ICICI Bank expects bad loan additions, credit cost to ease in FY20

Witnessing a sequential rise in fresh slippages in the fourth quarter of 2018-19, ICICI Bank expects the addition to bad loans to ease in the current financial year. The bank's credit cost that remained elevated on higher provisioning, is also likely to taper off going ahead, the lender's top management said on May 6 after announcing quarterly results.

In January-March, the bank added Rs 3,547 crore of non-performing assets (NPAs) from the SME and Corporate accounts category, as compared to Rs 2091 of slippages in the previous quarter. The gross NPA additions in fourth quarter include an account in the sugar sector where the payment obligations are being met, which has been classified as NPA pursuant to a regulatory interpretation communicated to banks relating to change in management.

"We believe we are at the end of this asset quality cycle and the NPA additions are expected to broadly stabilise going forward," said Sandeep Batra, Executive Director, ICICI Bank. He added that the bank plans to achieve consolidated RoE of 15 percent by the first quarter of current financial year.

ICICI Bank's consolidated RoE was at 4.1 percent in the March-ended quarter, as compared to 6.7 percent in the previous quarter and 4.1 percent in the same quarter last year.

The bank's credit cost was at 3.5 percent at the end of March 2019. Batra said that the credit cost is likely to normalise in the current financial year. While he did not give any forward looking target, Batra said that the bank's credit cost was in the range of 1-1.2 percent before the regulation for asset recognition came into place. The bank's provisions were Rs 5,451 crore at end of March, compared to Rs 6626 crore a year ago.

Batra, who was promoted to the post of Executive Director on May 6, said that the bank has reorganised itself for seamless coordination between the bank's different departments.