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Robust growth in retail loans helped ICICI Bank to report 20 per cent growth in net profit to Rs 2,352 crore in the July-September quarter.
Healthy growth in fee income and higher margins have also helped the country’s largest private lender to beat analysts’ estimates for the quarter.
On a consolidated basis, the profit after tax rose 13 per cent from a year before, to Rs 2,698 crore during the quarter. Net interest income (NII), the difference between interest income and expense, was Rs 4,044 crore during the three-month period, up 20 per cent from a year ago. Net interest margin (NIM) improved 31 basis points (bps) over a year and four bps sequentially, to 3.31 per cent.
"During the quarter, the overall economic activity was muted and financial markets were volatile. But we have reported a healthy performance driven by increase in NII and NIM. Our margin was almost the highest ever. Earlier, we expected it to improve by 10 bps in the current financial year. Now, we expect it to improve by 20 bps," said Chanda Kochhar, managing director and chief executive officer, in her post-earnings comments. The bank was also able to report strong growth in fee income, muted in 2012-13. It grew 17 per cent from a year earlier, to Rs 1,994 crore, aided by earnings from retail, commercial banking, foreign exchange and derivatives operations.
The bank also kept control on expenses, reducing the cost-to-income ratio to 37.3 per cent from 40.9 per cent a year earlier. ICICI made a mark-to-market (revaluation of assets at current worth) provision of Rs 279 crore on its investment portfolio and has not availed of the option permitted by the Reserve Bank of India, of recognising these over three quarters.
In addition, it made provision of Rs 625 crore, compared to Rs 508 crore a year earlier. Net bad loans were Rs 2,707 crore at the end of September, compared to Rs 2,472 crore a quarter earlier. The net non-performing asset (NPA) ratio deteriorated by four bps sequentially, to 0.73 per cent, at the end of the quarter. The provision coverage ratio was 73.1 per cent.
"Given the challenging environment, the banking sector continued to see addition in NPAs. Pressure on cash flows continues and we don't think there is an end to asset quality challenges as yet," Kochhar said.
Net loans to companies whose facilities have been restructured were Rs 6,826 crore at the end of September, 2013. The bank still has a pipeline of around Rs 2,000 crore in restructured assets.
Total advances increased by 16 per cent year-on-year to Rs 317,786 crore, even as the bank turned cautious in offering loans to companies. Domestic advances were up 14 per cent. The loan growth was primarily driven by a rise in retail advances. Mortgage dues and automobile loan portfolios grew 23 per cent and 27 per cent, respectively, leading to a 20 per cent year-on-year rise in retail advances.
"We calibrated the growth in corporate lending, due to the current uncertain environment. Our corporate loans increased by 11 per cent, compared to 20 per cent earlier. While we have the ability to grow faster than 11 per cent, we will continue to watch the environment," Kochhar said.
She expects retail credit to grow 22-23 per cent and corporate advances to rise 14-15 per cent this financial year.
Total deposits were Rs 309,046 crore at the end of September, up 9.8 per cent over a year. The share of low-cost current account and savings account (Casa) deposits was 43.3 per cent of the total at the end of the quarter.
ICICI's capital adequacy ratio was 16.50 per cent by Basel-III norms. Its tier-I CAR was 11.33 per cent.
The bank said it had designated Rakesh Jha as chief financial officer. He was previously deputy CFO and will continue to report to N S Kannan, executive director.
Healthy growth in fee income and higher margins have also helped the country’s largest private lender to beat analysts’ estimates for the quarter.
On a consolidated basis, the profit after tax rose 13 per cent from a year before, to Rs 2,698 crore during the quarter. Net interest income (NII), the difference between interest income and expense, was Rs 4,044 crore during the three-month period, up 20 per cent from a year ago. Net interest margin (NIM) improved 31 basis points (bps) over a year and four bps sequentially, to 3.31 per cent.
"During the quarter, the overall economic activity was muted and financial markets were volatile. But we have reported a healthy performance driven by increase in NII and NIM. Our margin was almost the highest ever. Earlier, we expected it to improve by 10 bps in the current financial year. Now, we expect it to improve by 20 bps," said Chanda Kochhar, managing director and chief executive officer, in her post-earnings comments. The bank was also able to report strong growth in fee income, muted in 2012-13. It grew 17 per cent from a year earlier, to Rs 1,994 crore, aided by earnings from retail, commercial banking, foreign exchange and derivatives operations.
The bank also kept control on expenses, reducing the cost-to-income ratio to 37.3 per cent from 40.9 per cent a year earlier. ICICI made a mark-to-market (revaluation of assets at current worth) provision of Rs 279 crore on its investment portfolio and has not availed of the option permitted by the Reserve Bank of India, of recognising these over three quarters.
In addition, it made provision of Rs 625 crore, compared to Rs 508 crore a year earlier. Net bad loans were Rs 2,707 crore at the end of September, compared to Rs 2,472 crore a quarter earlier. The net non-performing asset (NPA) ratio deteriorated by four bps sequentially, to 0.73 per cent, at the end of the quarter. The provision coverage ratio was 73.1 per cent.
"Given the challenging environment, the banking sector continued to see addition in NPAs. Pressure on cash flows continues and we don't think there is an end to asset quality challenges as yet," Kochhar said.
Net loans to companies whose facilities have been restructured were Rs 6,826 crore at the end of September, 2013. The bank still has a pipeline of around Rs 2,000 crore in restructured assets.
Total advances increased by 16 per cent year-on-year to Rs 317,786 crore, even as the bank turned cautious in offering loans to companies. Domestic advances were up 14 per cent. The loan growth was primarily driven by a rise in retail advances. Mortgage dues and automobile loan portfolios grew 23 per cent and 27 per cent, respectively, leading to a 20 per cent year-on-year rise in retail advances.
"We calibrated the growth in corporate lending, due to the current uncertain environment. Our corporate loans increased by 11 per cent, compared to 20 per cent earlier. While we have the ability to grow faster than 11 per cent, we will continue to watch the environment," Kochhar said.
She expects retail credit to grow 22-23 per cent and corporate advances to rise 14-15 per cent this financial year.
Total deposits were Rs 309,046 crore at the end of September, up 9.8 per cent over a year. The share of low-cost current account and savings account (Casa) deposits was 43.3 per cent of the total at the end of the quarter.
ICICI's capital adequacy ratio was 16.50 per cent by Basel-III norms. Its tier-I CAR was 11.33 per cent.
The bank said it had designated Rakesh Jha as chief financial officer. He was previously deputy CFO and will continue to report to N S Kannan, executive director.
