ICICI Bank, India’s largest private lender, on Thursday reported a consolidated net profit of Rs 1,568 crore for the quarter ended March, a rise of 17 per cent compared with the net profit of Rs 1,342 crore in the year-ago period.
The bank’s earnings were hit by additional motor pool losses in the bank’s non-life insurance arm. ICICI Lombard General Insurance saw third-party motor pool losses of Rs 272 crore during the quarter. According to an estimate by the Insurance Regulatory and Development Authority, total third-party motor pool losses across the industry industry stood at Rs 3,500 crore in 201-11.
The bank’s board declared a dividend of Rs 14 per share for financial year 2010-11.
“This year we would grow in line with the industry, which is expected to grow a little over 20 per cent. Our growth will also be similar,” said Managing Director and Chief Executive Officer, Chanda Kochhar. The bank would continue to focus on project financing, working capital, trade finance and auto and home loans to expand its loan book in the current financial year, she said.
Standalone net profit for the quarter surged 44 per cent to Rs 1,452 crore from Rs 1,006 crore a year ago. The rise in net profit was aided by reduced provisions and accelerated growth in interest income. Net interest income, or the difference between interest income and interest expenditure, stood at Rs 2,510 crore during the quarter, a rise of 23 per cent over the year-ago period.
“Most of our strategic parameters have shown considerable improvement. We are through with our consolidation phase and we have resumed growth,” Kochhar said.
The bank’s net interest margin during the quarter stood at at 2.7 per cent, compared with 2.6 per cent a year ago. “We would work towards improving our margins. However, this is also a scenario in which others are facing pressure on their margins,” Kochhar said.
The improved quality of assets allowed the bank to cut its provisions, even as the loan loss coverage ratio was increased to 76 per cent, higher than the Reserve Bank of India’s (RBI) mandate of 70 per cent. The bank recorded provisions worth Rs 384 crore in the quarter, a decline of 61 per cent compared to the corresponding period last year. Net non-performing asset ratio declined to 0.94 per cent. Net bad loans fell 37 per cent from a year earlier to Rs 2,459 crore.
“Our credit cards and personal loan portfolios are down to minimal levels. The losses in these portfolios have been taken care of. New businesses and credit quality are stable. All these contributed towards reduction in our provisions,” Kochhar said, adding the bank did not restructure any loans during the quarter and the total restructured portfolio decreased during the year.
Non-interest income declined 13 per cent to Rs 1,641 crore, despite a year-on-year growth of 18 per cent in fee income. Lower lease, other income and treasury losses worth Rs 196 crore contributed to the drop in non-interest income during the period.
The bank’s operating expenses rose 23 per cent to Rs 1,789 crore. At the end of the last financial year, ICICI Bank had a total of 2,529 branches and 6,104 automated teller machines.
For financial year 2010-11, ICICI Bank’s consolidated net profit rose 30 per cent to Rs 6,093 crore. “The consolidated profits for financial year 2010-11 and the fourth quarter include the impact of additional motor pool losses on ICICI Lombard General Insurance,” the bank said in a statement.
While ICICI Prudential Life Insurance’s profit after tax for 2010-11 stood at Rs 808 crore, compared with Rs 258 crore in the previous financial year, ICICI Lombard General Insurance reported a loss of Rs 80 crore. Advances rose 19 per cent to Rs 216,366 crore as on March 31 and deposits stood at Rs 225,602 crore, a rise of 12 per cent. The share of low-cost current account savings account (CASA) deposits to the bank’s overall deposits rose to 45.1 per cent as on March 31, compared with 41.7 per cent a year ago.
The bank’s credit deposit (CD) ratio was 96 per cent as on March-end. “This is because we have a large international book, which is funded by long-term funds and not deposits. The CD ratio from domestic business is only 75 per cent,” Kochhar said.
ICICI Bank’s capital adequacy ratio was 19.54 per cent under Basel II norms, as on March 31. Tier I capital adequacy stood at 13.17 per cent.
