Private sector lender ICICI Bank’s net profit surged 158% to ₹4,146 crore for the October-December quarter as provisions for bad loans halved.
Provisions, excluding taxes, declined by 51% year-on-year to ₹2,083 crore during the period under review, from ₹4,244 crore in the year ago period.
The bank benefited from the resolution of Essar Steel during the quarter, which boosted profitability.
Net interest income (NII) increased by 24.3% year-on-year to ₹8,545 crore, which helped the core operating profit (profit before provisions and tax, excluding treasury income) to swell 23.8% to ₹7,017 crore.
The net interest margin (NIM) was 3.77% in Q3 of FY20, compared with 3.64% in the quarter ended September 30, 2019 (Q2-FY20) and 3.4% in Q3-FY19
The gross slippages to NPA remained elevated though recoveries, and write-offs helped to contain the net slippages number.
During the quarter, the gross additions to NPAs were ₹4,363 crore. Recoveries, upgrades and other deletions, excluding write-offs, from non-performing loans were ₹4,088 crore in Q3-2020.
Asset quality improved, with gross NPA ratio declining to 5.95% as on December 31, 2019, as compared to 7.75% a year ago, and 6.37% in the previous quarter end.
Provision coverage
The provision coverage on non-performing loans, excluding cumulative technical write-offs, increased from 68.4% at December 31, 2018 to 76.2% at December 31, 2019.
“During the quarter, there was [a] certain development with respect to a broking company. Our exposure to the company has been classified as non-performing. The corporate NPA addition in this quarter also included a south India-based industrial company, where servicing was regular, but refinancing undertaken in 2018 has now been assessed to be restructuring, leading to classification of NPA by lenders. The company is backed by reputed promoters and investors,” Sandeep Batra, president, ICICI Bank, said in the post earnings interaction with the media. As at December 31, 2019, the fund-based and non-fund based outstanding to borrowers rated ‘BB’ and below was ₹17,403 crore, compared with ₹17,525 crore at March 31, 2019 and ₹16,074 crore at September 30, 2019.
The domestic loan growth was at 16% year-on-year on December 31, 2019, driven by retail loans, which grew by 19% year-on-year. Domestic corporate portfolio grew by 12% year-on-year.
Total deposits increased by 18% and the term deposits grew by 24% year-on-year, while the current and savings account (CASA) deposits grew by 15%. The share of CASA in total deposits was 42.8% in quarter ended December.
The bank’s balance sheet crossed the ₹10 lakh-crore milestone, with total assets at ₹10,07,068 crore.
