ICICI Bank charts new course to get back to growth trajectory after logging massive decline in Q4 net profit

After reporting a 50 percent decline in standalone net profit for the quarter ended 31 March, 2018, private sector lender ICICI Bank announced plans to deploy a "preserve, change and grow'' strategy to get back to a growth trajectory.

The announcement comes after the banking giant reported a massive decline in its net profit for the quarter and financial year ended 31 March, 2018.

According to the bank's MD and CEO Chanda Kochhar, the new policy entails growth of the retail loan portfolio, reconciliation and resolution of the stressed assets. "Going forward, ICICI Bank's strategy will be anchored around three key anchors: Preserve, Change, Grow," Kochhar said during a press conference after the announcement of quarterly and annual results.

The lender's Board is meeting on Tuesday, to deliberate upon budget and strategy for the financial year ahead. According to NDTV, an issue that is likely to be discussed at Tuesday's meeting is the controversy surrounding the Rs 3,250 crore ICICI loan to the Videocon group.

File photo of Chanda Kochhar, CEO, ICICI Bank. Reuters

File photo of Chanda Kochhar, CEO, ICICI Bank. Reuters

Vision 2020

Elaborating on the lender's new strategy, Kochhar said: “As far as preserve is concerned, we would like to preserve our robust funding franchise, and digital leadership. So, our target going forward is to maintain the average current and savings account (CASA) ratio above 45 percent and proportion of retail to total deposits over 70 percent”, reported The Hindu.

On ‘change’, ICICI Bank had adopted a new strategy for corporate lending by setting up ‘hard’ limits to group exposure based on credit ratings and past track record. The share of retail loans will be increased to more than 60 percent by March 2020.

For growth, the lender will aim for an overall loan growth of 15 percent of which 20 percent would be retail, the newspaper report added.

Disappointing earnings

The bank reported a massive decline of 49.63 percent in its standalone net profit for the fourth-quarter of 2017-18. The bank's net profit for the quarter under review decreased to Rs 1,020 crore from Rs 2,025 crore reported for the corresponding period of the previous fiscal.

However, ICICI Bank's net interest income inched up to Rs 6,022 crore in the quarter ended 31 March, 2018 from Rs 5,962 crore earned in the period ended 31 March, 2017.

On a consolidated basis, the company's net profit for the fourth-quarter declined by 45.17 percent to Rs 1,142 crore from Rs 2,083 crore reported for the corresponding period of previous fiscal.

As per a regulatory filing, the gross non-performing asset (NPA) additions of Rs 15,737 crore in Q4. This includes Rs 9,968 crore of loans that were under Reserve Bank of India (RBI) schemes and were classified as standard as on 31 December, 2017

"During Q4-2018, the gross additions to NPA were Rs 15,737 crore in Q4-2018. This included Rs 9,968 crore of loans which were under RBI schemes and classified as standard at 31 December, 2017. The Revised Framework for Resolution of Stressed Assets issued in February 2018 discontinued these schemes," the company said in a statement.

"Recoveries and upgrades from non-performing loans were Rs 4,234 crore in Q4-2018."

Besides, the company's standalone net profit for the fiscal ended 31 March, 2018 dropped by 30.85 percent to Rs 6,777 crore from Rs 9,801 crore for the year ended 31 March, 2017 (FY2017). In addition, the company's consolidated net profit for the fiscal under review declined by 24.30 percent to Rs 7,712 crore from Rs 10,188 crore in FY2017.

The company's Board has recommended a dividend of Rs 1.50 per share saying that the declaration of dividend is subject to requisite approvals.

"The bank has classified three borrower accounts in the gems and jewellery sector with fund-based outstanding of Rs 794.87 crore as fraud and non-performing and during Q4-2018 made a provision of Rs 289.45 crore through P&L account and Rs 505.42 crore by debiting reserves and surplus, as permitted by RBI," the filing said.

"Additionally, during Q4 2018, the Bank has also made provision for certain other fraud and non-performing cases by debiting reserves and surplus amounting to Rs 19.98 crore, as permitted by RBI."

"The provision made by debiting reserves and surplus will be reversed and accounted through the P&L account over the subsequent quarters of the year ending 31 March, 2019."

With inputs from IANS

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Updated Date: May 08, 2018 15:20:43 IST

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