ICICI Bank shares slumped over 5 per cent on Friday after India's biggest private sector lender by assets reported a sharp rise in bad loans. The slump in ICICI Bank shares impacted sentiments across banking stocks. The Nifty Bank, sub-index of banking stocks, traded 1.2 per cent lower as compared to 0.4 per cent rise in the broader Nifty.
Here is a 10-point cheat-sheet to the story:
1) ICICI Bank's bad loans as a percentage of total loans widened to 4.72 per cent in the December quarter, from 3.77 per cent in the previous three months. Provisions, including for loan losses, tripled to Rs 2,844 crore.
2) ICICI Bank's standalone net profit rose 4.5 per cent to Rs 3,018 crore, in line with estimates. The profit was helped by tax adjustments, analysts said.
3) The sharp rise in bad loans was on account of Reserve Bank's order asking lenders to treat some stressed borrowers as non-performing even if they have not defaulted yet.
4) About 60 per cent of ICICI Bank's bad loan additions of Rs 6,544 crore in the December quarter were due to the RBI directive on asset reclassification, said Chanda Kochhar, CEO of ICICI Bank. She cited steel and power as troubled sectors, without naming any companies.
5) ICICI Bank gave guidance of a similar amount of slippage for the March quarter. The management refrained from giving any guidance for FY17 and looked less confident on a significant turnaround in asset quality soon.
6) Brokerages were quick to cut their earnings estimate from ICICI Bank post Q3 numbers. Credit Suisse slashes ICICI Bank's earnings per share (EPS) estimate by 9-10 per cent, while CLSA lower its EPS estimate by 7-10 per cent.
7) Banking sector expert Hemindra Hazari said the problem at ICICI Bank is just the beginning of a "huge tsunami". "For some time now, market has believed that new private sector banks are a special breed and they are immune to economic slowdown which was impacting government banks. Now, wisdom is dawning rather late on markets after ICICI Bank results, that even Yes Bank and Axis Bank may have similar problems," he added. (Watch)
8) Axis Bank, India's third-biggest private sector lender, last week reported rise in bad loans due to the RBI move.
9) Public sector banks continue to report rising bad loans. On Thursday, state-run Syndicate Bank reported a surprise Rs 120 crore-loss on account of rising bad loans. (Read)
10) Indian banks have seen a surge in their bad and restructured loans in the past three years as an economic slowdown squeezed companies' profitability and their ability to service debt. The dominant state-run lenders, led by State Bank of India, have yet to report December quarter earnings.
ICICI Bank shares closed off the day's low, down 1.3 per cent at Rs 230.15. They however underperformed the broader Nifty, which closed with nearly 2 per cent gains.
(With inputs from Reuters)
Get Breaking news, live coverage, and Latest News from India and around the world on NDTV.com. Catch all the Live TV action on NDTV 24x7 and NDTV India. Like us on Facebook or follow us on Twitter and Instagram for latest news and live news updates.