ICICI Bank profit falls as bad loan provisions surge

A signboard of the ICICI Bank is pictured outside an automated teller machine (ATM) booth in New Delhi, India, March 4, 2016. REUTERS/Adnan Abidi/File Photo

ICICI Bank Ltd, India’s top private sector lender by assets, reported first-quarter profit fell about 25 percent as its provisions for bad loans more than doubled.

Standalone net profit fell to 22.32 billion rupees for its fiscal first quarter to June 30, from 29.76 billion rupees a year earlier, the Mumbai-based bank said in a statement on Friday. The profit was, however, ahead of analysts’ expectations of 21.99 billion rupees.

Indian banks have seen their bad loans surge after an asset quality review ordered by the Reserve Bank of India, which has set a March 2017 deadline for a sector clean-up, as high bad loans hobble credit growth.

ICICI’s gross bad loans as a percentage of total loans rose to 5.87 percent as of end-June, from 5.82 percent three months earlier. On the top of its gross bad loans of about 272 billion rupees, the bank said it has about 387 billion rupees of loans on its watch list.

“Our focus is to continue to work on resolution of most of these large exposures,” Chief Executive Chanda Kochhar said on a conference call, referring to the watch list loans.

The bank, which is also listed in New York, is setting up a dedicated credit monitoring group to help tackle a rise in sour assets in the corporate and small-and-medium enterprises segments, she said.

ICICI’s provisions jumped to 25.15 billion rupees in the June quarter, from 9.55 billion rupees a year earlier. The provisions were less than the 33.26 billion rupees made in the March quarter.

The bank’s domestic loans in the quarter grew 17 percent from a year earlier, with loans to individuals rising at a faster rate of 22 percent.

ICICI Bank’s life insurance unit has filed for an initial public offering that if it goes through will be India’ biggest IPO in six years. The bank, which is selling a stake of about 12.6 percent in the joint venture with Britain’s Prudential, will get all the proceeds from the IPO.

Shares in the bank fell 3.4 percent ahead of the results in a Mumbai market that closed 0.3 percent lower.


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