Embroiled in personal allegations, ICICI Bank chief on Monday, managed to keep media and analysts at bay on the conflict of interest relating to loans given to the Videocon Group
The board of ICICI Bank will meet for the second time in as many days, but absent on the agenda is the Videocon loan controversy.
Under-fire chief executive Chanda Kochhar termed it a "usual" board meeting, one in which the bank discusses budget planning and strategy for the current financial year.
The board had met on May 6 to discuss the bank’s March quarter earnings that were announced the next day.
After the earnings declaration, Kochhar interacted with analysts and the media for the first time since the Videocon loan controversy broke out in late March.
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Kochhar has been accused of facilitating loans from ICICI Bank for the Videocon Group, whose promoter Venugopal Dhoot had invested in her husband Deepak Kocchar’s firm, NuPower Renewables.
Both during the conference call and the press conference, Kochhar sidestepped questions over conflict of interest in the loans given to the Videocon group, maintaining that the board had "made its stance very clear" on the issue and that she did "not have anything more to add".
The ICICI board, and its chairman MK Sharma, has backed Kochhar, has maintained that there was no quid pro quo in giving out loans to Videocon, as has been alleged by a whistleblower.
Kochhar has avoided public functions and not issued any statements since March 28, when the controversy was first reported in the media.
But the board's clean chit may not be enough. Media reports say investigative agencies are looking into investments by other corporates in companies owned by Deepak Kocchar.
Govt nominee absent from board meeting
Even as Kochhar made clear that the issue was not raised at the board meeting to approve financial results, the government nominee on the board, Lok Ranjan, a joint secretary in the Department of Financial Services, was "not able to attend the board meeting".
In a sudden announcement a few days after the controversy erupted, Ranjan was appointed in the place of Amit Agarwal. A few more changes have also taken place at the director level at the bank since then.
Speculation was rife that the board was divided on whether Kocchar should continue as CEO till the end of her third term in March 2019.
To a question in the post result conference call on whether she should step down as a prudent measure, Kochhar stated that the "bank has supported all investigative authorities and co-operated with them in the past. ICICI Bank will continue to do so."
Growth at ICICI
At the conference, Kochhar pointed to the bank's achievements and improvements over the past years.
The veteran banker has spent almost nine years in the top post at ICICI Bank. While non-performing assets (NPAs) have troubled both the bank and the industry in general, Kochhar said the bank's cost of deposits stood at less than 5 percent as on March-end 2018, making it lowest in the last 10 years.
ICICI Bank's proportion of retail loans also increased from 39 percent four years ago to 56.6 percent as on March 2018, while the proportion of overseas loans came down to 12.6 percent -- outlining that the bank is focusing on domestic business and good quality borrowers.
Financial results
ICICI Bank's net profit halved to Rs 1,020 crore from a year ago, dragged lower by an 85 percent spike in provisions due to a surge in bad loans. The fall in profit was limited on account of a one-time gain of Rs 3,320 crore through the bank's stake sale in its subsidiary ICICI Securities.
However, asset quality continued to worsen to 8.84 percent of total loans from 7.89 percent in the previous quarter.
ICICI Bank said loans worth Rs 15,737 crore had become NPAs in January to March quarter, of which, about Rs 9,900 crore has been on account of the RBI’s new framework for stressed assets.
Analysts said the balance sheet clean-up exercise will help ICICI reduced its stressed pool assets and is a positive.
The watchlist or the potential bad loan's drill-down list was reduced from Rs 19,000 crore at the beginning to Rs 4,728 crore as on March 2018.
ICICI Bank shares were up over 7 percent in early trade, a day after the bank's earnings declaration.
ICICI Bank shares have fallen 8.1 percent so far this year compared to a 3.3 percent rise in India's benchmark S&P BSE Sensex Index.
ICICI Bank aims to bring down its net NPA ratio to 1.5 percent in two years from 4.77 percent at the end of March 2018.
When asked how the whole loan controversy affected her, Kochhar merely smiled and said: "I think a professional must focus on his or her job."