ICICI Bank said that fresh additions to bad loans had stabilized, which led to overall improvement in its asset quality. However, there was an uptick in the lender’s watchlist over concerns of an economic slowdown.
Total slippages for the quarter were Rs 2,482 crore, lower than around Rs 2,800 crore in the previous quarter and Rs 3,100 crore in the same period last year.
ICICI Bank said that the slippages have been coming down from the last few quarters and have stabilized in terms of asset quality.
However, half of the second quarter’s slippages came from retail loans and rest from corporate and SME segments.
The high share of retail loans slippages was in line with the size of the portfolio that comprises 60 percent of the total advances, the bank said, adding that it was within the lender’s overall pricing assumptions.
The bank’s gross non-performing assets (NPA) ratio and net NPA ratio eased to 6.37 percent and 1.6 percent in the second quarter, down from 8.54 percent and 3.65 percent respectively in the same period last year.
ICICI Bank said that its “BB and below-rated” loan book rose to Rs 16,000 crore at the end of September 30, higher as compared to Rs 15,200 crore in June quarter. However, it stood lower as compared to Rs 17,000 crore seen in March 2019.
“We are not immune to the macro environment. So, indeed if there is a slowdown we will also see bit of impact on our portfolio,” said Sandeep Batra, executive director designate, ICICI Bank.
The bank decided to exercise the option of lower marginal tax rate of 25.2 percent that resulted in one-time surcharge of Rs 2,920 crore in the second quarter. As a result, its net profit fell to Rs 654.96 crore in second quarter, down from Rs 908.88 crore in the same period last year.
The bank’s net interest margins (NIMs) rose to 3.64 percent in July-September quarter, up from 3.61 percent in the previous quarter and 3.33 percent in same period last year.
Batra said that there could be some impact on NIMs from the repo-linked loans from incremental growth going forward. He added that the bank may introduce loans linked to other benchmarks as well. The bank will also look at introducing floating-rate deposits for wholesale customers going forward.