ICICI Bank's net plunges 45% as fresh slippages, provisions soar

The bank's overall exposure to the 40 select accounts referred by the Reserve Bank to be resolved under bankruptcy laws is Rs 15,229 crore

Private sector lender ICICI Bank on Monday reported a steep 45 per cent plunge in March quarter net at Rs 1,142 crore, driven down by a Rs 10,000-crore of fresh slippages due to the changes in asset classification norms.

On a standalone basis, the bank, currently grappling with allegations of conflicts of interest involving chief executive Chanda Kochhar, saw its net profit halving to Rs 1,020 crore.

Asset quality worsened for the bank with the gross NPA ratio rising marginally to 8.84 per cent but net NPA moved down marginally to 4.77 per cent.

But bank had to set aside almost three times more in provisions at Rs 6,625 crore as slippages soared as against a low Rs 2,898 crore.

But that helped the bank improve its provision coverage ratio to 60.5 per cent from 53 per cent.

Kochhar cited the March 28 board statement rallying behind her, a day before the news on allegations against her began to appear in the media and further reports that led to multi-agency probes, and said she has nothing to add on to the board statement.

"The board did not discuss the issue," she said, termed the board meeting slated for Tuesday as a "routine one" to discuss the growth strategy for the new fiscal year.

Kochhar also announced a new strategy revolving around "preserve, change and grow" with targets for March 2020 on various parameters.

For the reporting quarter, the bank added Rs 15,737 crore to the gross non-performing assets list, including Rs 9,968 crore coming in by way of an end to various regulatory dispensations on February 12.

The bank's overall exposure to the 40 select accounts referred by the Reserve Bank to be resolved under bankruptcy laws is Rs 15,229 crore and it has provided 50 per cent against it, she said.

The 'drilldown list' of assets in challenging sectors now stands at Rs 4,728 crore, down from an opening balance of over Rs 19,000 crore two years ago, Kochhar said.

The gross NPA ratio shot up to 8.84 per cent and the net NPA ratio jumped to 4.77 per cent.

Kochhar said much of the stress from the changes in regulations is behind the bank and hinted at business as usual on NPA accretion front from here onwards.

The bank is targeting to bring down net NPA to 1.5 per cent and take the provision coverage ratio to 70 per cent by March 2020.

"The focus will be on recoveries and resolutions," she said.

The surge in bad assets restricted core income growth and net interest income was up only marginally to Rs 6,022 crore despite a widening of margins to 3.24 per cent and a 15 per cent domestic loan growth.

It was other income, which grew to Rs 5,678 crore from Rs 3,017 crore last year, thanks to the Rs 3,300-crore it netted from stake sale in the broking arm, that helped the bank's bottomline.

While retail book, which now contributes 57 per cent of the loan book, grew 20 per cent, corporate book was subdued at 5 per cent.

The bank is targeting to continue with similar growth even under the new plan, which also focuses on increasing unsecured loans of low base by nearly 40 per cent.

Share of overseas loans declined to 12.6 per cent and the bank is planning to trim it further down to 10 per cent as it sees more domestic opportunities, Kochhar said.

The share of low-cost current and saving account deposits grew to 51 per cent and the bank is targeting to maintain it at over 45 per cent by March 2020.

Without naming the borrowers, she said the bank classified three accounts with an exposure of Rs 794 crore in the gems & jewellery sector as fraud during the quarter and Rs 289 crore has been provided against those.

The bank board recommended a dividend of Rs 1.50 per equity share.

The bank counter gained 2.30 per cent at Rs 289.40 on the BSE, as against a 0.84 per cent rally on the benchmark.

The earnings were announced after the market hours.

Photograph: Danish Siddiqui/Reuters