April 30, 2016

ICICIBANK net profit down 76%

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The country’s largest private sector lender, ICICI Bank, on Friday reported a standalone net profit of Rs 702 crore for the March quarter, a fall of 76% year-on-year (y-o-y), owing to the creation of a collective contingency reserve of Rs 3,600 crore for possible bad loans along with provisions of Rs 3,326 crore.

Had it not been for a deferred tax write-back of Rs 2,199 crore, the bank would have reported a loss in Q4 FY16.

Chanda Kochhar, MD and CEO, said the additional reserves were created as a buffer against vulnerabilities in five sectors – iron & steel, mining, power, rigs and cement. “In general, towards our exposure in these sectors, we have created these kinds of collective reserves,” she said.

According to Kochhar, the bank will “work towards resolution of exposures in the context of the challenges facing the corporate sector”.

The lender’s net interest income, or the difference between interest earned and expended, stood at Rs 5,404 crore in the reviewed quarter, 6% higher y-o-y.

ICICI Bank’s retail assets, which constituted 47% of its loan portfolio as on March 31, saw a 23% Y-o-Y growth. This took its growth in domestic advances to 16% compared to the same period last year.

The asset quality suffered in Q4 owing to a 24% sequential rise in gross non-performing loans. As a percentage of total advances, the gross NPAs stood at 5.82%, 110 basis points higher than the previous quarter.

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