ICICI Bank’s net profit grew 17 per cent in the June quarter, on the back of an 18 per cent growth in net interest income. The bank continues to score well on the retail front with 26 per cent growth in retail loans leading the 15 per cent growth in overall advances.

In the past few quarters, while the bank’s strategy to focus on retail lending has been paying off well, the pressure on asset quality has been an area of concern. In this context, the moderation in the pace of addition to restructured loans in the June quarter lends comfort. The bank had been stepping up its loans recasts over the last couple of quarters. It restructured loans worth about ₹2,000 crore each in the December and March quarters. So, the sharp fall in incremental recast loans to ₹700 crore in the June quarter is a positive.

But ICICI Bank’s troubles with bad loans have been bigger than that of its peers. Its gross non-performing assets in the June quarter, at 2.69 per cent of loans, is much higher than those of HDFC Bank (1.07 per cent) and Axis Bank (1.34 per cent). The good news is that the pressure would most likely have peaked in 2013-14, and should ease in the current year as the economy starts to revive.

Moreover, strong retail performance augurs well for the bank’s profitability and growth.

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