ICICI Bank, the largest private sector bank in the country, reported a 25 per cent drop in its net profit for the quarter ended June 30,2016, to Rs.2,232 crore, due to an nearly three-fold rise in provisioning for bad loans.
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The gross non-performing assets ratio moved up to 5.87 per cent against 5.82 per cent at the end of the preceding March quarter when it recognised a bulk of the asset quality pain and 3.68 per cent in the year ago period. Net interest income, the difference between interest earned and interest expended, remained flat at Rs 5,159 crore, compared with Rs 5,115 crore.
The bank has made a provisioning of Rs.2,515 crore during the quarter as compared to Rs.955 crore during the same period of the previous year on the back Rs.8,249 crore slippages in the non-performing category.
ICICI’s provisions jumped to 25.15 billion rupees in the June quarter, from 9.55 billion rupees a year earlier.
The size of this watchlist after recoveries, upgrades and slippages now stands at Rs 38,723 crore.
The bank’s domestic loans in the quarter grew 17 percent from a year earlier, with loans to individuals rising at a faster rate of 22 percent. According to the management, the net loans to companies whose facilities have been restructured were Rs 7,241 crore during the quarter and the lender sold Rs 2,230 crore worth of stressed assets to asset reconstruction companies.
– Rs 6,000 crore (Bank of Baroda) and Rs 600 crore (Oriental Bank of Commerce).
Net interest margin, a key indicator of profitability, declined to 3.16 per cent, compared with 3.37 per cent in the quarter-ended March.
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“Our focus is to continue to work on resolution of most of these large exposures”, Chief Executive Chanda Kochhar said on a conference call, referring to the watch list loans. Including the profits for Q1 2017, the capital adequacy ratio for the bank as per Basel III norms would have been 16.45% and the tier I ratio would have been 13.02%, ICICI Bank said.
