Provision against bad loans to remain elevated in current fiscal, says ICICI Bank

New Delhi: ICICI Bank has said provisions against bad loans are expected to remain at elevated levels in the current financial year as the lender would have to earmark more funds for meeting the RBI norms.

The bank made a provision of Rs 17,307 crore against bad loans in 2017-18 as against Rs 15,208 crore in the year prior to that, ICICI Bank top management had said in an investors' call.

In the fourth quarter of 2017-18, the bank's provisions sharply jumped to Rs 6,626 crore compared to Rs 2,898 crore in the corresponding quarter 2016-17.

There are pressures which have come because of additions to non-performing assets in overseas branches book, it said.

"During fiscal 2019, provisions are expected to remain elevated, although lower than 2017-18," the bank added.

A file photograph of an ICICI Bank branch. Reuters

A file photograph of an ICICI Bank branch. Reuters

"In the current financial year, that is FY2019, clearly there will be pressure on the overseas margin, especially because we are not growing that book, so in that context, any impact which is there becomes more material," it said.

The bank noted that NPA additions during FY'2019 are expected to be significantly lower than FY'2018. The impact of the Revised Framework for Resolution of Stressed Assets will need to be closely monitored, it said.

With regard to loss booked by its UK subsidiary in FY'2018, the bank said this was essential because of the increased level of provisioning on impaired loans which were largely India-linked loans reflecting the local conditions.

Earlier this month, ICICI Bank reported its first-ever quarterly loss of Rs 119.5 crore for the three months to June on account of higher provisioning for bad loans.

The private sector lender, whose MD and CEO Chanda Kochhar was forced to go on leave last month following conflict-of-interest allegations, had posted a net profit of Rs 2,049 crore in the year-ago period.

On a consolidated basis, ICICI Group posted a profit of just Rs 4.93 crore, compared to Rs 2,604.73 crore a year ago.

Total income on a consolidated basis rose to Rs 29,174.12 crore for the quarter under review, as against Rs 26,517.57 crore in the same period of the previous fiscal, ICICI Bank said in a statement.

This is the first ever result announcement since Kochhar went on leave.


Updated Date: Jul 31, 2018 16:40 PM

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