ICICI beats analysts’ estimates, posts 30% jump in Q3 profit

MUMBAI: India’s largest private lender, ICICI Bank, which has been in a consolidation mode for the past couple of years, beat analysts estimates, reporting a growth of 30% in net profit in the quarter to December, helped by lower provision for bad loans and a healthy growth in interest and fee income.

The bank posted a net profit of Rs 1,437 crore for the latest quarter and the management has said it expects the growth momentum to continue.

ICICI Bank managing director and CEO Chanda Kochhar said on Monday after unveiling the results that the bank does not anticipate any moderation in credit growth, as indicated by the country’s largest bank, the State Bank of India, on Saturday. “We are seeing an uptake in credit,” Ms Kochhar said.

Loans or advances rose 15% to Rs 206,692 crore in line with the broader growth in the economy while deposits rose 26%, higher than the industry average to Rs 202,017 crore on a year-on-year basis.

The effort of ICICI Bank in focusing on boosting its share of such low-cost deposits appears to have paid off. The share of low -cost deposits, which includes savings and current accounts known as CASA, rose to 44.2% from 41.7% a year ago. This helped the bank maintain its margins.

Ms Kochhar said the bank would strive to maintain its margins of 2.6% and is now targeting a growth of 18% in deposit and advances for this fiscal. ICICI Bank will not be called upon to set aside more funds as provision for bad loans in the coming few quarters.

Lower provisions, she said, was done due to “tighter control over credit quality.” According to Ajay Piramal, head of institutional research, Emkay Global, a brokerage firm, earlier there was growth but the asset quality was missing. Piramal said with better asset quality now, he expects higher profits in the next few quarters.
ICICI Bank set aside Rs 465 crore for bad loans against Rs 1,002 crore a year ago.

Net interest income, or NII — the difference between the cost of mobilising deposits and the yield on loans — rose 12% to Rs 2,312 crore. Fee income, which includes guarantees, sale of third-party products and letters of credit, was up 14% to Rs 1,625 crore.

Total bad loans aggregated Rs 10,186 crore, up from Rs 8,925 crore a year ago. After making provisions , bad loans were Rs 2,872 crore from Rs 4,356 crore a year ago.

Shares of ICICI Bank rose 1.6% to close at Rs 1,083 on BSE on a day when the broader market rose 0.76%.
The consolidated net profits, which includes the profit from the bank and its subsidiaries in life insurance, general insurance and mutual funds, was up 36 % over the year-ago period at Rs 4,525 crore.