homefinance News

ICICI Bank Q4: Almost a third of book under moratorium, bank triples provision from last quarter

ICICI Bank Q4: Almost a third of book under moratorium, bank triples provision from last quarter

ICICI Bank Q4: Almost a third of book under moratorium, bank triples provision from last quarter
Profile image

By Ritu Singh  May 9, 2020 8:32:49 PM IST (Updated)

The country’s largest private lender ICICI Bank said almost 30 percent of its total book is under the three month moratorium permitted by Reserve Bank of India (RBI) under the March 27 circular.

The country’s largest private lender ICICI Bank said almost 30 percent of its total book is under the three month moratorium permitted by Reserve Bank of India (RBI) under the March 27 circular.

Recommended Articles

View All

"Almost 30 percent of our total book- retail, wholesale all assets included- is under moratorium,” said Sandeep Batra, executive director at ICICI Bank in a concall with the media, which is similar to the level disclosed by Axis Bank in their earnings recently, at 28 percent.
Other banks like RBL Bank and Yes Bank also disclosed that at least 33 percent of their loan books are under moratorium at the moment.
A back of the envelope calculation shows that of its total loan book of Rs 6,45,290 crore, almost Rs 1,93,587 crore of its book is under a three-month moratorium or pause in repayments by its customers. This Rs 1.93 lakh crore is the amount of loans that its customers are unable to service due to COVID-19 related hardship, or simply to conserve cash in this environment.
While the bank has provided more than what RBI norms require it to, the risk of these loans turning bad is significant, given the improbability of normal economic activity resuming anytime soon.
“From an RBI (required level of provision against accounts under moratorium) perspective, we would have to make a provision of only Rs 600 crore,” explained Batra, adding that the remaining provisions from the total of Rs 2,725 crore set aside for COVID-19 impact, was prudently made to strengthen the balance sheet in this uncertain times.
The bank reported its lowest net non-performing asset ratio in the past 19 quarters, a record high net interest margin, and a steady loan and deposit growth for the quarter ending March. Yet, it could not meet street expectations when it came to its bottom-line.
Profit grew 26 percent to Rs 1,221 crore for the quarter ending March against Rs 969 crore during the same quarter last year. A CNBC-TV18 Poll had estimated profit after taxe of over three and a half times that figure, at Rs 4,366 crore for Q4.
Rs 5,967 crore in provisioning for the quarter, almost triple the provisions of the previous quarter, dented profitability to an extent. This included coronavirus-related provisions of Rs 2,725 crore. Its provisions in the previous quarter were Rs 2,083 crore and at Rs 5,451 crore in Q4 of FY19.
On other parameters, including asset quality, the bank reported an improvement. Its gross non-performing assets (GNPA) ratio improved to 6.04 percent of gross advances versus 6.39 percent in the previous quarter, and its Net NPA ratio improved to 1.54 percent from 1.60 percent in the quarter before.
As a percentage of gross non-performing customer assets (net of write-off) to gross customer assets, its gross NPA ratio improved to 5.53 percent from 5.95 percent in Q3 and net NPA ratio to 1.41 percent from 1.49 percent in the previous quarter. The bank said this net NPA ratio was the lowest it had reported in the last 19 quarters.
However, gross bad loans additions, or slippages for the quarter remained elevated at Rs 5,306 crore against Rs 4,363 crore in Q3. The bank, in a call with the media, said the slippages rose due to two accounts from healthcare and oil companies, which the bank did not name. It said that both of these accounts slipped during the quarter and were adequately provided for, such that they would have no future impact on the P&L. The oil account is understood to be Singapore-based troubled oil trader Hin Leong Trading, which the bank had previously disclosed its exposure of $100 million to.
Recoveries and upgrades, excluding write-offs, from non-performing loans were Rs 1,883 crore in Q4. Net non-performing assets reduced by 26 percent from Rs 13,577 crore at March 31, 2019 to Rs 10,114 crore at March 31, 2020.
The fund-based and non-fund based outstanding to borrowers rated BB and below, which are risky loans as perceived by the bank- stood at Rs 16,668 crore as of March 31, compared to Rs 17,403 crore as of December 31, 2019. Almost Rs 1,800 crore slippages came from this low rated book, the bank said.
At a time when several private sector banks like Yes Bank, RBL Bank and IndusInd Bank saw large deposit withdrawals in the aftermath of the Yes Bank episode, ICICI Bank reported an 18 percent rise in deposits over the previous year. Its advances overall also grew by 10 percent over FY2019, with a 13 percent growth in domestic advances led by a 16 percent growth in the retail segment.
Batra did not give any forward looking guidance over the media concall, saying the outlook would depend on economic activity resuming, lockdown lifting, and until then, the bank would have to “play it by the day,” he said.
Going ahead, the bank said in its investor presentation, it would further strengthen its internal synergy and capability to capitalise on market opportunity, closely monitor its portfolio, and target a risk-calibrated profitable growth, while maintaining strong balance sheet.
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!

Top Budget Opinions

    Most Read

    Market Movers

    View All
    Top GainersTop Losers
    CurrencyCommodities
    CompanyPriceChng%Chng