Money & Banking

ICICI Bank Q4 profit plunges 50% to ₹1,020 crore as provisions rise

Our Bureau Mumbai | Updated on May 07, 2018 Published on May 07, 2018

Kochhar says loan allegations not discussed; board to meet again today

Private sector lender ICICI Bank on Monday posted a 49.6 per cent drop in its standalone net profit to ₹1,020 crore in the fourth quarter ended March 31, 2018, with a sharp rise in its provisions for bad loans. Its net profit in the fourth quarter of 2016-17 was ₹2,025 crore.

The board, which met amidst allegations of a quid pro quo in loans given by the bank to a few companies, will meet once again on Tuesday to approve the results.

“The board has already made its stance very clear and we don’t have anything more to add,” said Chanda Kochhar, Managing Director and CEO, ICICI Bank, adding that there was no discussion on the allegations in Monday’s meeting.

“Since it is the beginning of the year, the board will meet again on Tuesday to discuss the strategy and the budget planning,” she said, when asked about the agenda, terming it as a “routine procedure”.

However, sources said the meeting is not standard procedure and that the directors could discuss the allegations.

The government nominee on the bank’s board, Lok Ranjan, Joint Secretary, Department of Financial Services, did not attend the meeting.

In a statement on March 28, the board had staunchly supported Kochhar and denied the allegations of a quid pro quo between the Videocon Group and her family members, including her husband Deepak Kochhar and his company, NuPower Renewables, for a ₹3,250-crore loan given by the bank in 2012.

The Central Bureau of Investigation and the income-tax authorities are now looking into the issue.

Full-year profit down 30%

The standalone net profit of the bank also declined by 30.8 per cent for the financial year 2017-18 to ₹6,777.42 crore, from ₹9,801.09 crore in the previous fiscal.

ICICI Bank also reported a 45 per cent decline in consolidated net profit to ₹1,142 crore for the fourth quarter ended March 31, 2017-18.

Gross non-performing assets as a percentage of gross advances rose to 8.84 per cent for the fourth quarter from 7.82 per cent in the December quarter and 7.89 per cent in the year-ago quarter. “Gross NPA additions of ₹15,737 crore took place in the fourth quarter of 2017-18. This includes ₹9,968 crore of loans that were under RBI schemes and were classified as standard at December 31, 2017,” the bank said in a release.

Net NPAs were at 4.77 per cent in the quarter ended March 31, compared to 4.20 per cent in the third quarter and 4.89 per cent in the fourth quarter a year ago.

Kochhar said the bank would focus on lowering net NPAs to 1.5 per cent by March 2020.

Provisions for bad loans

Provisions for bad loans jumped 128.61 per cent in the fourth quarter to ₹6,625.75 crore from ₹2,898.22 crore a year ago. For 2017-18, provisions rose by 13.8 per cent to ₹17,306.98 crore.

The bank has classified three borrower accounts in the gems and jewellery sector as fraudulent and non-performing with fund-based outstandings of ₹794.87 crore.

Net interest income rose 1 per cent to ₹6,022 crore for the quarter from ₹5,962 crore a year ago.

Net interest margin increased to 3.24 per cent from 3.14 per cent.

“A lot of stress has been recognised and the focus will now be on recovery and resolution,” Kochhar said, adding that the lender plans to increase its retail loans to 60 per cent of overall loans while decreasing its exposure to overseas loans to 10 per cent of the whole loan book.

It will also continue to do corporate and project loans but the exposure will be smaller, she added.

The board of directors has also recommended a dividend of ₹1.50 per equity share for 2017-18.

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Published on May 07, 2018

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