seven quarters.
As a result, non-interest income fell to ₹3,167 crore from ₹3,939 crore reported in the year earlier period.
‘No exchange rate gains’
“We had ₹900 crore treasury income and ₹82 crore [in Q3 of FY17] from exchange rate gains which did not exist in Q3 [FY18],” said Chanda Kochhar, MD & CEO, ICICI Bank, in the post earnings media interaction. Rising bond yields in the most recent quarter led to lower treasury gains for the banks.
Net interest income, the difference between interest earned and interest expended, grew 6% to ₹5,705 crore on the back of 16% growth in domestic advances. Ms. Kochhar said corporate loan growth was about 15%.
For the full year, total domestic advances were likely to grow 15% while retail loan growth would be stronger at 18-20%, she said.
Net interest margin (NIM) remained steady at 3.14%, as compared with the year earlier period. CASA deposits rose 12% year-on-year and now accounted for 50.4% of total deposits.
Gross additions to non-performing assets (NPA) were ₹4,380 crore, the lowest addition in nine quarters, she said. The gross NPA ratio fell to 7.82% from 7.87% as at September 30. The net NPA ratio fell decreased to 4.2% at December 31, 2017 from 4.43% as at September 30, 2017.
Recoveries and upgrades from non-performing loans were ₹1,108 crore during the quarter. The loan loss provision for the bank was ₹3,567 crore in Q3 as compared with ₹2,713 crore in the same period of the previous year. The bank said it expected provisioning to stay elevated in the next few quarters.
The bank also said the provision coverage ratio for the second list of accounts, mandated by the RBI, and which will face insolvency proceedings, is 36.5%. RBI has mandated 50% provision for such accounts. The remaining provisioning will be made in the fourth quarter, Ms. Kocchar said. The bank’s aggregate exposure to the second list, comprising 18 accounts, stands at ₹10,000 crore.
