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Business News/ Companies / Company-results/  ICICI Bank Q1 net profit rises 12% to Rs2,976.16 crore
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ICICI Bank Q1 net profit rises 12% to Rs2,976.16 crore

Net interest income rose 13.9% to `5,115.09 crore from `4,491.89 crore last year

Net interest income, or the difference between interest earned on loans and that paid on deposits, rose 13.9% to Rs5,115.09 crore from Rs4,491.89 crore last year. Photo: Hemant Mishra/MintPremium
Net interest income, or the difference between interest earned on loans and that paid on deposits, rose 13.9% to Rs5,115.09 crore from Rs4,491.89 crore last year. Photo: Hemant Mishra/Mint

Mumbai: ICICI Bank Ltd, India’s second largest lender by assets, on Friday posted a 12% increase in net profit during the fiscal first quarter as it benefited from higher demand for loans from individual borrowers.

Net profit in the three months ended 30 June rose to 2,976 crore, or 5.09 per share, from 2,655 crore, or 4.56 per share, a year ago. The profit was slightly higher than the 2,916 crore estimated by a Bloomberg poll of 30 analysts.

Net interest income, or the difference between interest earned on loans and that paid on deposits, rose 14% to 5,115 crore from 4,492 crore. Total advances at the bank, including international advances, rose 15% to 3.99 trillion from 3.47 trillion a year ago.

The bank’s other income, or income earned from fees, trading in foreign exchange and gains on revaluation or sale of investments, rose just 5% to 2,989.89 crore from 2,849.81 crore in the same period last year. Managing director and chief executive officer Chanda Kochhar said the slow growth was mainly due to subdued corporate activity.

ICICI’s net interest margin or the difference between the interest it earns on loans and that it pays on deposits improved to 3.54% in June from 3.4% a year earlier.

The bank’s shares rose 4% on the BSE on Friday, while the benchmark Sensex gained 1.48%. Investors cheered the fact that additions to non-performing assets (NPAs) were surprisingly small.

NPAs, though higher than last year, were down from the quarter ended March. Net NPAs eased slightly to 1.58% of total advances from 1.61% in March, though higher than 0.99% in June last year.

Gross NPAs, at 3.68% of total loans, was a positive surprise compared with expectations of 4%, said Ravi Shenoy, vice president of research at Motilal Oswal Securities Ltd.

Kochhar said the rate of additions of fresh NPAs had halved compared with March quarter indicating “stability on new formation of stressed assets".

ICICI Bank added 1,672 crore to its total NPAs during the quarter, down from 3,260 crore added in the quarter ended March but higher than 1,200 crore added in the year-ago quarter.

“We have been monitoring asset quality and have seen some stability. Though nothing is cast in stone and the environment is volatile, we are seeing some activity in leading indicators like heavy commercial vehicles, mining and coal which, if it materializes, will bring back growth," Kochhar said.

Punit Srivastava, head of research at Daiwa Capital Markets India Pvt. Ltd, said that though the bank had managed to rein in NPAs for now, the risk of bad loans rising remains.

Kochhar said the bank has been concentrating on “recoveries, asking promoters to sell assets and making our loan book more granular" in order to keep NPAs on a leash.

The bank recovered 550 crore of loans during the quarter and sold another 500 crore to asset reconstruction companies.

Demand for loans from individuals to buy homes and cars rose 25%, which helped the bank make up for slower 9% corporate growth.

Kochhar said that though corporate loans are growing at a slower pace, companies, especially the highly rated ones, are seeking funds to expand existing projects and also for working capital.

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Published: 31 Jul 2015, 12:48 PM IST
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