ICICI Bank today reported a decline in quarterly net profit for the first time since its merger with ICICI in 2002.
The net profit fell 6.07 per cent to Rs 728.01 crore in the quarter ended June 2008, compared with Rs 775.08 crore during April-June last year, after its bond and equity portfolios lost value and bad loans climbed. ICICI Bank Joint Managing Director and CFO Chanda Kochhar told Business Standard the situation was very challenging as there was a steep rise in bond yields and the Sensex was down 24 per cent from its peak.”
| FEELING BLUE | |||
| (Rs crore) |
Quarter Ended June
| ||
| 2007 | 2008 |
% Change
| |
| Interest earned | 7,330.83 | 7,891.80 | 7.65 |
| Other income | 1,950.59 | 1,538.18 | -21.14 |
| Interest expended | 5,851.88 | 5,802.05 | -0.85 |
| Operating profit | 1,524.22 | 1,714.02 | 12.45 |
| Net profit | 775.08 | 728.01 | -6.07 |
The bank’s non-tax provisions and contingencies rose nearly 43.5 per cent to Rs 792.49 crore during April-June this year, compared with Rs 552.27 crore during the corresponding period last year. The increase in interest rates and adverse market conditions hit the bank’s trading portfolio and treasury income by Rs 594 crore.
Kochar played down the worries on the rise in provisions for bad and doubtful assets and said the level was nearly the same as the fourth quarter of 2007-08. “With the increase in interest rates, the rate of growth has slowed down. But people with existing liabilities continue to pay their dues, although there may be a little more delay (in payments),” she said.
Total income went up 1.6 per cent to Rs 9429.98 crore, while net interest income increased 41 per cent to Rs 2,090 crore. Expenses dipped 0.5 per cent to almost Rs 7,716 crore. Operating profit was 12.46 per cent higher at Rs 1,714 crore at the end of June 2008.
ICICI Bank’s gross non-performing assets rose over 60 per cent to Rs 8,511.36 crore at the end of the first quarter, while net NPAs, which includes provisions, rose nearly 51 per cent to 4,033.57 crore.
The bank’s total advances went up 13.04 per cent to Rs 2,24,146 at the end of the first quarter of this financial year, compared to Rs 1,98,277 crore at the end of June last year.
But, compared to the advances of Rs 2,25,616 crore at the end of the fourth quarter of 2007-08, the advances were 0.65 per cent lower. The bank, which was growing its retail asset book by over 25 per cent till some years ago, reported a 5 per cent growth in retail loan flows in the first quarter of the current financial year.
“We are not consciously scaling down our retail growth, but there is a conscious strategy to grow in line with market growth rates,” Kochhar said. On an annual basis, deposits grew 1.6 per cent to Rs 2,34,461 crore.
