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ICICI Bank Q4 Net Jumps 3-fold; Bad Loans Spike To Record High

ICICI BankBSE 9.40 % posted a nearly threefold jump in fourth-quarter net profit as its cost of funds and provisions reduced, even as a regulatory directive meant bad loans at the nation’s largest private sector lender surged to a record.

Operating profit plunged 28% in the past quarter amid deteriorating corporate loan performance, but the bank’s board positively surprised investors with a bonus share issue.

The management also painted a rosy picture for the fiscal year that just started, showing determination to improve on bad loan recoveries and post a decline in accumulation of bad loans.

“We believe that the NPA additions for the new financial year will be significantly lower than FY17”, Chief Executive Chanda Kochhar told reporters. “We also expect some of the resolutions to get completed and we also expect some upgrades from NPAs.”

Net profit for the January-March quarter rose to Rs 2,025 crore from Rs 702 crore a year earlier, but missed the 2,204 crore average of estimates in a Thomson Reuters poll of analysts. Other income fell 41% to Rs 3,017 crore.

The bank said its board decided to issue one share for 10 fully paid-up equity share held by investors. It also declared a dividend of Rs 2.50 per share. “That is a board’s decision looking at the overall performance of the company”, Kochhar said.

At a time when the profitability of the private lender has remained under pressure -for the just-ended fiscal year, net interest income growth was the lowest in eight years and net earnings expansion was a mere 0.7% -the move appears to be an effort to please shareholders, given the dismal performance of the stock in the last one year. The stock is one of the worst performing among private sector lenders, with a one-year return of 6.6% and one of the lowest forward price to book multiples of 1.5.

The bank said the divergence between the Reserve Bank of India and the bank on recognition of stressed loan was Rs 5,105 crore.

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