ICICI Bank Q4 profit dips 87% to 11-year low as NPA provisions soar

In its worst performance in over a decade, ICICI Bank on Friday posted a massive 87 per cent plunge in consolidated net profit to Rs 406.71 crore for the March quarter on spike in provisioning for bad loans and creation of a contingency reserve.

While provisioning for NPAs has more than doubled in view of the Reserve Bank's asset quality review (AQR) directive, the country's largest private sector lender has set aside a large amount of Rs 3,600 crore as reserves for any potential shocks in the future.

It had posted a post-tax net of Rs 3,084 crore on a consolidated basis in the January-March quarter of last fiscal, and Rs 3,122 crore in the preceding quarter, when it started recognising the effects of bad loans following AQR.

On a standalone basis, the bank's net profit tanked 76 per cent to Rs 701.89 crore from Rs 2,922 crore a year ago. Profit for the reporting quarter eroded on setting aside of Rs 3,600 crore towards "collective contingency and related reserves", above the RBI-mandated provisions in view of the stress it expects from the iron & steel, mining, rigs, power and cement sectors in the future, the bank said.

As of the December quarter, ICICI Bank, which is one of the two systemically important lenders (the other being SBI), did not have a counter-cyclical buffer unlike its private sector peers.

"The weak global economic environment, downturn in the commodity cycle and the gradual nature of the domestic economic recovery has adversely impacted borrowers. It may take some more time for the resolutions to be worked out," Chanda Kochhar, managing director and chief executive, told reporters in a concall. The bank saw loans worth Rs 7,000 crore slipping into NPAs during the March quarter, taking the gross NPA ratio to 5.82 per cent, from 3.78 per cent a year-ago and from 4.72 per cent at the end of the preceding quarter.

This led to spike in provisioning as per the norms to Rs 3,326.21 crore from Rs 1,344.73 crore in the year-ago period. The bank said as much as 60 per cent of the Rs 7,000 crore fresh slippages came in from the AQR, while Rs 2,700 crore came in from restructured assets slipping into NPAs. It continues to carry Rs 8,573 crore of restructured loans.

The first set of numbers from a large private sector underscore the fact that bad loan issues are not just limited to state-run banks, which had reported massive drop in profits due to AQR in the December quarter, when the private players were better off.

Meanwhile, ICICI Bank's scrip fell by 1.5 per cent after the company reported its worst numbers in over a decade with consolidated net profit plunging 87 per cent in March quarter. Shares of the company declined 1.48 per cent to settle at Rs 236.60 on BSE. During the day, it went down by 3.64 per cent to Rs 231.40.

On NSE, the stock went down 1.31 per cent to close the day at Rs 236.95. The company's market valuation fell by Rs 2,054.69 crore to Rs 1,37,586.31 crore. In terms of volume, 57.66 lakh shares of the company changed hands at BSE and over six crore shares were traded at NSE during the day.

ICICI Bank reported its worst numbers in over a decade with consolidated net profit plunging 87 per cent in March quarter at Rs 406.71 crore due to a spike in provisioning for bad loans.

Higher provisioning is in view of the Reserve Bank's asset quality review (AQR) as well as expectations of further bad loan issues at the country's largest private sector lender.

The Chanda Kochhar-led bank had posted a post-tax net of Rs 3,084 crore on a consolidated basis in the January-March quarter of last fiscal, and Rs 3,122 crore in the preceding quarter, when it started recognising the effects of bad loans following the AQR.

On a standalone basis, the bank's net profit tanked 76 per cent to Rs 701.89 crore from Rs 2,922 crore a year ago.

The bank saw loans worth Rs 7,000 crore slipping into NPAs during the March quarter, taking the gross NPA ratio to 5.82 per cent, from 3.78 per cent a year-ago and from 4.72 per cent at the end of the preceding quarter.