Lower provisions help India's ICICI bank swing to Q1 profit

MUMBAI: ICICI Bank Ltd, India's second-largest private lender, reported a quarterly profit on Saturday compared with a loss a year earlier, helped by lower provisions and higher retail loan growth.

Net profit for the fiscal first quarter ended June 30 was 19.08 billion rupees ($277.04 million), compared with a loss of 1.20 bln rupees in the same period a year ago, the bank said in a statement.

But the profit fell slightly short of the average forecast of 20.87 billion rupees from 19 analysts, according to Refinitiv data.

ICICI, like its peers, also said India's ongoing economic slowdown weighed on its performance in the quarter.

"From an economic scenario there is a bit of a slowdown in consumption as well as in auto sales," said Sandeep Batra, Executive Director of ICICI Bank in a conference call after the results. "However, the services sector continues to do well and we are seeing an improvement in the capital expenditure cycle."

The bank's corporate loan book grew at a pace of 13% in the quarter, while its retail loan book grew 22% in the period.

ICICI, which has been under pressure lately due to rising bad loans, said net non-performing assets (NPA) at the end of the June quarter were down 51% to $1.17 billion. The net NPA was at a 14-quarter low of 1.77%, said the bank's management.

Quarterly provisions fell to $507 million from $865 million a year ago.

Net interest margin, a key indicator of the bank's profitability, was 3.61% in the quarter, compared with 3.19% in the year-ago quarter.

The total capital adequacy ratio of the bank was 16.19% and it does not have any immediate plans to raise capital, said Batra.

Earlier in the week, ICICI's peer Kotak Mahindra Bank Ltd also reported a profit that fell marginally shy of estimates, and joined the country's largest private lender HDFC Bank in warning of the slowing pace of domestic growth.

The warnings from the private lenders in Asia's third largest economy, which have been dealing with a large pile of stressed loans, have spooked investors.