ICICI Bank: Q3 Net Profit Jumps 158%, Asset Quality Improves

ICICI Bank: Q3

India’s largest private sector lender ICICI Bank witnessed a 158% on year increase in net profit owing to a one-time gain from Essar Steel resolution, which led to lower provisions.

The private sector lenders standalone net profit at the end of 31 December 2019 stood at Rs 4,146 crore as compared to Rs 1,605 crore during the same period a year ago.

Retail loans as a proportion of total loans were 62.6% as of December 31, 2019. Including non-fund based outstanding, the share of the retail portfolio was 52.0% of the total portfolio as of December 31, 2019

The bank saw bad loan recoveries and upgrades worth Rs 4,088 crore during the third quarter.

Provisions declined 51% to Rs 2,083 crore during the quarter as against Rs 4,244 crore during the same period last year.

Overall asset quality saw an improvement this quarter. Gross non-performing assets as a percentage of total assets stood at 5.95% at the end of December quarter as compared to 7.75% during the same period last year and 6.37% in the second quarter of the fiscal year 2019-20.

A fresh addition to non-performing assets stood at Rs 4,363 crore at the end of December 2019 as against Rs 2,482 crore in the previous quarter.

At the operational front, ICICI Bank witnessed good traction in net interest earnings coupled with strong growth in the loan book.

It’s net interest income (NII) for the quarter seeing an increase of 24% on year to Rs 8,545 crore as compared with Rs 6,875 crore in the year-ago quarter. Loan book grew by 16% with a retail loan book, which is a 19% on-year growth.

Fee income rose 17%, on an annual basis, to Rs 3,596 crore with retail fees constituting 77% of total fees, the bank said. Treasury income rose 11% Rs 531 crore from Rs 479 crore.

The bank has recently launched India’s largest API Banking portal consisting of 250 APIs which enables developers of businesses, fintech, corporates, and e-commerce start-ups to easily partner with the Bank and co-create innovative 3 solutions
The management has also stated that FY2020 was likely to see a significant reduction as compared to FY2019 and would be in the range of 1.2% to 1.3% of average advances. The credit cost for 9M of 2020 was 1.79% or 41.1% of the core operating profit.

As far as subsidiaries are concerned the value of new business of ICICI Life increased by 24.7% year-on-year to Rs 11.35 billion in 9M of 2020. The new business margin increased from 17.0% in FY2019 to 21.0% in 9M of 2020.

Also, the Gross Direct Premium Income of ICICI General was 101.32 billion Rupees in 9M of 2020 compared to Rs110.03 billion in 9M of 2019.

The profit after tax of ICICI AMC increased from 1.96 billion Rupees in Q3 of last year to 3.05 billion Rupees in the current quarter.

The profit after tax of ICICI Securities, on a consolidated basis, was Rs 1.37 billion in the current quarter compared to Rs 1.01 billion in Q3 of last year.

Net net the performance of Q3 FY20 was in line with street expectations and going ahead we expect this positive momentum to continue ahead with roe expected to range between 14-15% over the next 18 months.

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