ICICI Bank tames its NPA; net profit for year falls by half

Net NPA ratio plunges from 4.77 pc to 2.06 pc

MUMBAI: ICICI Bank, the second largest private sector bank in the country, with an asset base of Rs9.64 lakh crore as of March 31, 2019, has come a long way in curbing its bad loans by trimming the net NPA ratio by about 57 per cent from 4.77 per cent to 2.06 per cent during the past one year.

However, the bottom line took a hit as the profit after tax (PAT) or net profit for the fourth quarter (Q4) declined 5 per cent from Rs1020 crore to Rs969 crore whereas the net profit for the financial year ending March 31, 2019 fell by 50.38 per cent – from Rs6777 crore to Rs3363 crore.

The bank succeeded in taming its NPA, which has become the Achilles heel of the country’s banking industry during the past close to half-a-decade, through prudent provisioning exercise. ICICI Bank that was mired in serious controversies in the recent past, has cost the institution even its fabled chief executive last year,

The bank saw its NPAs contract over 50 per cent year on year to Rs13,577 crore as its provision coverage ratio (PCR) rose to 70.6 per cent, one of industry’s best.  In fact, including technical/prudential write-offs, ICICI Bank’s provision coverage ratio was 80.7 per cent. The bank also sits on a strong capital base with Tier 1 ratio at 15.09 per cent.

While the operating profit for Q4 fell by 17 per cent from Rs7514 crore to Rs6233 crore, the full year operating profit suffered a milder fall of 5.27 per cent – from Rs24,742 crore to Rs23,438 crore.

While the deposits during the financial year under review grew by 16.4 per cent to Rs6,52,920 crore, ratio of CASA dropped marginally from 45.9 per cent to 44.6 per cent.

The total advances expanded by 14.5 per cent to Rs5,86,647 crore during the year, while the retail loans soared by 21.7 per cent, from Rs2,89,894 crore to Rs3,52,831 crore, thus becoming the mainstay of the bank’s loan book.

In fact, home loan portfolio that expanded by 18.8 per cent to Rs1,78,236 crore constitutes more than half of the retail loans at 50.5 per cent as of March 31, 2019.

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