High NPAs cap ICICI Group Q1 net at Rs 2,605 cr

Continuing asset quality woes and lack of two key profit streams crimped the bottomline of the country's largest private sector lender ICICI Bank, which today reported a marginal 3 per cent rise in June quarter consolidated net at Rs 2,605 crore.
On a standalone basis, the bank reported an 8 per cent decline in net at Rs 2,049 crore, down from Rs 2,232 crore a year ago.
The bank's MD and CEO Chanda Kochhar attributed the dip in profitability primarily to the exchange gains of Rs 206 crore on profits from overseas subsidiaries which are no longer allowed to be taken as income by the RBI, and Rs 204 crore in quarterly dividend from its life insurance arm which has now shifted to half-yearly basis.

On a sequential basis, standalone profit was marginally higher from Rs 2,025 crore it netted in the March quarter.
Gross slippages came in at Rs 4,975 crore, the lowest in seven quarters, but the gross non-performing assets ratio continued to be high at 7.99 per cent, compared to 5.28 per cent in the year-ago period. In the March 2017 quarter, the same stood at 7.89 per cent.
Sale of Jaypee Cements to UltraTech helped the bank report recovery of Rs 2,775 crore, while a write-off of Rs 1,600 crore led to a net addition to gross NPAs at Rs 2,200 crore.

Asked if this was a one-off quarter with better recoveries and what was the asset quality guidance, Kochhar said NPA additions in FY18 will be lower than in the previous fiscal.

Total provisions rose to Rs 2,609 crore, including Rs 160 crore for standard assets in distressed sectors, against Rs 2,514 crore last year.
Kochhar said as per the RBI directions, the bank has decided to set aside additional amount against exposure in the telecom, iron and steel, rigs and power sectors, between 0.40 per cent and 1 per cent as per the rating of the client.
The bank has outstanding exposure of Rs 6,889 crore to nine of the dozen biggest defaulters selected by the RBI to be resolved under the Insolvency and Bankruptcy Code, she said.

The bank has already made provisions of Rs 2,828 crore or 41 per cent against these assets, and will have to set aside an additional Rs 650 crore against them over the next three quarters, she said.
Its "drilled down" list of assets which have the potential to slip increased by Rs 1,000 crore to Rs 20,300 crore following a recent Supreme Court judgement that led to a rating decline in the power sector.
At Rs 800 crore, retail NPAs were higher than the preceding quarter, as the regulatory dispensation given after demonetisation disappeared, Kochhar said, adding unlike its peers, the bank has not seen much stress in rural loans following the farm loan waivers.

The bank is focusing on the retail sector for loan growth and witnessed a negative growth in corporate loan book where it is restricting its business to the better rates ones.
Overall loan growth came in at 10.9 per cent, driven by an 18.6 per cent increase in retail loan book that now constitutes 53 per cent of the total assets.
Overseas advances were down by 25 per cent as loans given against the diaspora deposits went off and also due to concerted strategy of selecting better rated corporates, she said, hinting that there will be further downward movement.
Its core net interest income increased 8 per cent to Rs 5,590 crore, while non-interest income fell to Rs 3,388 crore from Rs 3,429 crore in the year-ago period, primarily due to disappearance of the above-mentioned two income streams.

Net interest margins slipped to 3.27 per cent from 3.57 per cent in the March quarter, which was due to a higher base on tax refunds and higher interest from NPA accounts. Overall capital adequacy stood at 17.89 per cent with total capital adequacy at 14.80 per cent.
Among the subsidiaries, the life insurance arm reported a flat net of Rs 406 crore, the IPO-bound general insurance arm reported a bottomline of Rs 214 crore, AMC arm chipped in with a 44 per cent rise in net at Rs 141 crore and the brokerage arm delivered a 67 per cent increase in net at Rs 69 crore.

The bank's scrip shed 1.02 per cent to close at Rs 307.05 on the BSE, which ended the session flat.