Q4 Results: ICICI Bank’s Profit Misses Estimates, Asset Quality Improves

ICICI Bank Ltd.’s quarterly profit missed estimates but its asset quality improved.

Net profit fell 5 percent year-on-year to Rs 969 crore in the March quarter, according to the private lender’s exchange filing. That compares with the Rs 2,292-crore consensus estimate of analysts tracked by Bloomberg.

Net interest income, or core income of the bank, rose 26.54 percent year-on-year to Rs 7,620 crore—higher than the Rs 7,192-crore estimate. Its net interest margin stood at 3.72 percent compared to 3.4 percent in the December-ended period.

The bank’s provision rose 28.44 percent sequentially to Rs 5,451 crore. But they fell 17.7 percent over the last year. ICICI Bank’s new Chief Executive Officer Sandeep Bakshi has increased provisioning after assuming leadership, in an effort to turnaround the bank’s asset quality— one of the worst among India’s private lenders.

The bank said that its fund-based exposure to debt-ridden Infrastructure Leasing & Financial Services—which is worth Rs 276 crore—was classified as a non-performing asset. Chief Financial Officer Rakesh Jha said that this fund-based outstanding had a provision of Rs 146 crore, while its non-fund based exposure was worth Rs 545 crore where the bank holds a provision of Rs 468.26 crore .

Gross non-performing assets ratio fell to 6.7 percent from 7.75 percent last quarter. Net NPA also contracted to its lowest in 13 quarters to 2.06 percent from 2.58 percent in the preceding three months.

In the January-March period, an account from the sugar sector had been classified as NPA owing to the Reserve Bank of India’s interpretation of the account’s financial position, ICICI Bank said in the filing. The payment obligations, however, are being met by the borrower, it said.

The bank’s gross slippages were up 69 percent to Rs 3,547 crore sequentially. Jha said in a conference call that the bank had written off Rs 7,000 crore worth loans in the quarter, and over Rs 11,000 crore worth loans were written off in FY19.

Other Highlights:

• The bank’s operating profit stood at Rs 781.98 crore compared to Rs 1,902 crore in the previous quarter.
• Other income fell 36.22 percent to Rs 3,621 crore, year-on-year.
• Operating expenses were up 19.6 percent to Rs 5,007 crore on a yearly-basis.
• Total deposits were up 16 percent on a yearly basis.
• CASA ratio was at 49.6 percent compared to 49.3 in the previous quarter.

The company also said that its board had recommended a dividend of Re 1 per equity share with face value of Rs 2 apiece, subject to requisite approvals.

Shares of ICICI Bank closed flat in today’s trade. The stock has risen 11.80 percent so far this year compared to a 9.26 percent gain in the NSE Nifty Bank Index.