ICICI Bank Q3 FY17 net profit slips by 19%, asset quality weakens further

Image: Shailesh Andrade/Reuters

Private lender ICICI Bank on Tuesday reported a fall in standalone net profit for the quarter ended December 2016, compared to a year earlier, weighed down by rising provisions. Asset quality also continued to weaken, data from the bank showed.

ICICI Bank reported a 19 percent slide in profit to Rs 2,441.82 crore for the three months to December 2016, compared with Rs 3,018.13 crore a year ago. Provisions for bad loans for the April to December 2016 period jumped by 84 percent to Rs 8,723 crore, against Rs 4,742 crore a year earlier.

Its shares edged down 0.66 percent at Rs 269.05 at the BSE on Friday, after the earnings.

Earnings from most Indian banks for the December-ended quarter have been a mixed bag with some like Canara Bank and South Indian Bank posting improved earnings, while Axis Bank has reported weak earnings.

ICICI Bank’s net interest income—the difference between interest earned and interest expended—fell marginally by 1.65 percent to Rs 5,363 crore for the December-ended quarter, against Rs 5,453 crore a year earlier.

The year-on-year growth in domestic advances was 12 percent. ICICI Bank achieved strong growth in its retail business, resulting in a year-on-year growth of 18 percent in the retail portfolio, a statement to the stock exchanges said.

ICICI Bank said gross non-performing assets as a percentage of total loans were 7.91 percent in the December-ended quarter, compared with 6.82 percent in the quarter ended September 30, 2016. The bank’s net non-performing asset ratio was 4.35 percent at December 31, 2016, compared to 3.57 percent a year earlier.

In absolute terms, net non-performing assets for ICICI Bank at December 31, 2016, were Rs 20,155 crore, compared to Rs 16,483 crore at September 30, 2016.

Several public sector and some private banks have been struggling to cope with rising bad loans and higher provisions to cover for a risk of defaults.

The RBI has directed banks to clean up their balance sheets by March 2017. It has introduced several regulations and powers to boost governance at the boards of banks. Massive recapitalisation of state-owned banks from the government is required – and some of this could be expected through the Budget on Wednesday – which will help them to start lending more as economic growth picks up.