Higher provisions, poor show by arms pull down ICICI group net income a tad to Rs 1,874 cr

India's second largest private sector lender ICICI Bank Wednesday reported a marginal 1.1 per cent dip in consolidated net income for the December quarter at Rs 1,874 crore as the new management chose to set aside more money for sour assets despite a healthy improvement in asset quality.

On a standalone basis, net income slipped to Rs 1,604 crore from Rs 1,650 crore a year ago.

The major reason for a thinner bottomline is higher provisions along with a poor show by most of its subsidiaries.

The overall provisioning rose 18.89 per cent to Rs 4,244 crore even as the gross non-performing asset ratio declined, leading to a sharp 9.50 per cent jump in the provision coverage ratio during the reporting period to 68.4 per cent.

"Our objective is to grow operating profit in a granular and calibrated manner, improve the provision coverage ratio and minimise the impact of dud loans from the past," managing director and chief executive Sandeep Bakhshi told analysts in a concall.

This is Bakhshi's first full-quarter earnings announcement after his predecessor Chanda Kochhar left in October and now booked by the CBI last week for her alleged quid pro quo dealings in extending Rs 3,250 crore loan to the now-crippled Videocon group in 2011.

On the NPA addition front, the numbers halved to Rs 2,091 crore and was considerably lower than Rs 3,117 crore in the quarter before.

The gross NPA ratio came down to 7.75 from 8.54, while the net NPA ratio declined sharply to 2.58 from 4.20 year-ago after the additional provisioning.

The core net interest income grew 21 per cent to Rs 6,875 crore aided by loan growth and a widening of net interest margin to 3.40 per cent from 3.14 per cent, while non-interest income, excluding trading gains, went up to Rs 3,404 crore from Rs 3,062 crore.

A jump in treasury income to Rs 479 crore from a low Rs 99 crore in the year-ago period, and a write-back of Rs 1,873 crore in deferred tax adjustments helped the bottomline.

The bank registered a 14 percent rise in domestic advances, aided largely by a 21 percent retail growth, while the corporate loan book was flat.

The bank had an overall exposure,including fund-based and non-fund based loans of over Rs 13,000 crore to those 40 accounts in the two RBI lists which are being resolved now under the IBC process, with a provision coverage of 89.6 per cent in the first list and 71 percent in the second list.

The exposure to the assets with a rating of BB and below came down to Rs 18,800 crore and the same to those rated AA and above now constitutes 66.3 per cent of the book.

Its exposure to troubled NBFC sector rose marginally during the quarter, but to the housing finance companies had a sharper decline and the management said both the segments now represent only 4.6 per cent of the overall book.

The bank bought portfolios of over Rs 6,800 crore from the troubled NBFCs, which helped the retail loan growth.

Bakhshi said there is no change in their strategy on retail loans, but added under-penetration in the unsecured segment has led to a higher growth in credit cards and personal loans.

Advances to the small and medium enterprises segment grew 12.7 per cent and now represents 4.9 percent of the overall book.

The average share of the low cost current and savings accounts slipped to 46 percent of the deposits in December from 47.1 per cent.

The overall capital adequacy came in at 17.15 per cent with the core tier-I at 15.14 per cent.

The bank is yet to receive the RBI report on risk-based supervision for FY18 which generally reveals divergences, Bakhshi said, adding it expects to get the same in the March quarter.

Among the subsidiaries, the life insurance arm saw its net plummeting to Rs 297 crore, general insurance had a marginal increase to Rs 239 crore, asset management saw an increase to 193 crore and NBFC home finance reported a loss of Rs 3 crore.

ICICI Bank shares rallied 5.3 per cent at Rs 365.25 apiece on the BSE while the benchmark Sensex closed flat.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)