Retail loans push ICICI Grp net up 12%; asset quality worsens

ICICI Bank, the country's largest private sector lender, today reported 12 per cent growth in consolidated net profit at Rs 3,419 crore for the three months through September, helped largely by healthy uptick in retail loans and higher margins from its international operations.
The bank reported robust numbers, which were in line with market expectations, despite the fact that the asset quality worsened during the reporting quarter with both the gross NPAs and net NPAs inching up.
The lender also announced that it is selling 9 per cent stake in its general insurance arm, ICICI Lombard, to Toronto, Canada-based NRI Prem Watsa- promoted Fairfax Financial Holdings.

It will bring down the bank's stake in the venture to 64 per cent and bring in Rs 1,550 crore.
The lender reported 12 per cent uptick in post-tax profit on a standalone basis to Rs 3,030 crore during the reporting period.
Its core net interest income rose 13 per cent to Rs 5,251 crore, while non-interest income increased 10 per cent to Rs 3,007 crore.

Helped by a healthy rise in international margins, which moved to 2 per cent from 1.58 per cent a year ago, the overall net interest margin (NIM) moved up by 0.10 per cent to 3.52 per cent and the bank's managing director and chief executive Chanda Kochhar said she is confident of maintaining the NIMs at this level.

Domestic NIM stood at 3.84 per cent and Kochhar said the bank will continue to align the rates of interest with the improvement in cost of funds by passing benefits to borrowers.
The international margins were up due to refinancing of some borrowings to lower the cost, she added.
It registered an overall credit growth of 17 per cent during the quarter, helped by a 25 per cent surge in retail advances. The share of retail advances in the overall book has now risen to 44 per cent from 40 per cent a year ago.
The market, despite a selloff, lapped up ICICI shares, pushing the closing price to Rs 277.15, up 2.10 per cent on the BSE, whose main gauge Sensex shed 0.70 per cent.

"We believe that unlocking of value in subsidiaries will
be an added icing on the cake for investors, especially the bank's plans to sell 9 per cent in ICICI Lombard will add immense investor value," Shenoy said.
Kochhar said corporate loans grew slower at 7 per cent due to sluggish demand, but the bank expects corporate demand to gather steam going forward and end the fiscal with a 10 per cent growth.
Domestic credit growth will go up a few notches in the remainder of the year, Kochhar said, adding that the bank is targeting to finish it with an 18-20 per cent growth.

On asset quality front, overall slippages were at Rs 2,242 crore, which included Rs 931 crore of standard restructured advances.
She said excluding restructured advances, fresh slippages have fallen to Rs 1,311 crore from Rs 1,380 crore in the June quarter, and also maintained a target of ending the year with lower slippages than the last one.
With the discontinuation of the CDR facility, the restructured book has also fallen to Rs 11,868 crore from Rs 12,604 crore.
Kochhar said around Rs 2,000 crore of advances were realigned under the 5:25 scheme during the quarter, but stressed that these are for companies which are viable.

There was one case involving its exposure to an account where the banks have taken over a company under the SDR route, she added.
The gross NPAs rose to 3.77 per cent from 3.12 per cent a year ago and from 3.68 per cent in Q1. As a result, the overall provisions moved up to Rs 942 crore from Rs 849 crore and Rs 956 crore in Q1 of the current year.
Net non-performing assets rose to Rs 6,828 crore from Rs 6,402 crore or 1.47 per cent from 1.40 per cent. On share sale in ICICI Lombard General Insurance to

Fairfax, Kochhar said the bank is satisfied with overall valuation of Rs 17,225 crore and the partner's move to up stake reflects its confidence in the company and also on the country.
She said there are no immediate plans to go in for an IPO in the company at present, and declined an answer as to why they have chosen to raise Fairfax's stake to 35 per cent as against the regulatory ability for foreign shareholders to be at 49 per cent.
On similar plans for the life insurance arm, ICICI Prudential Life, Kochhar said the bank continues to look at opportunities to monetise its investments.

Non-interest income rose 10 per cent to Rs 3,007 crore, while the cost-to-income ratio rose to 37.5 per cent from 36.5 per cent.
On performance of the subsidiaries, Kochhar said ICICI Prudential Life reported a net profit of Rs 415 crore, up from Rs 399 crore a year ago, and could continue to retail its leadership position in the industry.
The general insurance arm ICICI Lombard also maintained its leadership in the private sector but turned in a lower profit in the quarter at Rs 143 crore, down from Rs 158 crore a year ago, despite a 22 per cent increase in gross premium collection to Rs 1,638 crore, she said.