During the quarter, the gross additions to NPAs fell significantly to Rs 1,160 crore, compared to Rs 5,306 crore reported in the same period last year.
India's second-largest private sector lender ICICI Bank on July 25 reported Q1 FY21 profit at Rs 2,599.1 crore, a growth of 36.2 percent year-on-year backed by some stake sale in general and life insurance subsidiaries. But the additional COVID-19 related provisions of Rs 5,550 crore limited the profit growth.
Net interest income during the quarter increased by 20 percent to Rs 9,280 crore compared to the corresponding period of the previous fiscal, with loan growth of 7 percent and strong deposits growth of 21 percent YoY.
Domestic loan book grew by 10 percent in June quarter with retail loan portfolio growth at 11 percent, while growth in the performing domestic corporate portfolio was about 8 percent YoY, the bank said in its BSE filing.
"Deposits increased by 21 percent year-on-year to Rs 8,01,622 crore in June quarter. Average current and saving accounts deposits increased by 20 percent and 14 percent YoY, while term deposits jumped by 27 percent," it added.
The net interest margin was 3.69 percent in Q1FY21, falling from 3.87 percent in March quarter but increased 8 bps YoY, reflecting the higher liquidity with the bank due to strong deposit inflows and limited credit demand due to the lockdown, ICICI said.
The bank sold a 3.96 percent stake in its subsidiary ICICI Lombard General Insurance for Rs 2,250 crore and 1.5 percent stake in ICICI Prudential Life Insurance for Rs 840 crore in June, which strengthened the balance sheet.
"The sale resulted in net gain (after sale related expenses) of around Rs 3,036.29 crore in standalone financial results and Rs 2,715.87 crore in consolidated financial results for Q1FY21," ICICI Bank said.
Provisions and contingencies in Q1 shot up 117.2 percent year-on-year to Rs 7,594 crore and the same increased by 27.3 percent sequentially, due to additional COVID-19 related provisions.
ICICI Bank said it had made additional COVID-19 related provisions of Rs 5,550 crore in June quarter with the objective of completely cushioning the balance sheet from the impact of the pandemic. With this, the total COVID-19 related provisions stood at Rs 8,275 crore at the end of June quarter.
Provisions (excluding COVID-19 related provisions and provision for tax) declined by 42 percent YoY to Rs 2,044 crore in Q1, it added.
The provision coverage ratio improved to 78.6 percent at the end of June 2020, from 75.7 percent in the March quarter.
Asset quality has seen improvement during the quarter with gross non-performing assets (NPA) as a percentage of gross advances falling 7 bps QoQ to 5.46 percent, while net NPAs declined 18 bps QoQ to 1.23 percent.
During the quarter, the gross additions to NPAs (fresh slippages) fell significantly to Rs 1,160 crore, compared to Rs 5,306 crore reported in the same period last year.
"Recoveries and upgrades, excluding write-offs, from non-performing loans were Rs 757 crore in Q1FY21," the bank said, against Rs 1,883 crore in the corresponding quarter of last year
In June 2020, the fund-based and non-fund based outstanding to borrowers rated BB and below (excluding non-performing assets) was Rs 17,110 crore compared to Rs 16,668 crore in the previous quarter, it added.
Non-interest income and pre-provision operating profit saw a significant growth of 79.3 percent YoY at Rs 6,142.6 crore and 71.4 percent YoY at Rs 10,776.45 crore respectively in the quarter ended June 2020, boosted largely by treasury income including stake sale in subsidiaries.
Fee income was down by 30.8 percent YoY to Rs 2,104 crore in Q1FY21 due to lower business volumes and customer activity in view of the lockdown.
Core operating profit (profit before provisions and tax, excluding treasury income) grew by 15 percent YoY to Rs 7,014 crore in Q1, while excluding the impact of higher interest on income tax refund in the corresponding quarter last year, core operating profit growth was at 18 percent YoY, the bank said.
"ICICI Bank's operating performance in Q1 FY21 was much better than our expectations. Core pre-provisioning operating profit is higher than our estimate, courtesy a better NII growth and a resilient fee performance despite substantially lower activity levels," Rajiv Mehta, Lead Analyst – Institutional Equities at Yes Securities told Moneycontrol.ICICI Bank share price fell 2.66 percent on July 24, ahead of its June quarter earnings. Overall, it has been rangebound in the last four months compared to a 48 percent rally in Nifty50. The scrip has corrected 29 percent year-to-date.