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ICICI Bank’s net profit for the quarter ended December rose 13 per cent year-on-year to Rs 2,532 crore, above the Street’s estimate of Rs 2,476 crore. Higher interest and non-interest income and margin aided the country’s largest private lender’s earnings growth. Operating profit increased 29 per cent year-on-year to Rs 4,439 crore.
However, bad loans increased during the quarter. Provisions nearly doubled to Rs 695 crore from Rs 369 crore a year earlier. Though the gross non-performing asset ratio fell 26 basis points to 3.05 per cent, net non-performing asset ratio increased 18 basis points to 0.94 per cent at the end of December.
Net loans to companies that have got debt restructured rose to Rs 8,602 crore in the quarter from Rs 6,826 crore in the previous quarter. The bank has got proposals to restructure loans worth Rs 3,000 crore. The outlook on asset quality remains grim.
The bank had to make an additional tax provision of Rs 215 crore for deferred tax liability on the special reserve for April-December. Otherwise, its net profit would have grown 22 per cent year-on-year.The bank was creating special reserves through appropriation of profit to avail of tax deduction. But RBI has recently directed it to create a deferred tax liability on the amount outstanding in the special reserve.
Chanda Kochhar, managing director and chief executive officer of the bank, said: “The profitability is the result of healthy growth in our balance sheet. We have been emphasising on the growth of our retail franchise. Our secured retail assets have seen a strong growth — mortgages were up 23 per cent, while automobile loans grew 35 per cent. We are calibrating the growth in our corporate advances, given the current uncertain environment.”
Net interest income, or the difference between interest income and interest expense, grew 22 per cent from a year ago to Rs 4,255 crore during the period. “Our reliance on short-term wholesale funds is really low. Hence, market volatility does not impact us in a significant way. I will expect our net interest margin to remain stable in this quarter,” Kochhar said.
Fee income grew 12.8 per cent to Rs 1,997 crore in the quarter against 17 per cent in the September quarter. Before the Spetember quarter, the income had been growing at less than 10 per cent for the past eight quuarters. Treasury income rose 78.1 per cent year-on-year to Rs 447 crore and lease & other income 85 per cent to Rs 357 crore, aiding other income growth and overall performance. Other income, thus, was up 26 per cent year-on-year to Rs 2,801 crore. Total income was up 23.5 per cent year-on-year to Rs 7,056 crore.
The bank has been able to control its costs. Operating expenses grew 15.7 per cent year-on-year to Rs 2,617 crore. As a result, the cost-to-total income ratio for the bank fell to 37.1 per cent in the December quarter from 39.6 per cent in the year-ago period and 37.4 per cent in the September quarter.
Advances were up 16 per cent (in line with the trend in recent quarters) year-on-year to Rs 332,632 crore. Credit growth was driven by higher demand for retail loans, up 22 per cent from a year earlier. Corporate loan growth was muted at seven per cent year-on-year.
Deposits were up 10.7 per cent year-on-year to Rs 3,16,970 crore, the highest over the first three quarters of this financial year for the bank. The cheaper current account-savings account (CASA) deposits made up 43.3 per cent of the total deposits at the end of December. The bank raised $2 billion foreign currency non-resident (B) deposits, against which it has offered $1 billion worth loans.
ICICI Bank closed the quarter with a capital-adequacy ratio of 16.81 per cent, in line with the Basel III rules.
The stock, however, fell in the last hour of the trading session on Wednesday to close at Rs 1,002 a piece or up 1.7 per cent, mainly due to concerns on asset quality. At this price, the scrip trades at 1.7 times FY15 estimated book value.
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