ICICI Bank Q3 net surges 158%, asset quality improves

ICICI Bank on January 25 registered a healthy 158.4 percent year-on-year (YoY) growth in Q3FY20 profit, driven by lower provisions and recoveries from non-performing loans (NPLs).

Higher other income, net interest income (NII) and pre-provision operating profit (PPoP) also aided profitability for the country's largest private sector lender.

Net profit increased significantly to Rs 4,146.46 crore during the quarter, from Rs 1,604.91 crore in the same period last year.

NII during the quarter grew by 24.3 percent YoY to Rs 8,545.32 crore with loan growth of 13 percent YoY (to Rs 6.35 lakh crore) and 37 bps improvement in net interest margin.

Domestic advances grew 16 percent YoY and retail loan grew 19 percent YoY, the bank said, adding net interest margin for the quarter stood at 3.77 percent, higher from 3.64 percent in September quarter and 3.4 percent in December quarter 2018.

Total deposits increased by 18 percent to Rs 7.16 lakh crore, wherein CASA deposits grew 15 percent and term deposits grew 24 percent YoY.

Asset quality improved sequentially with gross non-performing assets (NPAs) as a percentage of gross advances falling 42 bps to 5.95 percent and net NPA declining 11 bps to 1.49 percent in the quarter ended December 2019.

"Overall numbers, barring a marginal increase in the watchlist, were very good on all cards. Provisions have not gone up which is a good comfort. There has been sizeable recovery during the quarter. Even reported net interest margin was higher," Siddharth Purohit of SMC Institutional Equities told CNBC-TV18.

In absolute terms, gross NPAs, as well as net NPAs, fell 4.8 percent each sequentially to Rs 43,453.86 crore and Rs 10,388.5 crore in Q3FY20 driven by better recoveries and upgrades, but slippages were higher on the quarter-on-quarter basis (QoQ).

"Recoveries, upgrades and other deletions excluding write-offs, from NPLs were Rs 4,088 crore in Q3FY20," ICICI Bank said, adding the gross additions to NPAs were Rs 4,363 crore for the quarter (against Rs 2,482 crore in the previous quarter).

The Bank's fund-based and non-fund based outstanding to borrowers rated BB and below (excluding non-performing assets) was Rs 17,403 crore during the quarter, higher compared to Rs 16,074 crore as of September 2019.

"Slippages are slightly elevated but recoveries in large accounts helped the bank contain its gross NPAs for the quarter. The increase in watchlist might be due to not only telecom exposure, but also its broking exposure which might be the case that classified under borrowers BB and below rated," Darpan Shah of HDFC Securities said.

Provisions and contingencies for the quarter at Rs 2,083.2 crore dropped sharply by 16.9 percent QoQ and 50.9 percent YoY.

Other income (non-interest income) increased 17.8 percent to Rs 4,573.98 crore YoY as fee income grew by 17 percent to Rs 3,596 crore and treasury income rose by 11 percent YoY.

Pre-provision operating profit jumped 22.8 percent to Rs 7,548.63 crore compared to the corresponding quarter last fiscal.

ICICI Bank said its consolidated profit grew by a whopping 149.2 percent YoY to Rs 4,670 crore in Q3FY20. "ICICI Life showed a 1.7 percent YoY growth in profit, ICICI General 23 percent, ICICI Securities 35.6 percent and ICICI Prudential AMC 55.6 percent," the bank said.

Its consolidated assets grew by 11 percent YoY to Rs 13.04 lakh crore for the quarter ended December 31, 2019.