ICICI Bank, country’s largest private bank, made a marginal rise of 2.4% in net profit at Rs 3,102 crore from June to September period from Rs 3,030 crore a year earlier.
The profitability in the second quarter was helped by lower tax expense and a one-time non-interest income gain of Rs 5,682 crore from the bank’s life insurance subsidiary. The gains were utilised to make provisions towards bad loans.
During the quarter, total provisions (funds set aside for future bad loans and other contingencies) soared to Rs 7,083 crore from Rs 942 crore in September last year.
Chanda Kochhar, MD and CEO of ICICI Bank, said, “In the next 6-9 months, we expect to reduce the exposure to below investment grade companies. We want to reduce exposure to companies in the stressed environment mainly in the power, iron and steel, mining, oil and rigs and metal sectors. We expect that the 2-3 deals (including sale of Essar Oil and Jaiprakash Associates cement business) announced would reduce our exposure. We are also working on other resolutions.”
The bank’s exposure to the above mentioned sectors has come down to 11.9% of total loans from 13.3% in March 2016 and 16.2% in March 2012.
The bank’s net interest income remained flat at Rs 5,253 crore. While, non-interest or other income jumped to Rs 9,120 crore in the September quarter from Rs 3,007 crore in the same quarter last year. Tax expenses fell to Rs 451 crore from Rs 1,186 crore a year earlier due to deferred tax adjustments.
However, the bank’s bad loans more than doubled with gross non-performing assets (NPAs) at Rs 32,178 crore (6.82% of total loans), up from Rs 15,857 crore (3.77%) in September 2015. Net NPAs rose to 3.57% of total loans from 1.65% a year ago.
Addition to bad loans was about 8,000 crore with the watch-list (list of potential bad loans given by the bank) reducing to Rs 32,490 crore, down from Rs 38,723 crore in the previous quarter and Rs 44,000 crore at the beginning of the year.
Consolidated profit after tax (including profits from life and general insurance units) declined by 12.8% to Rs 2,979 crore in Q2FY17 as compared to Rs 3,419 crore in Q2FY16.