This week in Banking: ICICI Bank loss, PSU banks profits surprise investors

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26 Aug, 2025 12:21

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The week ended to haunt ICICI Bank investors as the bank reported its first ever loss in its history since it went public in 2001. On the other hand, Bank of Baroda surprised with an over two-fold jump in its net profit. The bank’s chief called the first quarter of FY19 likely to be a turnaround quarter, ceteris paribus.

ICICI Bank, India’s largest private sector lender, on Friday it reported a historic loss of Rs 120 crore for the June quarter ending 2018. In anticipation of the financial results to be in line with expectations, ICICI Bank’s stock had surged nearly 10 percent in the week but investors may have been deluded.

The loss has been mainly on the grounds of substantially higher provisions of nearly Rs 6,000 crore, up by 129 percent over last year and just 10 percent lower than the quarter ending March 2018.

However, a look beyond the bottomline number shows that the bank may be on the brink of recovery and that the conservative estimates may augur well for the bank going ahead.

Gross non-performing assets (GNPA) reduced to 8.81 percent from 8.84 percent QoQ. Net non-performing assets reduced to 4.19 percent from 4.77 percent QoQ.

This was also 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 being probed against her.

Moreover, it was the first for Sandeep Bakhshi after being appointed as ICICI Bank’s new COO or chief operating officer in June this year. He has ensured the operating performance is strong, being the highest in the last 11 quarters and the loan book grew by 15 percent.

Moreover, its gross and net NPAs or bad loans also reduced by about Rs 600 crore and Rs 3,716 crore from the January to March quarter.

Siddharth Purohit, a research analyst with SMC Institutional Equities, said, “While the loan growth is on expected lines, the asset quality has improved in absolute terms. Hence, the market may not see it as negative due to the healthy balance sheet numbers."

Bank of Baroda surprise

As of Bank of Baroda, the profit more than doubled with a dip in provisions towards bad loans with the bank’s CEO and managing director PS Jayakumar saying: “Indications are that this is going to be a turnaround quarter… In the sense of the probability of outcomes, our NPA numbers in absolute terms will go down and we’re expecting a healthy growth rate on our balance sheet. But we’ll hold our judgement for one more quarter.”

Although its NPAs increased marginally during the first quarter, its net interest income grew 29 percent, loan growth was at 20 percent and net interest margin (NIM) also improved to 2.65 percent from 2.51 percent in March quarter.

Another government-owned lender Canara Bank also posted improvement in profit numbers on the back of healthy net interest income and reduction in bad loans.

And while the Bank of Baroda attempts to contain its NPA watchlist at about Rs 8,700 crore as it is “getting a grip on the NPA cycle, it will “need 2-3 more quarters to say it has ended”.

These words by Jayakumar may be true for his bank and several of its peers given the gradual domestic economic pickup, and yet relatively uncertain environment in the resolution of bad loans under the Insolvency and Bankruptcy Code (IBC).