ICICI Bank Q1FY20 success: Private lender reports lowest net NPA in 14 quarters

The private lender ICICI Bank has witnessed some major revival during June 2019 (Q1FY20) result, with both provisions and gross NPA decelerating and resulting in better earnings. In fact, the bank has now turned losses into net profit in Q1FY20 compared to the same period of previous year.  ICICI Bank bagged profit after tax (PAT) of Rs 1,908 crore (US$ 276 million) in Q1-2020 compared to a loss of Rs 120 crore (US$ 17 million) in Q1-2019. However, the overall PAT is still below what analysts had expected, but the revival in business does indicate good sign for ICICI Bank. A Bloomberg poll of analysts had predicted PAT to come around Rs 2,090 crore in Q1FY20 for ICICI Bank. 

Meanwhile, Net interest income (NII) increased by 27% year-on-year to Rs 7,737 crore (US$ 1.1 billion) in Q1-2020 from Rs 6,102 crore (US$ 884 million) in Q1- 2019. NII in Q1-2020 includes Rs 184 crore (US$ 27 million) of interest on income tax refund compared to Rs  8 crore (US$ 1 million) in Q1-2019 and Rs 414 crore (US$ 60 million) in Q4-2019. 

Also, core operating profit (profit before provisions and tax, excluding treasury income) increased by 21% year-on-year to Rs 6,110 crore (US$ 885 million) in Q1-2020 from Rs 5,042 crore (US$ 731 million) in the quarter ended June 30, 2018 (Q1-2019).

As for net interest margin (NIM) was around  3.61% in Q1-2020 compared to 3.19% in Q1-2019 and 3.72% in Q4-2019. The impact of interest on income tax refund and interest collection from NPLs on net interest margin was about 17 basis points in Q1-2020 compared to about 25 basis points in Q4-2019.

Provisions were at Rs  3,496 crore (US$ 507 million) in Q1-2020 compared to Rs  5,971 crore (US$ 865 million) in Q1-2019.

Gross NPA additions in Q1-2020 were Rs  2,779 crore (US$ 403 million) compared to Rs 3,547 crore (US$ 514 million) in the quarter ended March 31, 2019 (Q4-2019). While, Net NPA ratio decreased from 4.19% at June 30, 2018 to 1.77% at June 30, 2019 - the lowest in the last 14 quarters. In value terms, Net non-performing assets (NPA) decreased by 51% from Rs  24,170 crore (US$ 3.5 billion) at June 30, 2018 to Rs 11,857 crore (US$ 1.7 billion) at June 30, 2019. 

A day before the result announcement, ICICI Bank share price ended at Rs 415.50 per piece up by Rs 6.45 or 1.58% on Sensex.