A sharp rise in non-performing assets (NPAs) and provisioning has dented a big hole in the bottomline of ICICI Bank in its worst quarterly performance in the last 10 years.
The net profit of the largest private sector bank plunged 76 per cent to Rs 701.89 crore on a standalone basis for the quarter ended March 2016 from Rs 2,922 crore in the same period of last year, indicating that private banks are not behind their public sector counterparts on the bad loans front.
The bank’s gross NPAs surged by 73.7 per cent to Rs 26,221 crore (5.82 per cent of advances) from Rs 15,094 crore (3.78 per cent of advances) in the previous year.
“The bank has on a prudent basis made a collective contingency and related reserve of Rs 3,600 crore during Q4-2016 towards exposures to stressed sectors,” ICICI Bank MD & CEO Chanda Kochhar said.
The bank witnessed loans worth Rs 7,000 crore slipping into NPAs during the March quarter. The spike in bad loans led to a sharp jump of 147 pc in provisioning as per the RBI norms to Rs 3,326.21 crore from Rs 1,344.73 crore in the year-ago period. On a consolidated basis, net profit plummeted by 87 per cent to Rs 406.71 crore.
The increase in non-performing assets was primarily due to the continuing challenges in the operating and recovery environment and the RBI’s directive of early and conservative recognition of stress and provisioning.
The RBI had asked banks to review certain loan accounts and their classification over the two quarters ended December 2015 and March 2016.
“The bank has now completed the exercise of review of classification of cases highlighted by the RBI,” Kochhar said.”
The weak global economic environment, the sharp downturn in the commodity cycle and the gradual nature of the domestic economic recovery has adversely impacted the borrowers in certain sectors like iron and steel, mining, power, rigs and cement. While the banks are working towards resolution of stress on certain borrowers in these sectors, it may take some time for solutions to be worked out, given the weak operating and recovery environment,” Kochhar said on the additional provisioning of Rs 3,600 crore.
“This is over and above provisions made for non-performing and restructured loans as per the RBI guidelines,” she said. About Rs 7,000 crore fresh slippages came in from the asset quality review, while Rs 2,700 crore came in from restructured assets slipping into NPAs.
ICICI Life to go public
Mumbai: The board of directors of ICICI Bank has approved the sale of a part of its shareholding in ICICI Prudential Life through an initial public offering by the company, subject to market conditions and necessary approvals. “The size and other details of the offer would be determined in due course. The bank will retain majority control after the IPO,” ICICI Bank MD Chanda Kochhar said. ENS
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