ICICI Bank on Saturday reported a 19% year-on-year (y-o-y) rise in its net profit at Rs 4,940 crore in the December quarter (Q3FY21) on the back of healthful interest revenue and enhanced asset top quality. Sequentially, its net profit rose 16%. The operating profit of the lender enhanced 17% y-o-y and 7% quarter-on-quarter (q-o-q) to Rs 8,820 crore. The interest revenue (NII) enhanced 16% y-o-y and 6% q-o-q to Rs 9,912 crore. Provisions for the lender enhanced 32% y-o-y to Rs 2,742 crore, but declined 8% sequentially.
Sandeep Batra, executive director (ED), ICICI Bank, stated the continued pickup in financial activity and tailwinds from the festive season combined with the bank’s digital initiatives and substantial franchise reflected in an boost in disbursements across retail goods through Q3- 2021. Credit card spends also have reached pre-Covid levels in December thanks to enhanced spends in categories such as well being & wellness, electronics and e-commerce, he added.
During Q3FY21, the bank has changed its provisioning policy on non-performing assets (NPA) to make it more conservative. As element of the revised policy, the bank has created contingency provision of Rs 3,012 crore for borrower accounts not classified as NPAs as per Supreme Court (SC) path.
The apex court had earlier directed lenders not to classify borrowers as NPAs immediately after August 31, 2020. ICICI Bank has utilised Rs 1,800 crore of Covid-19 connected provisions created in the earlier periods. “We see provisioning around 25% of the operating profit in the financial year 2022 (FY22),” Batra stated. The provisioning in the December quarter remained at 34% of the operating profit.
The asset top quality of the lender showed an improvement through the December quarter. Gross non-performing assets (NPAs) ratio of the lender enhanced 79 bps to 4.38%, compared to 5.17% in the preceding quarter. Similarly, net NPAs ratio came down 37 bps to .63% from 1% in the September quarter. The lender has not classified any NPAs considering the fact that August 31, 2020, due to the interim order of Supreme Court. “The proforma gross NPA ratio would have been at 5.42% and net NPAs at 1.26%,” Batra stated. The proforma gross NPAs in the retail segment remained more than 3% through the December quarter.
The lender has supplied one-time restructuring to borrowers worth Rs 2,536 core. The Reserve Bank of India had permitted restructuring for accounts impacted by Covid-19. The lender’s net interest margin (NIM) rose 10 bps on a sequential basis to 3.67%, but was down 10 bps on a y-o-y basis.
The charge revenue of the lender enhanced 15% q-o-q to Rs 3,601 crore, but remained flat on a y-o-y basis. Sandeep Batra stated the sequential choose up in the charge revenue reflects normalisation.
Advances grew 10% y-o-y and 7% q-o-q to Rs 6.99 lakh crore. Deposits saw a robust development of 22% y-o-y and 5% q-o-q at Rs 8,74 lakh crore, with typical present account savings account (CASA) ratio of 41.8%. The capital adequacy ratio of the lender stood at 19.51% at the finish of the December quarter, compared to minimum regulatory requirement of 11.08%.