ICICI Bank posts net profit of Rs 1,908 crore for June quarter, NII grows 27% over improved asset quality

ICICI Bank Ltd, India’s second-largest private lender, reported a quarterly profit on Saturday compared with a loss a year earlier, helped by lower provisions and higher retail loan growth. Total income on standalone basis in the reported quarter rose to Rs 21,405.50 crore from Rs 18,574.17 crore a year earlier, the bank said in a regulatory filing.

Net profit for the quarter ended 30 June was Rs 1,908 crore over lower provisioning and healthy net interest income (NII) growth compared with a loss of Rs 119.55 crore in the same period a year ago, the bank said in a statement.

NII grew by 26.8 percent year-on-year to Rs 7,737.43 crore for the quarter that ended on June 2019, while the net interest margin (NIM) was 3.61 percent.

But the profit fell slightly short of the estimated 20.87 billion rupees that 19 analysts had expected on average, according to Refinitiv data. Reuters said.

Representational image AFP

The lender witnessed an improvement in asset quality as gross non-performing assets (NPAs) fell to 6.49 percent of the gross advances by the end of June 2019, from 8.81 percent a year ago.

"We continued to leverage strong retail franchise, resulting in a 22 percent year-on-year growth in the retail loan portfolio in Q1. Excluding non-performing and restructured loans, the growth in domestic corporate loans was about 13 percent YoY," ICICI Bank said in its BSE filing.

Deposits increased by 21 percent year-on-year to Rs 6.6 lakh crore with average CASA deposits growth of 12.3 percent and term deposits growth of 34 percent YoY in Q1.

The net interest margin (NIM) remained strong at 3.61 percent in Q1FY20 as compared to 3.19 percent seen in the previous year, though there was a sequential contraction of 11bps.

ICICI has been under pressure lately due to rising bad loans. Net NPAs were 1.77 percent, down from 4.19 percent a year ago. Thus, the provisioning for bad loans and contingencies fell to Rs 3,495.73 crore for April-June 2019, as against Rs 5,971.29 crore a year earlier.

Earlier in the week, ICICI’s peer Kotak Mahindra Bank also reported a profit that fell marginally shy of estimates, and joined the country’s largest private lender HDFC Bank in warning of the slowing pace of domestic growth.

The warnings from the private lenders in Asia’s third largest economy, which have been dealing with a large pile of stressed loans, have spooked investors.

--With agency inputs