ICICI Bank Q1 loss at Rs 119 crore, first ever since listing; provisions up 129%

ICICI Bank reported a net loss of Rs 119.5 crore in the first quarter of FY19 compared to a profit of Rs 2,049 crore in the same quarter last year.

This is the first loss reported by the bank since listing in 1998.

The net interest income or NII, the difference between interest earned and expended, was up 9 percent at Rs 6,102 crore from Rs 5,590 crore.

Provisions were up 129 percent year-on-year (YoY) at Rs 5,971 crore. However, it was down 10 percent quarter on quarter (QoQ). Recoveries for the quarter were at Rs 2,036 crore.

A Reuters' poll estimated the lender’s net profit to fall 31 percent to Rs 1,422 crore. A Motilal Oswal report had projected the net profit to fall about 7.3 percent to Rs 1,900 crore.

Provision Coverage Ratio improved to 66.1 percent versus 53.6 percent QoQ.

Net Interest Margin (NIM), the difference between the interest income generated and interest paid to lenders, was at 3.19 percent from 3.24 percent QoQ.

The non-interest income, excluding treasury income, was Rs 3,085 crore in Q1FY19 compared to Rs 2,530 crore a year ago. The fee income grew 16 percent YoY to Rs 2,754 crore.

CASA deposits increased by 16 percent YoY to Rs 2.76 lakh crore. The CASA ratio was 50.5 percent at the end of Q1 compared to 49 percent a year ago.

Total deposits increased by 12 percent YoY to Rs 5.46 lakh crore.

NPAs

Gross non-performing assets (GNPA) improved to 8.81 percent from 8.84 percent QoQ. Net non-performing assets improved to 4.19 percent from 4.77 percent QoQ.

In absolute terms, GNPA was Rs 53,465 crore for the quarter compared to Rs 54,063 crore in the March quarter. Net NPA was Rs 24,170 crore compared to Rs 27,886 crore QoQ.

While the gross additions to NPA at Rs 4,036 crore ($589 million) were
the lowest in the last 11 quarters, additional provisions on existing NPAs
as per Reserve Bank of India (RBI) guidelines (aging-based provisions
and provisions for cases directed by RBI to be referred to the National

Company Law Tribunal) resulted in total provisions of Rs 5,971 crore ($872 million) and a net loss of Rs 120 crore (US$ 18 million) in Q1-2019, the bank said.

The Bank had classified three borrower accounts in the gems and jewellery sector with fund-based outstanding of Rs 289.45 crore through profit and loss account and around Rs 505.42 crore by debiting reserves and surplus, as permitted by RBI.

This was the first results announcement in absence of its CEO and Managing Director Chanda Kochhar, who is on leave pending an independent inquiry into the impropriety allegations being probed against her. Sandeep Bakhshi was appointed as ICICI Bank’s new COO or chief operating officer.

Analyst comments

Siddharth Purohit, Research analyst at SMC Institutional Equities said, "The profit has dipped mainly on account of higher provision but more details on the same are awaited. While the loan growth is on expected lines, the asset quality has improved in absolute terms. The market may not see it as negative due to the healthy balance sheet numbers."