ICICI Bank Q4 net profit jumps but lags estimates

Posted May 04, 2017

In terms of profitability, ICICI Bank reported a 17.08 percent sequential drop in net profit to Rs 2,024.64 crore for the January to March 2017 quarter, compared to Rs 2,441.82 in the December 2016 ended quarter.But year-on-year, the bank's net profit soared 188.45 percent, compared to a lower Rs 702 crore profit figure a year earlier. The net interest income increased by 10 per cent to Rs 5,962 crore while its fee income increased 11 per cent to Rs 2,446 crore.

"We also expect some of the resolutions to get completed during the year, we also expect some upgrades from NPAs", Kochhar said on a conference call.The amount of bad loans at the Mumbai-based bank rose 335 billion rupees on a gross basis during its last fiscal year.

For the full year, net loss reported to Rs 1372.51 crore in the year ended March 2017 as against net profit of Rs 100.69 crore during the previous year ended March 2016.

Besides this, there were Rs 5,911 crore additions to the gross NPAs.

Indian banks have seen their bad loans surge in the past year or so after an asset quality review ordered by the central bank as part of a clean-up exercise.

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The bank's earnings were impacted by higher provisioning for bad loans, which stood at Rs 15,208 crore for FY2017, against Rs 8,067 crore in FY2016. "This account was included in the drill-down exposures to key sectors disclosed by the bank and an M&A (merger and acquisition) transaction has been announced in respect of this company", the bank said. Such an account was over and above the provisions made for non-performing and restructured loans under RBI guidelines.

Besides, the bank's domestic advances grew by 14 per cent on a YoY basis, while the retail portfolio increased by 19 per cent year-on-year and constituted 52 per cent of the total portfolio at March 31, 2017.

Several public sector banks have been struggling to cope with rising bad loans and higher provisions to cover for a risk of defaults.

ICICI also said it would issue one free share for every 10 held.Shares in the lender, valued at about $25 billion, fell about 1 percent on Wednesday ahead of the results released after the market close.The stock is up 6.8 percent so far in 2017, lagging a 22.7 percent gain in the banking sector index and a 13.8 percent rise in the main market index.

He recommends to buy ICICI Bank with a target price of Rs 315.