The largest private sector lender ICICI Bank, which on Friday reported an 11.8% rise in net profit to Rs 3,030 crore, is expecting its lending rates to fall further with the cost of funds coming down.
During this festive season, customers can expect some special schemes from the bank. The bank is focusing on retail loans to grow its balance sheet, while it may also look to post double digit growth in its corporate loans.
Net profit during the July-September grew on the back of a robust growth in its home loans, car loans and credit card and personal loans, said the bank. Its advances were up 17% while the retail advances were up 25%, and the corporate growth, 7%.
ICICI Bank stock ended 2.04% higher at Rs 277 on the Bombay Stock Exchange.
The Board on Friday approved a 9% stake sale in ICICI Lombard General Insurance Company to FairFax Financial Holdings. The proposed transaction values the company at Rs 17,225 crore and post the transaction, the bank will hold 65% with FairFax holding the remaining 35%.
Chanda Kochhar, managing director and chief executive officer, ICICI Bank, said in a media conference call, “Our profits have come from strong operating parameters. Advances of the bank are up a 17% supported by a healthy growth in deposits. We will also see our lending rates come down in line with the cost of funds coming down.”
The net interest income (NII or the difference between interest earned and interest expended) rose 12.8% over the previous year to Rs 5,252 crore during the quarter with net interest margin at 3.52%, a shade lower than the 3.54% reported in the preceding quarter but higher than the 3.42% reported in the corresponding period a year ago. The other income was up 9.8% at Rs 3,007.4 crore. The fee income grew only by 6% due to subdued corporate activity.
Deposits increased 9% over the previous year and the CASA deposits (current and saving accounts) were up 13%. The low cost deposit base of the bank CASA ratio was at 45.1% with the bank adding Rs 3,550 crore to its savings account and Rs 7,220 crore to its current account.
Stress continued on its portfolio with gross bad loans or non-performing assets (NPAs) for the quarter at Rs 15,858 crore, an increase of 37.3% over the same period a year ago and 4.8% higher than the preceding quarter. Fresh NPA additions during the quarter were Rs 1,311 crore. Another Rs 931 crore slipped to NPA category from its restructured book.
However, Kochhar expects the bad loan accretions during the financial year to be lower than last year with green shoots in the economy beginning to emerge. She is expecting double-digit corporate credit growth with working capital requirements and expansion in ongoing lending activities. However, the thrust of the growth will be on home loans, car loans and to some extent on the unsecured book like credit cards and personal loans.
Kochhar said, “Excluding restructured advances, fresh slippages have fallen to Rs 1,311 crore from Rs 1,380 crore in the June quarter. The restructured book has also fallen to Rs 11,868 crore from Rs 12,604 crore.” About Rs 2,000 crore of advances were realigned under the 5:25 scheme during the quarter.
Nitin Kumar, an analyst with Prabhudas Lilldhar, told dna, “The bank has reported a healthy set of numbers and in line with expectations. The asset quality is also stable and the bank is managing the bad assets well.
However, the fee income growth at 6% was a disappointment.”