ICICI Q3 net up 5%; provisions rise 190%, asset quality worsens

The bank in Q3 continued to register robust growth in retail business resulting in a year-on-year growth of 24 percent in retail portfolio, which constituted about 44 percent of loan book.

Deposits increased by 15 percent year-on-year to Rs 4.07 lakh crore in December quarter, it said, adding total CASA deposits increased by 18 percent to Rs 1.84 lakh crore in same period.

Profit was slightly lower than analysts' expectations but net interest income was ahead of estimates. Profit was estimated at Rs 3,044 crore and net interest income at Rs 5,392 crore for the quarter, according to average of estimates of analysts polled by CNBC-TV18.

Provisions for bad loans shot up 190 percent year-on-year and 202 percent quarter-on-quarter to Rs 2,844 crore in October-December quarter. Provision coverage ratio as of December 2015 stood at 53.2 percent, the bank said in its filing.

Asset quality deteriorated during the quarter with gross non-performing assets (as a percentage of gross advances) climbed to 4.72 percent compared to 3.77 percent in preceding quarter and 3.4 percent in year-ago period. Net NPA jumped 63 basis points sequentially and 101 bps year-on-year to 2.28 percent in Q3.

In absolute term, net NPA shot up 46.6 percent quarter-on-quarter and 107.6 percent year-on-year to Rs 9,907.8 crore in December quarter, primarily on account of one large steel company. Its exposure to steel sector stood at 4.5 percent of total loan book.RBI's rule on early recognition of stressed assets also had an impact on NPAs. The Reserve Bank of India has asked banks to review certain loan accounts and their classification over the two quarters ending December 31, 2015 and March 31, 2016.Total addition to NPAs in Q3 was Rs 6,544 crore and Rs 1,355 crore of slippages were from existing restructured portfolio.ICICI Bank MD & CEO Chanda Kochhar said she sees subdued corporate activity, adding global economic environment is challenging and there could be a similar rise in NPAs in Q4.She also expects similar amount of provisioning & slippages in Q4.Total strategic debt restructuring for the bank so far is Rs 1,900 crore, including Rs 1,600 crore in Q3.

Net loans to companies whose facilities have been restructured were Rs 11,294 crore as of December 2015 compared to Rs 11,868 crore as of September 2015, the country's largest private sector lender said.

Other income grew by 36.4 percent year-on-year to Rs 4,216.9 crore. During the quarter, the bank received approval of Insurance Regulatory and Development Authority of India (IRDAI) for sale of 4 percent shareholding in ICICI Prudential Life Insurance Company to Premji Invest/its affiliates. Profit on sale of this stake was Rs 1,243 crore.

Operating profit in Q3 increased 30.2 percent to Rs 6,559.80 crore while tax expenses declined 40.3 percent to Rs 697.6 crore compared to year-ago period.

ICICI said cost to income ratio was at 32.2 percent in Q3FY16 compared to 36.3 percent in Q3FY15, adding capital adequacy ratio stood at 15.77 percent compared to 16.15 percent in preceding quarter and 16.39 percent in corresponding quarter of last fiscal.

ICICI Life achieved a profit after tax of Rs 436 crore during the quarter, declined compared to Rs 462 crore in year-ago period.

The scrip of ICICI Bank closed at Rs 232.95, down Rs 4.00, or 1.69 percent ahead of earnings that announced after market hours.