Last updated: 02 Nov, 2020 | 09:14 am
ICICI Bank Ltd., has for the quarter ending September 2020, has declared a 6-fold jump in profits year-on-year, amidst increasing provisions.
Net Profit: Net profit was at ₹ 4,251 crore, the highest quarterly profit reported by the lender. The increase in profit is attributable to a 20% rise in operating profit, decrease in tax expense by 70% year-on-year and no additional provisioning for Covid-19 induced bad loans.
Net Interest Income (NII): NII was up 16% year-on-year to ₹ 9,366 crore, however Net Interest Margin (NIM) was down by 7bps year-on-year and 12bps quarter-on-quarter at 3.57%.
Provisions: Covid provisions are set to cushion the bank’s balance sheet as the bank didn’t utilize any Covid-19 related provision in the September quarter. The bank’s provisions were at ₹ 2,995 crore for the quarter, an increase of 19.5% year-on-year, the numbers,however included ₹ 497 crore in provisions that the bank had made on prudent basis on loans amounting to ₹ 1,410 crore, which were not classified as non-performing pursuant to Supreme Court’s interim order.
Operating Expenses: Operating expenses declined 4.6% year-on-year to ₹ 5,133 crore.
Asset Quality: Gross NPA ratio declined 29bps quarter-on-quarter to 5.17%, while Net NPA ratio declined 23bps to 1% in the same period showing improvement in asset quality. These NPA ratios measures the gross and net non-performing assets as a percentage of total loans.
Loan & Deposit Growth: Average Savings account and current account deposits increased by 15.4% and 20.7 % year-on-year. Domestic loans grew by 10.3% year-on-year.
Equity: The bank, during the quarter raised ₹ 15,000 crore through Qualified Institution placement.
a. Provision coverage ratio: The provision coverage ratio, measures the ability of banks to service its debt and meet its financial obligations such as interest payments or dividends, stood at 0.815 for quarter ending September 2020.
b. Tier 1 Capital Ratio (CET1)- From regulators point of view, this ratio measures the bank’s financial strength, with core capital in the numerator and total risk weighted assets in the denominator. The ration was at .1654, which shows bank’s strengthened capital adequacy.
ICICI Bank traded 7% up in early hours Monday on account of robust results. The management has reassured that buffer provision of 1.5% is adequate with normalcy expected starting next fiscal, also the asset quality is positive with level of collection at most retail segments reaching 97% pre Covid-19 levels. A 12% CASA growth suggests faster loan growth for the bank going forward.