Bad loans bog down ICICI bank

Mail Today Bureau   Mumbai     Last Updated: November 8, 2016  | 11:19 IST
Bad loans bog down ICICI bank

The country's largest private sector lender ICICI Bank on Monday reported a 12.8 per cent decline in consolidated net profit to Rs 2,979 crore for the July-September quarter as it had to make a sevenfold increase in provision for bad loans.

The bank's NPAs or bad loans jumped to 6.82 per cent of total loans as against 3.77 per cent at the in the year-ago period. During the quarter under review, the bank has made provisions (other than tax) and contingencies of Rs 7,083 crore as against Rs 942 crore in the same quarter of the previous fiscal.

The bank's net profit in July-September quarter of the last fiscal was Rs 3,419 crore. Its total income during the second quarter of the current fiscal increased to Rs 32,435 crore, as against Rs 25,138 crore in the year-go period, ICICI Bank said in a statement.

However, on standalone basis, the bank reported a marginal 2.3 per cent rise in net profit at Rs 3,102 crore for the second quarter as compared to Rs 3,030 crore in the same period of the previous fiscal.  

Net interest income remained almost flat at Rs 5,253 crore. ICICI Bank's gross non-performing assets

ICICI Bank said its watch list of potentially troubled loans had declined to about Rs 32,500 crore from about Rs 38,700 at the end of June.

"We expect a significant further reduction in this portfolio in the next six to nine months," Chief Executive Chanda Kochhar said on a conference call.

Recent deals by Essar group to sell its oil arm to a group led by Russia's Rosneft and Jaiprakash Associates' agreement to sell its cement plants will help lower stressed debt, Kochhar said.

Loans to five most-stressed industrial sectors - iron and steel, power, cement, mining and oil rigs - as a percentage of the bank's total outstanding loans fell to 11.9 percent at the end of September from 13.3 percent in March, she said.

Retail loans rose by 21 percent in the quarter, faster than its overall local loan growth rate of 16 percent as corporate lending weakens. Tax expenses fell to Rs 451 crore in the September quarter from Rs 1186 crore billion rupees a year earlier due to deferred tax adjustments.

Ahead of the results, shares in the bank closed 3.3 percent higher in a Mumbai market that gained 0.75 percent.

The bank further strengthened its balance sheet by making additional provisions of Rs 3,588 crore which comprised of provisions of Rs 1,678 crore for standard loans and entire loss of Rs 395 crore on sale of NPA during the six months ended September 30 which is permitted to be amortised as per Reserve Bank of India (RBI) guidelines, recognised upfront.

Besides, the bank has made a floating provision of Rs 1,515 crore during the period. Indian banks were saddled with $138 billion of stressed loans as of the end of June. While state-owned lenders account for the bulk, ICICI has the highest proportion among private sector banks.

The amount of bad loans has increased this year after an asset quality review ordered by the Reserve Bank of India uncovered more than previously thought. The central bank has set a March 2017 deadline for the sector to fully disclose and make provisions for those.

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