ICICI Bank Q3 net falls 19% to Rs 2,442 cr; bad loans rise

Asset quality remains under pressure leading to a rise in dud loans and lower core interest income

ICICI Bank, country's largest private sector lender, saw a 19.09 per cent drop in its net profit in the October-December quarter to Rs 2,441.82 crore from Rs 3,018.13 crore in the same period last financial year.

The management explained that the profit was lower as compared to the previous quarters as there were significant gains from stake sale in subsidiaries in the comparative quarters.

"If you are comparing the profits with Q3 of last year and Q2 of this year, both the quarters have substantial gains from sale of stake in life insurance companies. Q3 last years included a gain of Rs 1,243 crore on account of sale of life insurance and Q2 this year included gain of moire than Rs 5,600 core. So if you take that out, then there is an increase in profit," said Chanda Kochhar, MD & CEO, ICICI Bank.

Net interest income, difference between interest earned and interest expended also declined by 1.64 per cent to Rs 5,363.35 crore from Rs 5,452.96 crore last year. The fall in NII was led by an increase in bad loans. The percentage of Gross Non Performing advances to gross advances increased to 7.91 per cent as compared to 4.72 per cent in the same quarter a year ago. In the same period the percent of net non-performing advances to net advances also increased to 4.35 per cent as compared to 2.28 per cent in the quarter ended December last fiscal.

The management added that 75 per cent of the addition to gross NPA from corporate and SME segment was from their drill-down list that include below investment grade loans. At the start of this financial year, ICICI Bank had come put with its watchlist which included loans worth Rs 44,065 crores. During the last nine months resolution has been achieved in loans worth Rs 4,165 crore. Loans worth Rs 308 crore were upgraded where as assets of Rs 12,057 crore slipped into NPA. At the end of quarter ended December, the watchlist had loans of Rs 27,536 crore.

The total slippages in this quarter were Rs 7,000 crore out of which Rs 6,600 crore were from the corporate segment.

Other income which includes fees, commissions etc also declined by 6.6 per cent to Rs 3,938.31 crore, The management added that the fall in other income was also due to sale of investments (stake sale in life insurance subsidiaries).

Net interest margin, a key indicator of bank's profitability, was reported at 3.12 per cent as compared to 3.13 per cent in the quarter ended September. The management explained that even though the domestic margins had increased to 3.51 per cent as compared to 3.41 per cent in the quarter ended September, the overall margins came down as the international business had shrunk by 16 per cent.

The bank remains well capitalised with a capital adequacy ratio of 15.98 per cent.