ICICI Bank's net profit rises 260% to Rs 4,403 cr in Q4FY21; NII rises 17%

Net interest margin was 3.84% in Q4FY21 as compared to 3.67%in Q3FY21 and 3.87% in Q4FY20

Private sector lender ICICI Bank on Saturday reported a net profit of Rs 4,403 crore in the March quarter of FY21, up 260 per cent year-on-year (YoY). In the same period last year, the bank's net profit stood at Rs 1,221 crore. 

Sequentially, however, the bank's net profit was down around 11 per cent. It decided to provide Rs 1,000 crore as additional Covid-related provisions in the reporting quarter while, in Q3, the bank had utilised Rs 1,800 crore of provisions. Also, the treasury income in the reporting quarter is lower compared to the last quarter. 

The net interest income (NII) increased by 17 per cent YoY to Rs 10,431 crore in Q4FY21 from Rs 8,927 crore in Q4FY20 while the net interest margin (NIM) was 3.84 per cent in Q4FY21 as compared to 3.67 per cent in Q3FY21 and 3.87 per cent in Q4FY20. The non-interest income of the lender, excluding treasury income, was Rs 4,137 crore in the March quarter of FY21 compared to Rs 4,013 crore in the same period last year. 

Also, as per the apex court’s judgment where it asked banks to refund the interest on interest charged to all borrower accounts during the moratorium period, the bank has reduced Rs 175 crore from the interest income during the reporting quarter. 

Provisions made by the lender in the reporting quarter were to the tune of Rs 2,883 crore as compared to Rs 5,967 crore in the same period last year. Furthermore, the lender provided Rs 1,000 crore as additional Covid-19 provisions. Overall, at the end of March 2021, the bank held Covid-19 related provision of Rs 7,475 crore. In Q4FY21, the lender utilised contingency provision amounting to Rs 3,509 crore towards proforma NPAs as of December 31, 2020, as these loans have now been classified as per the RBI guidelines.

As far as asset quality is concerned, the gross non-performing assets (NPAs) of the lender stood at 4.96 per cent at the end of the March quarter. During the quarter, the gross NPA additions, excluding borrowers in the proforma NPAs as of December 31, 2020, were Rs 5,523 crore. The net NPA ratio of the lender declined to 1.14 per cent in the March quarter from 1.26 per cent (on a proforma basis on December 31, 2020) and 1.41 per cent on March 31, 2020.

As of March 2021, under the Reserve Bank of India’s (RBI) resolution framework for Covid-19 related stress, the bank has implemented restructuring of 1,624 accounts, amounting to Rs 1,976.37 crore. Of which, Rs 1,323.28 crore has come from 30 corporate accounts and Rs 643 crore from more than 1,500 retail accounts. 

“The performance of the portfolio in the face of the pandemic has demonstrated the robustness of our underwriting and portfolio selection in recent years. Even after taking into account the higher NPAs addition due to the pandemic, we have maintained a healthy provision coverage ratio of 77.1 per cent at the end of March 2021," the management said. 

The domestic advances grew by 18 per cent YoY and 6 per cent sequentially as of  March 31, 2021.  And, total advances increased by 14 per cent YoY to Rs 7.33 trillion. Total deposits, on the other hand, increased by 21 per cent YoY to Rs 9.32 trillion. 

Sandeep Batra, Executive Director, ICICI Bank said, the level of economic activity saw an increasing trend from January to March. However, the sharp rise in Covid-19 cases in the last few weeks has led to a reimposition of restrictions in various states and cities, which have impacted economic activity. 

"The formation of gross NPAs in FY22 will depend on the trajectory of the second wave of Covid. Looking ahead, we see many opportunities in the medium term to grow the core operating profit in a risk-calibrated manner. We will calibrate our growth in the near term based on the operating environment and conditions based on the second wave of the pandemic," Batra added.