ICICI Bank Q3 Results: Net Profit Rises 19%
People exit the ICICI Bank Towers, in Mumbai, India. (Photographer: Prashanth Vishwanathan/Bloomberg News)

ICICI Bank Q3 Results: Net Profit Rises 19%

ICICI Bank Ltd. reported a 19% increase in net profit for the October-December quarter even as provisions increased over a year ago.

Net profit rose to Rs 4,939.6 crore in the quarter ended December compared to Rs 4,146 crore in the same period last year, the private lender said in an exchange filing. Net interest income, or core income, rose 16% year-on-year to Rs 9,912 crore.

Analysts polled by Bloomberg estimated the bank’s profit at Rs 4,242.6 crore and NII at Rs 9,554 crore.

ICICI Bank reported a gross non-performing asset ratio of 4.38% in the three-month period compared with 5.17% in the quarter ended September. Net NPA ratio improved to 0.63%—lower by 37 basis points on a sequential basis.

The improvement in asset quality numbers was largely because of an interim order by the Supreme Court, which barred lenders from classifying an account as NPA after Aug. 31.

If the court order weren’t in place, the bank’s pro forma gross NPA ratio would have been at 5.42% compared with 5.36% quarter-on-quarter. Similarly, the net NPA ratio, without the asset classification benefit, would have been at 1.26% compared with 1.12% in the preceding quarter.

According to a statement released by the bank, loans worth Rs 8,280 crore were not classified as NPA owing to the Supreme Court order. This included retail loans worth Rs 7,521 crore and Rs 759-crore worth corporate and small business loans.

Loans worth Rs 2,546 crore were under resolution, which included retail loans worth Rs 837 crore, the bank said. The Reserve Bank of India’s August 6, 2020 circular allows banks to restructure loan accounts affected by the Covid-19 pandemic without attracting an NPA tag.

“The asset quality indicators are seeing an improvement. We expect the normalisation of credit costs fiscal 2022 based on our current expectations of economic activity and portfolio trends,” said Sandeep Batra, executive director of ICICI Bank.

Total provisions stood at Rs 2,741.72 crore—up 31% from a year ago. During the October-December quarter, ICICI Bank said it made contingency provisions worth Rs 3,012 crore against accounts covered under the Supreme Court order. The bank also utilised Covid-related provisions worth Rs 1,800 crore it had made previously.

In the third quarter the bank “has changed its provisioning policy on nonperforming assets to make it more conservative,” it said. The change in policy resulted in higher provisions on advances amounting to Rs 2,096 crore, for aligning provisions on the outstanding loans to the revised policy.

The bank has been making 15% provisions against restructured accounts, as compared with the regulatory requirement of 10%, Batra said.

ICICI Bank’s total advances rose 10% year-on-year to Rs 6.99 lakh crore, the bank said. Domestic advances rose 13% year-on-year and 7% on a quarter-on-quarter basis. Overseas loan portfolio, however, saw a 26% fall from a year ago.

According to Batra, the bank is seeing some revival in corporate loan demand, even though retail credit demand has led most of the growth during October-December. In the third quarter, auto loan disbursals crossed pre-Covid levels, while credit card spends had reached levels seen in the earlier part of the year, before the pandemic affected spends.

Total deposits rose 22% from a year ago to Rs 8.74 lakh crore. Low cost current account savings account deposits rose 17.5% year-on-year to Rs 3.9 lakh crore. Term loans rose 26% from last year to Rs 4.8 lakh crore.

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