ICICI Bank, the largest private sector lender in the country, breezed past Street estimates with better-than-expected earnings, as standalone net profit for the quarter ended September climbed 30 per cent from a year earlier, to Rs 1,956 crore.
Higher interest income, stable net interest margin (NIM), dividend income from subsidiaries and better cost management aided earnings. Analysts were expecting the bank to report about 22 per cent growth in profit after tax.
Net interest income, the difference between interest income and expense, grew 35 per cent year-on-year to Rs 3,371 crore during the quarter. This is the third quarter in a row where ICICI has maintained its NIM at three per cent, up 39 basis points from a year before.
| REPORT CARD Quarter ended Sept (standalone) (in Rs cr) | ||
| Sept ’12 | % chg* | |
| Interest earned | 10,026.33 | 22.91 |
| Other income | 2,042.97 | 17.44 |
| Total income | 12,069.30 | 21.95 |
| Interest expended | 6,655.10 | 17.76 |
| NII | 3,371.23 | 34.50 |
| Net profit | 1,956.11 | 30.13 |
| *change over y-o-y; Data compiled by BS Research Bureau Source: Capitaline | ||
“We will look to improve our margin slightly in the coming quarters. The target is to keep the margin at least at three per cent,” said Chanda Kochhar, managing director and chief executive. On a consolidated basis, net profit was Rs 2,390 crore in the July-September quarter, up 20 per cent from a year earlier. It was driven by higher profitability of the life insurance, general insurance and asset management subsidiaries.
Asset quality
The bank was able to keep its asset quality steady, despite Rs 1,220 crore of fresh slippages. These were higher than in previous quarters as the bank classified Rs 500 crore of loans to Deccan Chronicle Holdings as a non-performing asset (NPA).
“We have classified Rs 500 crore loans to a media company as NPA and have provided 85 per cent of that amount. Hence, provisions have increased. But our asset quality has remained steady and we maintain our guidance (expectation) on provision requirement at 0.75 per cent of the loan assets,” said Kochhar. The net NPA ratio was 0.66 per cent at the end of September.
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She said the bank had no loan dues to troubled Kingfisher Airlines and its exposure to Lanco was limited to the infrastructure company’s Australian venture.
The net restructured asset portfolio was Rs 4,158 crore at the end of the quarter. It has a pipeline of another Rs 500 crore of loans, which might be restructured in the coming quarters.
Business growth
ICICI’s advances rose 18 per cent year-on-year to Rs 275,076 crore, driven by growth in retail and corporate loans. The bank expects its loan book to grow 20 per cent this financial year. Retail loans are 34 per cent of total advances.
Deposits grew nearly 15 per cent to Rs 281,438 crore. The share of low-cost current account/savings account deposits was 40.7 per cent of the total.
ICICI closed the quarter with a capital adequacy ratio of 18.3 per cent.