The Hindu Business Line : ICICI Bank Q2 net rises 30 pc

ICICI Bank has reported a 30 per cent rise in net profit at Rs 755.01 crore in the second quarter against Rs 580.05 crore in the same period last year.

The increase in profit was contributed mainly by higher interest and fee income, said Ms Vishakha Mulye, Group Chief Financial Officer, ICICI Bank.

Net interest income increased 47 per cent to Rs 1,577 crore (Rs 1,070 crore) and fee income by 62 per cent to Rs 1,138 crore (Rs 704 crore).

Analysts said the bank's profits bettered expectations. "The bank's results have beaten market expectations. We expected a profit of around Rs 700 crore for the quarter," said a banking analyst.

Total income for the quarter was 58 per cent higher, at Rs 7,039.56 crore (Rs 4,440.88 crore).

Provisioning has increased, to Rs 709.34 crore (Rs 303.79 crore) and is partly made up of the premium amortisation on government securities, at Rs 243 crore (Rs 184 crore) and rise in standard asset provisions to Rs 87 crore (Rs 24 crore).

"Because of the increase in our assets, the standard provisioning has also increased, as the RBI has raised provisioning on standard assets from 40 to 100 basis points," Ms Mulye said. Net interest margin (NIM) climbed marginally to 2.5 per cent (2.2-2.3 per cent). The NIM has been hit by the RBI decision to scrap interest payment (5 per cent) on cash reserves statutorily held by banks with the central bank, Ms Mulye said.

The cost of deposits is currently at 6.2 per cent. "Despite the cost of deposits going up, the yield on advances has also moved up, to help maintain our NIM," she explained.

Retail assets

The bank saw an increase of 57 per cent in retail assets to Rs 1,07,679 crore (Rs 68,537 crore). Retail assets form 69 per cent of total advances.

Total retail disbursements as on September 30, amounted to Rs 33,500 crore including home loan disbursements of about Rs 13,400 crore.

When asked if provisioning would go up on a larger portfolio of retail assets, Ms Mulye said it was unlikely. "The increase in retail assets is not abnormal and our portfolios are mature," she added.

In the second quarter, the bank raised hybrid Tier I capital worth $340 million from international markets and Rs 800 crore from the domestic markets. It also picked up Rs 1,200 crore through issue of upper Tier II bonds in the local market. The average interest cost of the domestic Tier I capital is about 10 per cent and that of upper Tier II capital is 9.25 per cent. The capital adequacy ratio of the bank is 14.34 per cent (11.52 per cent).

Shares of ICICI Bank closed at Rs 720.55 on Monday down 2.34 per cent from the earlier close of Rs 737.85, on the BSE.

Net non-performing assets constituted 0.9 per cent of total advances, as against 1 per cent a year ago.

On interest outflows, Ms Mulye claimed the funds raised should be compared with equity and not with debt.

ICICI bank is zeroing in on non-fund based products and services and extending its reach to small and medium enterprises (SME). Its rural portfolio has grown by 70 per cent on a year-on-year basis.

Internationally the bank is present in 14 locations contributing to 16 per cent of the total balance sheet. "We are looking to widen the geography," Ms Mulye added.

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