Gold Silver Reports (GSR) – ICICI Bank (ICICIBANK-532174) on Saturday reported a standalone net profit of ₹1,908 crore in the April-June of FY20, against a loss of ₹120 crore in the same period last year, owing to higher net interest income (NII) and lower provisions. The bank’s profit was lower than ₹2,085 crore estimated by a Bloomberg poll of 21 analysts.
Its net interest income (NII), the difference between interest earned and interest expended, rose 27% year-on-year (y-o-y) to ₹7,737 crore in the first quarter of FY20.
Net interest margin (NIM), a key measure of profitability, expanded 41 basis points (bps) y-o-y to 3.61%. On the other hand, the bank’s provisions were down 42% y-o-y to ₹3,496 crore.
ICICI Bank’s provision coverage ratio, a measure of the funds set aside to cover bad loans, increased to 74% at the end of the June quarter of FY20, from 54.1% a year ago.
The private sector lender saw improvement in asset quality as its gross non-performing assets (NPAs) as a percentage of gross advances declined 232 bps to 6.49%, and the net NPA ratio stood at 1.77%, down 242 bps from the same period last year.
Sandeep Batra, executive director (designate), ICICI Bank, said the bank’s net NPAs were at its lowest in 14 quarters. “We have also written-off around ₹2,200 crore of loans in the quarter,” said Batra. He added that while there was a slowdown in consumption as well as in the automobile sector, the services continued to do well and it was also seeing some improvement in capacity utilisation in the manufacturing sector.
Fresh additions to bad loans stood at ₹2,779 crore, down from ₹3,547 crore in the March quarter of FY19. The bank’s domestic loan book grew 18% y-o-y with retail loans growing at 22%.
The bank management declined to give any particular loan growth target saying, it was not “targeting any particular level of loan growth, but the focus was on growing risk-calibrated operating profit”.
The bank, Batra said, will also lend to the good-rated non-banking financial companies (NBFCs), but did not disclose if the bank made any portfolio purchases from stressed NBFCs. “From the normal business point of view, we do buy portfolios from NBFCs,” he added.
Total deposits of ICICI Bank increased 21% y-o-y ₹6.6 trillion as on 30 June 2019. Average current account savings account (CASA) deposits increased 12.3% y-o-y in Q1 of FY20 and the CASA ratio was 45.2% as on 30 June 2019, against 50.5% a year ago.
