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ICICI Bank Q3: Is the worst over for lender on bad loans front?

The Economic Survey 2021 warned that yet another round of asset quality review is required to assess the actual extent of NPAs in the system.

January 30, 2021 / 07:28 PM IST
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On January 30, private sector lender, ICICI Bank said December quarter would have been probably the worst in terms of COVID-impact on its loan book and things should improve from this point. The bank has aggressively provided for potential losses and will look for growth from quality borrowers, the bank's top executives of the bank said in a conference call post the announcement of results.

What is the asset quality situation of the ICICI Bank at the end of December?

The actual bad loan levels of the bank have gone up in the December quarter. Proforma Gross non-performing asset ratio (GNPAs) (without factoring in the Supreme Court dispensation impact) rose to 5.42 per cent of total loans at the end of December quarter as against the reported 4.38 per cent. Similarly, the proforma net NPAs stood at 1.26 per cent as against the reported 0.63 per cent.

This means, if one includes the impact of loans that would have gone bad but for the Supreme Court order (which barred banks from tagging any account that was standard as on August 31 as NPA), the actual stress on the books have gone up. In other words, stress remains on the books and the actual trend will emerge only after a few quarters.