By Ekta Batra, Research Analyst at CNBC-TV18
India's largest private sector lender ICICI Bank on Friday reported a forecast beating 30% year-on-year jump in its second quarter net profit at Rs 1,956 crore in 2012-13, bolstered by robust loan growth and other income. Net interest income or the difference between interest earned and paid out, grew 35% to Rs 3,371 crore.
Analysts on an average had expected 22% y-o-y rise in the net profit while NII at 30%, according to a poll by CNBC TV18.
"This healthy growth has come on the back of strong loan growth," Chanda Kochchar, MD & CEO, ICICI Bank said in a conference call.
"Going forward, we do not expect any pressure on our asset quality. We would grow our loan book by 20% in 2012-13. We will continue to expand our retail loans as the consumption demand remains intact and people are still buying homes and cars. In corporate segment, we are mostly disbursing working capital loans. However, we have not seen any major increase in new project loans yet."
ICICI Bank expanded its loans by 18% to Rs 2.75 lakh crore. Retail credit grew 14% y-o-y to around Rs 90,000 crore. Currently, retail book forms 33% of total loans as against 28% held by corporate credit.
Other income ramped up more than 17% y-o-y to Rs 2,043 crore. This component included revenues via fees and commissions and treasury opeartions as well as dividend income. According to Kochchar, dividend income of Rs 162 crore was the main contributor to the quarterly growth of overall other income.
At a time when the fear of rising bad loans continues to loom large for banks, the second largest bank in terms of loan book, somehow managed to allay apprehensions. Its gross non-performing loan (NPL) ratio remained unchanged at 3.54% quarter on quarter.
However, net NPL ratio rose to 0.78% in July-September quarter as compared with 0.71% recorded in April-June quarter. Provisions rose to Rs 508 crore from Rs 466 crore quarter-on-quarter.
"We have around Rs 500 crore exposure to a media company and we have marked it as non-performing asset during the quarter. Moreover, we have a recast pipeline of around Rs 500 crore. This is currently lying with the corporate debt restructuring cell. Net NPA ratio should remain in the range of 0.50-0.75 in FY13," Kochchar told reporters.
ICICI Bank was the lead lender of 13-bank consortium that jointly lent around Rs 4,100 crore to debt-ridden media company Deccan Chronicle Holding (DCH) based in Hyderabad, the publisher of three English dailies and one vernacular newspaper. The case was referred to the CDR cell but later, two main banks including ICICI Bank and Axis Bank withdrew and it could not be admitted into the cell.
ICICI Bank showed the DCH as sub-standard asset, the first stage of NPAs, in its book. When an account fails to repay loans for more than 90 days, it is called sub-standard asset under NPA category.
The bank's deposit base upped by 15% to Rs 2.81 lakh crore while the share of current and savings account (CASA) inched up to 40.70% compared with 40.50% in Q1, FY13. CASA is the cheap source of raising funds for banks.
On consolidated basis (including its subsidiaries), ICICI Bank's second quarter profit increased 20% y-o-y to nearly Rs 2,400 crore.