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 healthy interest income and improved asset quality. Sequentially, its net profit rose 16%. The operating profit of the lender increased 17% y-o-y and 7% quarter-on-quarter (q-o-q) to Rs 8,820 crore. The interest income (NII) increased 16% y-o-y and 6% q-o-q to Rs 9,912 crore. Provisions for the lender increased 32% y-o-y to Rs 2,742 crore, but declined 8% sequentially.
Sandeep Batra, executive director (ED), ICICI Bank, said the continued pickup in economic activity and tailwinds from the festive season combined with the bank’s digital initiatives and extensive franchise reflected in an increase in disbursements across retail products during Q3- 2021. Credit card spends also have reached pre-Covid levels in December thanks to increased spends in categories such as health & 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 part of the revised policy, the bank has made contingency provision of Rs 3,012 crore for borrower accounts not classified as NPAs as per Supreme Court (SC) direction.
The apex court had earlier directed lenders not to classify borrowers as NPAs after August 31, 2020. ICICI Bank has utilised Rs 1,800 crore of Covid-19 related provisions made in the earlier periods. “We see provisioning around 25% of the operating profit in the financial year 2022 (FY22),” Batra said. The provisioning in the December quarter remained at 34% of the operating profit.
The asset quality of the lender showed an improvement during the December quarter. Gross non-performing assets (NPAs) ratio of the lender improved 79 bps to 4.38%, compared to 5.17% in the previous quarter. Similarly, net NPAs ratio came down 37 bps to 0.63% from 1% in the September quarter. The lender has not classified any NPAs since 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 said. The proforma gross NPAs in the retail segment remained over 3% during the December quarter.
The lender has provided one-time restructuring to borrowers worth Rs 2,536 core. The Reserve Bank of India had allowed 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 fee income of the lender increased 15% q-o-q to Rs 3,601 crore, but remained flat on a y-o-y basis. Sandeep Batra said the sequential pick up in the fee income reflects normalisation.
Advances grew 10% y-o-y and 7% q-o-q to Rs 6.99 lakh crore. Deposits saw a robust growth of 22% y-o-y and 5% q-o-q at Rs 8,74 lakh crore, with average current account savings account (CASA) ratio of 41.8%. The capital adequacy ratio of the lender stood at 19.51% at the end of the December quarter, compared to minimum regulatory requirement of 11.08%.