ICICI Bank Ltd (ADR)(NYSE:IBN) posted a 10% jump in its 4Q profit boosted by higher interest income. The net profit in the quarter ended March 31, 2015 came at 29.22 billion rupees compared to 26.52 billion rupees in the same quarter, a year ago. It also topped the analysts’ expectations of 28.8 billion rupees. The net interest income in the quarter surged 17% to 50.79 billion rupees.
The bad loans
The only problem seen in the financial report was bad loans which as a percentage of total lending came at 3.78% compared to 3.03% a year ago. However, the market ignored the figure of bad loans as the stock price jumped more than 6% in Mumbai Stock trading. The gains came on a speculation that bad loans had peaked in the quarter and therefore, the profits will improve in the coming quarters.
The expert view
Chanda Kochhar, the CEO of ICICI said that the fiscal ended March 31, 2015 was probably the worst fiscal in terms of NPAs. The loan growth is expected to improve in the current fiscal. The bank recorded the lowest quarterly profit growth in past five years. The expectations of a strong fiscal boosted optimism among the investors and helped them to ignore the NPAs. The management sounded confident with their view on asset quality. The credit growth in FY2016 is expected to be in a range of 18% to 20%.
The highlights
ICICI Bank Ltd (ADR)(NYSE:IBN) has managed tight control over costs related to employees that jumped 2.9% YOY while other operating expenses surged 11.9%. The growth was supported by retail segment. The retail portfolio which constitutes 42% of the loan portfolio grew at 25% YOY. The provisions for bad loans came at 88.4% in the 4Q of fiscal whereas the sequential rise was 37.2%. The provision coverage ratio stood at 58.6% as on March 31.
