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ICICI Bank Q1 profit jumps 78% on lower provisions; gross NPAs rise

The rise in profit was mainly on account of lower provisioning. Provisions (excluding provision for tax) fell sharply to Rs 2,852 crore during the quarter, down 62 per cent compared to Rs 7,594 crore a year ago.

By: ENS Economic Bureau | Mumbai |
July 25, 2021 1:27:38 am
According to the bank, retail disbursements moderated during April and May on account of the containment measures in place across various parts of the country.

Aided by lower provisions, ICICI Bank on Saturday reported a standalone net profit of Rs 4,616 crore, up 78 per cent year-on-year for the quarter ended June 2021 as against Rs 2,599 crore in the same quarter last year.

The rise in profit was mainly on account of lower provisioning. Provisions (excluding provision for tax) fell sharply to Rs 2,852 crore during the quarter, down 62 per cent compared to Rs 7,594 crore a year ago.

According to the bank, retail disbursements moderated during April and May on account of the containment measures in place across various parts of the country.

With the gradual easing of restrictions, disbursements picked up in June and July. Credit card spends declined in April and May and increased to March levels in June, driven by spends in categories like consumer durables, utilities, education and insurance, the bank said.

Credits received in the overdraft accounts of business banking and SME (small and medium enterprise) customers also picked up in June and July after declining in April and May.

“The retail loan portfolio grew by 20 per cent year-on-year and comprised 61.4 per cent of the total loan portfolio at June 30, 2021. Including non-fund outstanding, retail was 50.4 per cent of the total portfolio as of June 2021,” ICICI Bank said.

Gross non-performing assets (NPAs) were Rs 43,148 crore as of June 2021 as against Rs 40,386 crore a year ago. Gross NPA additions were Rs 7,231 crore in Q1 of FY2022.

Recoveries and upgrades of NPAs, excluding write-offs and sale, were Rs 3,627 crore (US$ 488 million) in the first quarter. Gross NPAs written off were Rs 1,589 crore.

Explained

Disbursals rise as curbs ease

For the quarter ended June, ICICI Bank reported a sharp 62 per cent decline in provisions — from Rs 7,594 crore a year ago to Rs 2,852 crore. This decline comes as containment measures across several parts of the country were eased starting June and disbursements in the retail segment gathered pace. Credit to SME customers too picked up in June, after a decline in April and May.

Net interest income increased by 18 per cent year-on-year to Rs 10,936 crore in Q1 of FY2022 from Rs 9,280 crore in the year-ago quarter.

The net interest margin was 3.89 per cent as compared to 3.84 per cent in the quarter ended March 31, 2021 and 3.69 per cent in Q1 of FY21.

Based on its current assessment of the portfolio, the bank wrote back Covid-19 provisions amounting to Rs 1,050 crore made in earlier periods. As of June 2021, the bank held Covid-19 related provision of Rs 6,425 crore, it said.

The value of mobile banking transactions increased by 117 per cent year-on-year to Rs 349,072 crore in the June quarter.

Digital channels such as internet, mobile banking, PoS and others accounted for more than 90 per cent of the savings account transactions.

During the June quarter, the bank changed its policy on nonperforming loans to make it more conservative.

The change in policy resulted in higher provision on non-performing advances amounting to Rs 1,127 crore for aligning provisions on outstanding loans to the revised policy.

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