First Time In 10 Years: ICICI Bank Posts Q1 Loss Of Rs 120 Cr On Rising Bad Loans

The private sector lender, whose MD and CEO Chanda Kochhar has been forced to go on leave following conflict-of-interest allegations, had posted a net profit of Rs 2,049 crore in the year-ago period.

However, on a consolidated basis, ICICI Group posted a meagre profit of Rs 4.93 crore, compared to Rs 2,604.73 crore a year ago. Total income on consolidated basis rose to Rs 29,174.12 crore for the quarter under review, as against Rs 26,517.57 crore in the same period of the previous fiscal, ICICI Bank said in a statement. 

This is the first ever result announcement since Kochhar went on leave. A 129 per cent increase in provisions to Rs 5,971.29 crore on a jump in sour assets admitted for resolution to the NCLT and ageing of existing non-performing assets (NPAs) were the primary reasons for the loss.

The bank, which recently saw the induction of ICICI Prudential Life MD and CEO Sandeep Bakhshi as the chief operating officer, decided to increase its provision coverage ratio for sour assets by over five percentage points during the quarter to 66.1 per cent. Kochhar continues to hold her titles but is away from the day-to-day functioning of the bank, which now rests with Bakhshi.

Unlike the usual practice, the bank did not have a post-results conference call with reporters. The statement further said gains of Rs 1,110 crore on stake sale in its life insurance arm and a tax write back of Rs 85 crore helped narrow the losses.

On standalone basis, total income of the bank rose to Rs 18,574.17 crore as against Rs 16,847.04 crore in April-June, 2017-18. There was a deterioration in bank's asset quality, with gross non-performing assets (NPAs) or bad loans widening significantly to 8.81 per cent of the gross advances as on June 30, 2018, compared to 7.99 per cent at June last year.

However, the net NPA ratio decreased to 4.19 per cent at June 30, 2018 as compared to 4.86 per cent earlier. As a result, there was a surge in provisioning and contingencies, which more than doubled to Rs 5,971.29 crore as against Rs 2,608.74 crore earlier.

"While the gross additions to NPA at Rs 4,036 crore were the lowest in the last 11 quarters, additional provisions on existing NPAs as per Reserve Bank of India (RBI) guidelines (ageing-based provisions and provisions for cases directed by RBI to be referred to the National Company Law Tribunal) resulted in total provisions of Rs 5,971 crore and a net loss of Rs 120 crore," it said. 

Speaking to analysts, Bakhshi said the slippages will be lower going forward and also asserted that the bank is at the end of the NPA cycle. In absolute terms, the gross NPAs of the bank rose to Rs 53,464.94 crore as against Rs 43,147.64 crore in the same period a year ago.

The net interest margin narrowed to 3.19 per cent from the 3.23 per cent achieved during the entire fiscal 2017-18. Giving details of the provisions, it said Rs 706.78 crore were to be set aside to meet regulatory requirements on provisioning for assets being resolved under the two lists of 40 accounts being referred to NCLT.

An additional Rs 247.82 crore in provisions to exposures related to fraudulent "gems and jewellery" accounts made through the reserves and surplus had to be reversed and charged to the profit and loss account during the quarter, it said. 

The wholesale banking unit, which houses its exposure to corporates, reported a nearly five-fold increase in profit before tax at Rs 3,675 crore. The overall assets in this segment also reduced marginally on a quarter-on-quarter basis. 

Share of the low-cost current and savings account deposits moved up to 50.5 per cent from year-ago's 49 per cent. Its overall capital adequacy stood at 18.35 per cent, including 15.84 per cent in core tier-I.

Among the subsidiaries, the life insurance arm's profit dipped to Rs 282 crore from the year-ago's Rs 406 crore, general insurance arm reported a 35 per cent rise in profit to Rs 289 crore, ICICI Securities' profit grew 14 per cent to Rs 134 crore, while the same for the asset management arm narrowed to Rs 80 crore from Rs 141 crore. 

The bank scrip jumped 2.62 per cent to close at Rs 293.30 a piece on the BSE before the announcement of the results in the evening.