ICICI Bank profit down 50%, board silent on Chanda Kochhar

May 7, 2018

ICICI Bank Ltd reported a 50% drop in its fiscal-fourth quarter profit as it set aside cash to cover a surge in bad loans, a fallout of the central bank’s revised scheme on resolution of stressed assets.

Even as the board, sans government nominee director Lok Ranjan who skipped the meeting, approved the results on Monday, it stayed mum on the controversy surrounding its chief executive officer Chanda Kochhar on allegations of conflict of interest with respect to loans made to Videocon Group. 

In a post-earnings conference call, Kochhar said that, “Today, there was no discussion at all on this issue…Board has made its stance very clear and we do not have anything more to add”.

The board will meet again on Tuesday, although little is expected to be discussed on the controversy with Kochhar saying that it was a routine meeting, conducted every year after the announcement of annual results, to finalize planning and budget. 

The bank reported a net profit of Rs1,020 crore for the three months ended 31 March, compared with Rs2,024.64 crore in the year-ago period. Profit was in line with the Rs1,060.8 crore estimated by a Bloomberg poll of 18 analysts. 

Loan slippages in the March quarter rose to Rs15,737 crore from Rs4,380 crore in the last quarter. Of these, Rs9,968 crore was from loans under various restructuring schemes of the Reserve Bank of India (RBI) and were standard as at the end of December.

The bank’s total gross non-performing loans stood at Rs54,063 crore at the end of March compared with Rs46,039 a quarter ago. 

Gross non-performing assets (NPAs), as a percentage of total advances, were at 8.84% in the March quarter compared with 7.82% in the December quarter and 7.89% in the year-ago quarter. 

Provisions during the March quarter surged 129% to Rs6,625.75 crore from Rs2,898.22 crore in the year-ago quarter.

The bank also disclosed that it has made a full provision of nearly Rs795 crore, partly through profit and loss account and debiting reserves and surplus, in the fourth quarter towards three accounts from the gems and jewellery sector, which are classified as fraud and NPA. 

Kochhar said that the impact of RBI’s February circular on stressed assets was taken into account in the March quarter itself. 

“We believe that since a lot of the stress is already recognized, going forward, our focus will be on recovery and resolution. And while there would be some additions to NPAs with the focus on recovery we will work to bring down the net NPA ratio to 1.5% in two years’ time,” she said. 

Currently, net NPA stands at 4.77%.


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