ICICI Bank net hit by higher deferred tax

Profit falls 28% to ₹655 crore on one-time impact of adjustment; net interest income rises 26%

Private sector lender ICICI Bank reported a 28% fall in net profit to ₹655 crore for the July-September period, due to a one-time impact of deferred tax assets adjustment arising out of the change in corporate tax rate.

The additional impact was ₹2,920 crore. Excluding the impact of one-time additional charge due to re-measurement of accumulated deferred tax, profit after tax would have been ₹3,575 crore, Sandeep Batra, executive director designate, ICICI Bank said in the post-earnings media interaction.

The net interest income (NII) increased by 26% year-on-year to ₹8,057 crore during the quarter, while net interest margin (NIM) was 3.64% in Q2 compared to 3.61% in Q1 and 3.33% in Q2 of the previous financial year.

“NII was driven by loan growth and increase in margins,” Mr. Batra said.

Core operating profit, that is, profit before provisions and tax, excluding treasury income, increased by 24% year-on-year to ₹6,533 crore.

“Growth in core operating profit and reduction in credit costs resulted in an increase in profit before tax,” Mr. Batra said.

While non-interest income, excluding treasury income, was ₹3,854 crore as compared to ₹3,191 crore, treasury operations reported a profit of ₹341 crore compared to a loss of ₹35 crore during the same period of the last financial year.

Improvement in asset quality helped provisions (excluding taxes) decline by 37% year-on-year to ₹2,507 crore.

Gross NPA ratio falls

The gross NPA ratio fell sharply to 6.37% as at end-September, from 8.54% a year ago, and from 6.49% in the previous quarter. In absolute terms, gross NPA fell by close to ₹10,000 crore in one year to ₹45,638.79 crore at the end of September.

Slippages also fell, with gross additions to NPAs at ₹2,482 crore in the second quarter, compared to ₹3,117 crore in the same period of the previous year and ₹2,779 crore in the first quarter of 2020.

Retail credit growth continued to be strong, growing by 22% year-on-year, and helped overall domestic advances to grow by 16%.

“Including non-fund outstanding, retail was 49.9% of the total portfolio at September 30, 2019,” the bank said. Corporate loan growth was at 7%.

While deposit growth was 25% year-on-year, the share of current and savings account deposit to total deposit continued to fall.

The average CASA ratio was 42.2% in the second quarter compared to 43.4% in the first quarter, and 47.1% in the second quarter of the previous year.

“Term deposits increased by 35% year-on-year to ₹3,71,273 crore at September 30, 2019,” the bank said.

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