ICICI Bank's Q1 net up 5%

ICICI Bank, the country’s largest private sector lender, reported a 5.4 per cent increase in consolidated net profit at Rs 1,091 crore for the quarter ended June 30, 2010, compared to a year ago, weighed down by a loss from its life insurance subsidiary.

On a standalone basis, the bank reported a 17 per cent year-on-year growth in net profit to Rs 1,026 crore, which was in line with analysts’ expectations. Lower provisions and lower expenses compensated for flat net interest income and a decrease in non-interest income on a year-on-year basis.

Net interest income, or the difference between interest earned on loans and that paid on deposits, was Rs 1,991 crore in the quarter ended June 30 2010, compared to Rs 1,985 crore in the corresponding period last year.

ICICI Prudential Life Insurance reported a loss after tax of Rs 116 crore before accounting for a surplus of Rs 235 crore in the non-participating policyholders’ funds. If the surplus in the non-participating policyholders funds were transferred in the June 2010 quarter, ICICI Bank would have reported a consolidated net profit of Rs 1,264 crore, the lender said in a statement.

Non-interest income fell almost 20 per cent to Rs 1,680 crore on account of an unusually high treasury income reported in the year-ago quarter. Within that, fee income grew 7 per cent to Rs 1,413 crore from Rs 1,319 crore in the June 2009 quarter.

The bank, which has been on an aggressive cost-cutting drive for the past few quarters, reduced its total expenditure by more than 20 per cent to Rs 5,304 crore from Rs 6,694 crore in the June 2009 quarter. Gross advances, at Rs 1,84,378 crore, were 7 per cent lower than the same period last year, but the bank managed to grow its loan book by about 2 per cent over the quarter ended in March.

ICICI Bank Managing Director and CEO Chanda Kochhar said the bank’s corporate book grew 30 per cent in the June quarter and she expects loans to grow 15-16 per cent in the year to March 31. The bank also announced that it has increased deposit rates across various maturities by 25 basis points to 75 basis points from today. Kochhar said she doesn’t expect lending rates to start rising before the second half of the current financial year.

Gross non-performing assets, which had been declining till the December 2009 quarter, rose to Rs 9,829 crore from Rs 9,480 crore at the end of the March 2010 quarter. Gross NPA as a percentage of gross advances was 5.14 per cent at the end of the June 2010 quarter compared to 5.06 per cent in the previous quarter.

The gross NPAs rose because of a change in the accounting policy that doesn’t permit any write offs from this year, Kochhar said in an interview.

The Net NPA ratio shrunk to 1.62 per cent from 2.19 per cent of loans as of June 30, 2009. The bank’s provisioning ratio was 64.8 per cent as of June 30, 2010. It expects 70 percent provisioning cover much before the mandated March deadline, Kochhar said.

ICICI Lombard, the bank’s general insurance subsidiary reported a profit of Rs 33 crore down from Rs 38 crore a year earlier. The bank’s asset management arm recorded a 68 per cent rise in profit after tax to Rs 32 crore from Rs 19 crore in the June 2009 quarter, while ICICI Securities reported a 79 per cent increase in net profit to Rs 25 crore from Rs 14 crore over the same period.