ICICI Bank Q2 profit misses estimates, falls 34%; asset quality stable, no divergence

Moneycontrol News

Private sector lender ICICI Bank's second quarter profit fell 33.66 percent year-on-year to Rs 2,058 crore, but there was a big sigh of relief on asset quality and slippages front which came in far better than previous quarters.

Profit in year-ago quarter was Rs 3,102.3 crore.

Net interest income, the difference between interest earned and interest expended, grew by 8.7 percent to Rs 5,709.1 crore in Q2 year-on-year, which was in-line with estimates.

Loan growth during the quarter was also better as domestic advances increased 13 percent in Q2, with retail loan growth of 19 percent (which contributed 54 percent to total loan portfolio) YoY. Net interest margin was unchanged at 3.27 percent on sequential basis, but improved by 14 basis points YoY.

Total advances for the quarter increased 6 percent while deposits grew by 11 percent, with CASA deposits showing a 20 percent rise on year-on-year basis.

India's largest private sector lender said gross slippages for the quarter stood at Rs 4,674 crore, which were lower compared with Rs 4,976 crore in June quarter and Rs 8,029 crore in corresponding quarter last fiscal.

Asset quality was far better than its rivals Axis Bank and Yes Bank. Gross non-performing assets (NPA) as a percentage of gross advances came in at 7.87 percent for the quarter, lower compared with 7.99 percent in previous quarter.

Net NPA as a percentage of net advances was also lower at 4.43 percent compared with 4.86 percent on sequential basis.

"Numbers look strong. Asset quality has fallen; on top of that, there are no divergences for the quarter," Manish Ostwal of Nirmal Bang Securities said. He feels ICICI Bank will continue to outperform its peers.

Krishnan ASV of SBICap Securities also feels numbers are very commendable as slippages are under control and assuming no divergence during the quarter. In fact, the firm like ICICI Bank does not need to report divergence as it already learned lessons from last experiences.

In absolute terms, gross NPA for September quarter stood at Rs 44,488 crore (against Rs 43,148 crore in Q1FY18) and net NPA at Rs 24,130 crore (Rs 25,306 crore).

Profit was expected at Rs 2,525 crore and net interest income at Rs 5,697.4 crore for the quarter, according to average of estimates of analysts polled by CNBC-TV18.

Provisions and contingencies for the quarter were lower by 36.42 percent at Rs 4,503 crore compared with year-ago quarter, but increased 72.6 percent over previous quarter.

Provision coverage ratio improved by 410 basis points to 59.3 percent in quarter gone by YoY that further strengthened the balance sheet, the bank said.

Other income (non-interest income) during the quarter fell 43.1 percent year-on-year to Rs 5,186.2 crore. Other income of Q2FY18 included gains of Rs 2,012 crore from sale of some shareholding in ICICI Lombard General Insurance and gains of Rs 5,682 crore from sale of stake in ICICI Prudential Life Insurance included in other income of Q2FY17.

"Excluding gains on sale of shareholding in insurance subsidiaries, the non-interest income was Rs 3,174 crore in September quarter 2017 compared with Rs 3,438 crore in year-ago quarter," ICICI Bank said.

Operating profit fell by 34.3 percent year-on-year to Rs 6,986.50 crore.

Consolidated profit after tax was lower by 30.5 percent at Rs 2,071 crore compared with corresponding quarter last fiscal.