What Chanda Kochhar has to say about ICICI results
The sequential improvement in asset quality was owing to sale of restructured debt of Kingfisher Airlines during the quarter. Read on for the key highlights of the results
ICICI Bank, the country's second largest bank, reported a bigger-than-estimated earnings and said it expected to see improvement in asset quality going forward, boosting sentiment for its shares.
In a post earnings conference call, bank's managing director Chanda Kochchar said pipeline for restructuring of loans is "small".
She also said net restructured loans fell sequentially owing to sale of restructured debt of Kingfisher Airlines during the quarter. ICICI Bank witnessed a fall in restructured assets sequentially as it had sold Rs 430 crore of Kingfisher Airlines debt to Srei Venture Capital.
The bank's net profit in April-June was Rs 1,815 crore, up 36 percent year on year, against a CNBC-TV18 poll estimate of Rs 1,704 crore.
At 2:11 p.m, shares of the bank were up 2.7 percent at Rs 932.
The results also show that private banks are better placed for profit growth in the current environment than government-owned banks, which account for 70 per cent of the market in India but whose lending decisions are not always driven by commercial considerations.
The bank's net interest income rose to Rs 3,193 crore, higher than the estimates of Rs 3025 crore. The bank also witnessed an improvement of 40 basis points in net interest margin to 3.01 percent during the quarter from 2.61 percent a year ago, a press release from the bank said.
Kochchar said the bank's aim is to keep the margin above 3 percent for the full year.
Net non-performing asset ratio as on June 30 was at 0.61 percent, almost steady on quarter but down from 0.91 percent a year ago.
The bank's total advances as of June 30 stood at Rs 2.68 lakh crore compared with 2.54 lakh crore as of March 31, 2012.
Kochchar said the loan growth target for the full is unchanged at 20 percent. Its retail loan book is expected to grow 15 percent this year, she said.
The bank's total deposits as on June 30 were at Rs 2.6 lakh crore, up 16 percent.
The bank's non-interest income increased by 14 percent to Rs 1,880 crore from Rs 1,643 crore a year ago.
Cost-to-income ratio reduced to 41.8 percent from 44.7 percent in the year-ago quarter, the release said.
Provisions were at Rs 466 crore compared with Rs 454 crore a year earlier.
"Provisions in Q1-2013 include general provisions of Rs 76 crore on standard assets, reflecting the growth in the loan portfolio," the release said.
The bank's CASA (current account savings account) ratio was at 40.6 percent at June 30.
Net restructured assets as of June 30 were Rs 4,172 crore compared with Rs 4,256 crore as of March 31.
Below are the key points made by ICICI Bank head Chanda Kochhar
• Improvement seen in liquidity in the first quarter as asset quality appreciates
• Lending rates will depend on cost of funds. Since ICICI Bank's cost of funds are coming down, the benefit has been passed on to customers in the form of
• Loan growth is coming from mortgages, car loans and commercial vehicle loans. International loans and advances have also grown. On the corporate side, growth has been contributed from the working capital business and disbursements to existing projects under implementation.
• Target total deposit growth of 20 percent going ahead
• CASA has fallen quarter-on-quarter because of a fall in current accounts. This trend is common in the first quarter of every year.
• Operations in international subsidiaries is stable but size has seen a sight marginal decline in dollar terms.
• ICICI Bank plans to bring back capital from the internal subsidiaries. Returns have already been made by way of dividend from the UK and Canada arms in the first quarter.
The company's net profit stood at Rs 24.7 crore, as against a loss of Rs 123.16 crore a year ago and a CNBC-TV18 estimate of net loss of Rs 198 crore.