This will be 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 against her
ICICI Bank, country’s largest private lender, is likely to report a 31 percent fall in net profit for the first quarter ending 2018 due to rise in provisions owing to a surge in bad loans.
As per a Reuters poll, the lender’s net profit will decline to Rs 1,422 crore as against Rs 2,049 crore reported in the same quarter last year.
A Motilal Oswal report projects a net profit fall of about 7.3 percent to Rs 1,900 crore.
In the fourth quarter ending March 2018, the profit had halved to Rs 2,025 crore.
This will be 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 against her.
It will also be the first after the appointment of Sandeep Bakhshi as ICICI Bank’s new Chief Operating Officer in early June this year.
Last week, a senior management rejig saw Sandeep Batra join as the bank's new President - Corporate Centre. He was formerly the Executive Director with ICICI Prudential Life Insurance.
The bank has postponed its annual general meeting (AGM) to September 12 against the earlier schedule of August 10.
Key issues to watch for in Q1 results:
> Outlook on the bank’s performance under the new COO Sandeep Bakhshi.
> Movement of watch-list accounts which stood at Rs 4,728 crore as on March 2018
> Outlook on asset quality and trend on further relapse from restructured loans
Asset quality expectations
During the quarter, provisions towards loan losses or bad loans are estimated to surge by 47 percent to Rs 3,840 crore from Rs 2,609 crore in Q1 last year, as per the Reuters poll. However, sequentially, it will reduce from a substantial jump in Q4 ending March 2018 at Rs 6,626 crore.
Gross non-performing asset (NPA) ratio is likely to worsen to 10.30 percent of total loans as on June end 2018 from 7.99 percent a year ago and 8.84 percent in the previous quarter ending March 2018.
Net NPA ratio is also expected to rise to 5.30 percent from 4.89 percent in June quarter ending 2017 and 4.77 percent as on March-end 2018.
Interest income and margins
Net interest income (NII), the difference between interest earned and expended, is estimated to increase by 9 percent to Rs 6,080 crore as compared with Rs 5,890 crore in the year-ago period, as per the poll.
Non-interest or other income is expected to grow by 4.5 percent to Rs 3,540 crore in Q1Fy19 from Rs 3,388 crore in Q1FY18. Sequentially, it may decline on account of base effect as Q4FY18 included gains from stake sale in ICICI Securities.
NIM or net interest margin is expected to stay largely flat over the previous quarter at about 3.1 percent, as per Motilal Oswal report.“We expect loan growth to pick up to about 13 percent year-on-year. Corporate loan growth would be moderate and international loan exposure would continue declining. Retail loans should continue exhibiting healthy growth,” it said.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.