India’s largest private sector lender ICICI Bank reported a better-than-expected 10% rise in standalone net profit for the January-March quarter at Rs 2,922 crore, helped by strong demand for retail loans.
However, rising bad loans sent the stock down by almost 2% on Monday.
Analysts had expected ICICI to report a net profit of about Rs 2,865 crore, according to a Reuters poll.
The company’s net interest income, or the difference between interest earned by the bank and the interest it pays, rose 17% year-on-year in the fourth quarter, to Rs 5,079 crore.
Its income earned from fees and commissions was also up 17% to Rs 3,496 crore.
“ICICI Bank’s core performance came marginally ahead on the back of better than expected net interest margin (3.57% in Q4) while loan book grew at a healthy pace,” said Saday Sinha, analyst at Kotak Securities.
However, the company’s net non-performing assets increased to 1.61% from 0.97% a year ago. Due to the higher NPAs, the bank’s provisions for bad loans also rose sharply to Rs 1,344 crore from Rs 714 crore in the year-ago quarter.
“Asset quality continued to remain a drag, as slippage from restructured portfolio spiked,” Sinha said.
Chanda Kochhar, ICICI Bank’s CEO and MD, said, the rise in bad loans was from already troubled assets and not from new problem assets. She expects things to improve in the current financial year on the bad-loans front. “I would believe that 2014-15 was probably the peak as far as the addition to NPAs and restructured assets, as well as credit costs are concerned,” said Kochhar.
For the same quarter, ICICI Bank’s total loan book increased 14% to Rs 3.87 lakh crore. While retail loans increased 25%, corporate loans grew 10%.
On a consolidated basis, ICICI Bank’s net profit for the fourth quarter rose 13% to Rs 3,085 crore
ICICI Bank shares closed at Rs 302.40, down 1.9% on BSE on Monday.
(With Reuters inputs)