ICICI Bank Q3 Net Jumps 17% On Core Income, Retail NPAs Rise

ICICI Bank on Saturday reported a 17.73 per cent jump in its December quarter consolidated net profit to Rs 5,498.15 crore, helped by a jump in core income but experienced a surge in bad assets from its retail loans.

On a standalone basis, the second largest private sector lender by assets showed a 19.12 per cent rise in the post-tax profit to Rs 4,939.59 crore for the reporting quarter, up from Rs 4,146.46 crore in the October-December 2019 period.

Its core net interest income grew 16 per cent to Rs 9,912 crore, on the back of a 13 per cent growth in domestic advances, while the the net interest margin came at 3.67 per cent as against 3.57 per cent in the preceding September quarter and 3.77 per cent in the year-ago period.

The non-interest income excluding the treasury income came at Rs 3,921 crore as against 4,043 crore.

The reported gross non-performing assets ratio was at 4.38 per cent, but would have been 5.42 per cent if not for the Supreme Court order asking banks not to classify non-paying loan accounts as NPAs after the end of the loan repayment moratorium.

Over Rs 8,280 crore of assets would have slipped into non-performing assets (NPAs) if not for the Supreme Court order on a standstill, while Rs 2,546 crore are set to be recast under a special scheme of RBI for taking care of the COVID-related stress.

A bull Rs 7,521 crore of the proforma NPAs and Rs 837 crore of restructured assets came from the retail segment, taking the gross NPA ratio from the vertical which was assumed to be more resilient than the corporate sector to 3.11 per cent.

The bank's executive director Sandeep Batra told reporters that there is an element of pent-up supply in the NPAs as this is the first quarter with full recognition of the stress after the end of the loan repayment moratorium in August.

He said the stress is on expected lines and the bank has set aside money as provisions to take care of the reverses. It has set aside money for the proforma NPAs and also provided for restructured assets at 15 per cent as against the mandated 10 per cent.

Its overall provisions increased to Rs 2,741 crore from the year-ago period's Rs 2,083 crore, but lower when compared to the preceding quarter's Rs 2,995 crore.

It made a contingency provision of Rs 3,012.16 crore for borrower accounts not classified as NPAs pursuant to the interim order of the Supreme Court and utilized Rs 1,800 crore of the Rs 8,772.30 crore in provisions for the pandemic made earlier.

As of December 31, 2020, the bank held an aggregate COVID-19 related provision of Rs 9,984.46 crore, including contingency provision amounting to Rs 3,509.46 crore, it said. Batra exuded confidence that the money it is carrying will take care of the stress in the future.

The bank is targeting to reduce the overall credit costs to 25 per cent of the core operating profit as against 34 per cent experienced during the current period.

In the quarter under review, its retail advances grew 15 per cent, led by mortgages at 15 per cent and business banking at 39 per cent. The bank is reducing its non-India linked corporate portfolio, which decreased by 48 per cent when compared to the year-ago period.

There was a Rs 2,200 crore addition to the low-rated advances below BB and below and the book stands at over Rs 18,000 crore now, the management said, stressing that it did not contribute to the high slippages.

Its overall capital adequacy stood at 18.04 per cent as of December 31, 2020.