ICICI Bank Q1 takeaways: Pick up in disbursements, fall in provisions & more

Here are the key takeaways from the quarterly results:

Profit in line, NII beats expectations
ICICI Bank’s 78 per cent rise in June quarter was largely in line with an ETMarkets.com poll estimate of 77 per cent growth.

The bottonline growth was lower than 260.47 per cent growth in profit the bank reported in March quarter, but higher than 36 per cent profit growth it reported in the year-ago quarter.

NII growth for the quarter at 15-16 per cent beat expectations. Analysts at an ET NOW poll had expected NII growth at 14 per cent.

Disbursements pick up

ICICI Bank said retail disbursements have picked up in June and July after moderating in April and May due to Covid containment measures in place across various parts of the country.

The disbursement levels, it said, recovered to March levels in June, driven by spending in categories like consumer durables, utilities, education, and insurance. Credits received in the overdraft accounts of business banking and SME customers also picked up in June and July after declining in April and May, it said.

Provisions fall, NPA rises marginally

ICICI Bank said it has changed its policy on non-performing loans during the June quarter to make it more conservative. Provisions for the quarter fell 63 per cent to Rs 2,852 crore from Rs 7,594 crore against expectations of up to 70 per cent fall. This could be due to the bank’s policy change, which the bank said resulted in higher provision on non-performing advances amounting to Rs 1,127 crore for aligning provisions on outstanding loans to the revised policy.

Gross non-performing assets, meanwhile, rose to 5.15 per cent against 4.96 per cent in the March quarter and 5.46 per cent in the year-ago quarter.

Recoveries and upgrades of NPAs, excluding write-offs and sale, stood at Rs 3,627 crore. The bank wrote off Rs 1,589 crore worth gross NPAs in June quarter. Excluding NPAs, the total fund-based outstanding to all borrowers under resolution as per the various extant regulations was Rs 4,864 crore or 0.7 per cent of the total loan portfolio.

Uncertainty still looms
In the absence of regulatory dispensations like moratorium on loan repayments and standstill on asset classification, the impact on the quality of the loan portfolio would likely be sharper and earlier during FY22, the bank said.

“The impact, including with respect to credit quality and provisions, of the Covid-19 pandemic on the bank and the group, is uncertain and will depend on the trajectory of the pandemic, progress and effectiveness of the vaccination programme, the effectiveness of current and future steps taken by the government and central bank to mitigate the economic impact,” it said.

Retail loan growth up 20%, SME 43%
Retail loan portfolio comprised 61.4 per cent of the total loan portfolio as of June 30. Including non-fund outstanding, retail accounted for 50.4 per cent of the total portfolio as on June 30.

For the quarter, the credit growth for the retail segment stood at 20 per cent. The business banking portfolio climbed 53 per cent YoY and was 5.4 per cent of total loans on June 30. The SME business, comprising borrowers with a turnover of less than Rs 250 crore, advanced 43 per cent year-on-year and accounted for 4 per cent of total loans as on June 30.

“Growth in the domestic corporate portfolio was about 11 per cent year-on-year, driven by disbursements to higher-rated corporates and public sector undertakings across various sectors. The growth in performing domestic corporate portfolio, excluding the builder portfolio, was 15 per cent year-on-year on June 30, 2021,” it said. Overall, the credit growth was up 20 per cent, while deposit growth rose 16 per cent.

Subsidiaries reported mixed growth
Subsidiaries reported mixed growth.

, on a consolidated basis, saw 61 per cent YoY jump in profit at Rs 311 crore from Rs 193 crore YoY. ICICI Prudential Asset Management Company clocked 48 per cent year-on-year jump in profit at Rs 380 crore compared Rs 257 crore YoY. The profit after tax at General Insurance Company fell to Rs 152 crore from Rs 398 crore. Overall, ICICI Bank’s consolidated profit after tax came in at Rs 4,747 crore compared with Rs 4,886 in the March quarter and Rs 3,118 crore in the year-ago quarter.