Lender makes additional ₹5,550 crore provision to cushion balance sheet from impact of COVID-19
ICICI Bank Ltd. on Saturday reported first-quarter standalone profit after tax rose 36% to ₹2,599 crore, from ₹1,908 crore a year earlier.
Core operating profit increased by 15% to ₹7,014 crore, while net interest income (NII) grew by 20% to ₹9,280 crore.
The net interest margin inched up to 3.69%, from 3.61% a year earlier, reflecting the higher liquidity with the bank due to strong deposit inflows and limited credit demand due to the lockdown, the bank said in a regulatory filing.
Fee income slid to ₹2,104 crore, from ₹3,039 crore, reflecting lower business volumes and customer activity in view of the lockdown.
The bank reported treasury income of ₹3,763 crore, including ₹3,036 crore realised from the sale of stakes in ICICI Lombard and ICICI Prudential.
The bank also made an additional COVID-19 related provision of ₹5,550 crore. “Theadditional provisions have been made to completely cushion the balance sheet of the bank from the impact of COVID-19,” Sandeep Batra, president, said in a conference call.
Mr. Batra said the bank held COVID-19 related provisions amounting to ₹8,275 crore as of June 30, and that the additional provision ensured that the bank had set aside more than was required as per the RBI’s guideline of April 17.
Stake sale boost
“The bank prudently utilised large gains on partial stake sale in insurance subsidiaries for significantly augmenting COVID-19 related provisioning pool [now at 1.3% of loan book],” said Rajiv Mehta, lead analyst, Institutional Equities at Yes Securities.
“The impact of COVID-19 pandemic on the bank is highly uncertain and will depend on the ongoing spread of COVID-19,” the lender said in the filing. “The bank’s capital and liquidity position is strong and would continue to be the focus area for the bank during this period,” it added. “The slowdown in the economy is expected to result in higher additions to non-performing loans, increase in provisions, lower loan growth and fee income,” the bank said.
Total advances of the bank increased by 7% to ₹6,31,215 crore. Total deposits increased by 21% to ₹8,01,622 crore. Average savings account deposits increased by 14% year-on-year.
Gross additions to NPAs were ₹1,160 crore. Recoveries and upgrades, excluding write-offs, from non- performing loans were ₹757 crore. The net NPA ratio declined to 1.23% as of June 30, from 1.41% as on March 31.
Total capital adequacy, including first-quarter profit, was 16.3% and Tier-1 capital adequacy was 14.9%.
Consolidated net profit rose to ₹3,118 crore, from ₹2,514 crore a year earlier.
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