ICICI Bank's Q1 profit surges 78% as bad loan buffers decline


ICICI Bank posted a 78 per cent jump in profit in the first quarter, helped by strong net interest earnings and lower bad loan buffers amid the recent deadly coronavirus wave.

Net income at India's second-largest private lender stood at 46.16 billion rupees (S$844 million) in the three months to June, compared with 25.99 billion rupees a year ago, according to a statement on Saturday. That beat an average estimate of 43.37 billion rupees by 10 analysts in a Bloomberg survey.

ICICI Bank's asset quality risk is less than its peers given the lender's large exposure to the secured mortgage and vehicle business as part of its total loan book. The bank has been growing its so-called safer retail loans at double the pace of its corporate book as a recent coronavirus wave caused a cash crunch among businesses following localised lockdowns in April and May.

"We are very comfortable with our growth," Sandeep Batra, executive director of the bank, said after the results. "It's important to look at the quality of the books we have built over the last couple of years."

The Mumbai-based bank's gross bad loan ratio widened to 5.15 per cent at the end of June from 4.96 per cent three months prior. It set aside 28.52 billion rupees towards provisioning during the first quarter compared with 28.83 billion rupees three months ago and 75.94 billion rupees a year ago.

The Reserve Bank of India has extended a one-time debt restructuring facility until September, allowing lenders to extend repayment lengths on stressed loans without having to classify them as non-performing. The relaxation will mask the true extent of soured loans in the banking system which the RBI forecasts to rise to 9.80 per cent by March 2022 from 7.48 per cent a year ago. BLOOMBERG

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