This Article is From Jul 25, 2020

ICICI Bank June Quarter Profit Rises 36% To Rs 2,599 Crore, But Misses Street Estimates

The private sector lender had posted a net profit of Rs 1,908.03 crore for the corresponding period a year ago.

ICICI Bank June Quarter Profit Rises 36% To Rs 2,599 Crore, But Misses Street Estimates

ICICI Bank said its provisions declined 42% on a year-on-year basis

ICICI Bank on Saturday reported a 36.22 per cent rise in net profit to Rs 2,599.15 crore in the quarter ended June 30 compared to the corresponding period a year ago, but missed analysts' estimates. Provisions for bad loans by the country's third largest private bank by market capitalisation rose sharply to account for the impact of the coronavirus pandemic. In a regulatory filing, said its total income from operations came in at Rs 26,066.95 crore, up 21.78 per cent compared to the year-ago period. On Friday, ICICI Bank shares had ended 2.66 per cent lower at Rs 381.85 apiece on the BSE, underperforming the benchmark Sensex index which recovered most of the day's losses to close on a flat note.

Here are 10 things to know:

  1. The net profit fell short of analysts' estimates. Analysts had on average estimated the lender's profit at Rs 2,747 crore, news agency Reuters reported citing Refinitiv data.

  2. ICICI Bank said its total interest income stood at Rs 19,924.35 crore in the first quarter of current financial year, up 10.81 per cent on a year-on-year basis.

  3. The lender's net interest income - or interest earned minus interest expended - climbed up 19.93 per cent to Rs 9,279.75 crore.

  4. The bank's net interest margin (NIM) - a key measure of profitability - was at 3.69 per cent in the quarter ended June 30, 2020, as against 3.87 per cent in the previous quarter, and 3.61 per cent in the quarter ended June 30, 2019. The improvement in margin was aided by an increase in deposits and weak credit demand due to a nationwide lockdown to curb the spread of COVID-19.

  5. ICICI Bank said its provisions - excluding those related to COVID-19 - declined 42 per cent compared to the year-ago period. The lender said it made additional provision to the tune of Rs 5,550 crore related to COVID-19, with the objective of completely cushioning the balance sheet from the impact of the pandemic.

  6. The additional provisions were "with the objective of completely cushioning the balance sheet from the impact of COVID-19," president Sandeep Batra said on a post-earnings conference call.

  7. "We continue to live in uncertain times," he said. "From our perspective we wanted to be prudent and that is the reason why we made this provision."

  8. Gross non-performing assets - or bad loans - as a percentage of total loans came in at 5.46 per cent in the first quarter of financial year 2020-21, as against in 5.53 per cent in the previous quarter, and 6.49 per cent in the quarter ended June 30, 2019.

  9. The impact of COVID-19 is highly uncertain and will depend on its ongoing spread, the effectiveness of steps taken by governments, central banks and ICICI Bank, and the time it takes for economic activities to return to pre-pandemic levels, it said.

  10. Asset quality of banks in India is expected to take a severe hit due to the coronavirus-led economic crisis. The country's central bank has warned the bad loans in the banking system could soar to almost 15 per cent of total loans by March 2021.