ICICI Bank FY19 bad loan provision to stay elevated, but below FY18 number

The bank noted that NPA additions during FY19 are expected to be significantly lower than in FY18

ICICI Bank has said provisions against bad loans are expected to remain at elevated levels in the current financial year as the lender would have to earmark more funds for meeting the Reserve Bank of India (RBI) norms.

The bank made a provision of Rs 173.07 billion (Rs 17,307 crore) against bad loans in 2017-18 as against Rs 152.08 billion (Rs 15,208 crore) in the year prior to that, ICICI Bank top management had said in an investors' call.

In the fourth quarter of 2017-18, the bank's provisions sharply jumped to Rs 66.26 billion (Rs 6,626 crore) compared to Rs 28.98 billion (Rs 2,898 crore) in the corresponding quarter of 2016-17.

 

There are pressures which have come because of additions to non-performing assets in overseas branches book, it said.

"During financial year 2019, provisions are expected to remain elevated, although lower than 2017-18," the bank added. 

"In the current financial year, that is FY2019, clearly there will be pressure on the overseas margin, especially because we are not growing that book, so in that context any impact which is there becomes more material," it said.

The bank noted that non-performing asset (NPA) additions during FY'2019 are expected to be significantly lower than in FY'2018. The impact of the Revised Framework for Resolution of Stressed Assets will need to be closely monitored, it said.

With regard to loss booked by its UK subsidiary in FY'2018, the bank said this was essentially because of the increased level of provisioning on impaired loans which were largely India-linked loans reflecting the local conditions.

Earlier this month, ICICI Bank reported its first ever quarterly loss of Rs 1.195 billion (Rs 119.5 crore) for the three months to June on account of higher provisioning for bad loans.

The private sector lender, whose MD and CEO Chanda Kochhar was forced to go on leave last month following conflict-of-interest allegations, had posted a net profit of Rs 20.49 billion (Rs 2,049 crore) in the year-ago period.

On a consolidated basis, ICICI Group posted a profit of just Rs 49.3 million (Rs 4.93 crore), compared to Rs 26.0473 billion (Rs 2,604.73 crore) a year ago. 

Total income on consolidated basis rose to Rs 291.7412 billion (Rs 29,174.12 crore) for the quarter under review, as against Rs 265.1757 billion (Rs 26,517.57 crore) in the same period of the previous fiscal, ICICI Bank said in a statement.

This is the first ever result announcement since Kochhar went on leave.