ICICI Bank's stressed loans more than double to Rs32,179 cr

Private sector lender ICICI Bank saw a doubling of bad loans in the quarter ended 30 September, in what could be seen a wider spread of the non-performing asset problem in the already sluggish banking sector.

ICICI Bank Ltd on Monday reported a more-than doubling of its gross non-performing assets (GNPAs) year-on-year to Rs32,179 crore at the end of September 2016 – perhaps the highest in 10 years - from Rs15,858 crore as of end-September 2015.

India's largest private sector bank, however, reported a marginal increase in its net profit at Rs3,102 crore in the July-September quarter. ICICI Bank had had recorded a net profit of Rs3,030 crore in the year-ago quarter.

The gains were due mainly from selling a part of the stake in its life insurance subsidiary and deferred tax adjustment.

Provisioning for bad loans rose sharply to Rs7,082 crore in the second quarter of the current fiscal from Rs2,514 crore in the first quarter and Rs942 crore in the year-ago quarter.

While gross non-performing assets (GNPAs) more than doubled year-on-year from ?15,858 crore as at September-end 2015 to Rs32,179 crore,

Net interest income (the difference between interest earned and interest expended) of ICICI Bank was flat at Rs5,253 crore in the second quarter against Rs5,251 crore last year.

The bank, however, found some solace in the fact that its potentially troubled loans had, in fact, declined from Rs38,700 crore at the end of June 2016 to about Rs32,500 crore as of 30 September 2016.

''We expect a significant further reduction in this portfolio in the next six to nine months,'' Chanda Kochhar, managing director and CEO of ICICI Bank, said on a conference call, referring to clients the bank considers below investment-grade.

Kochhar declined to give any guidance on the percentage of loans included in the watchlist that are likely to slip into the 'bad loan' category.

Thanks to the realisation of Rs5,682 crore on selling 12.63 per cent stake in its life insurance subsidiary ICICI Prudential Life via an IPO, the bank's non-interest income jumped to Rs9,120 crore (Rs3,007 crore in the year-ago quarter).

The bank also benefited from higher deferred tax adjustment (DTA) of Rs1,247 crore, which helped prop up profits in the quarter. The bank saw a DTA of Rs214 crore in the year-ago quarter.

GNPAs increased by Rs4,985 crore in the reporting quarter. GNPAs as a percentage of gross advances shot up to 6.82 per cent as of end-September 2016 from 3.77 per cent as of end-September 2015.