ICICI Bank Ltd, the most popular bank in the private sector came out with its third quarter results with its gross bad loans ballooning by 17.21% as compared to Q2. Since the past 13 years, this time the asset quality has stooped to the new low and the growth in interest income which is the core area for the bank’s income has slowed down.
The market analysts had quoted a figure of Rs 2,466.7 crore as net profit for the third quarter and the bank posted a marginally lower figure than that. It came out with a net profit figure of Rs 2,441.82 crore which is 19.1 percent less than the corresponding quarter in the last year when the bank posted Rs 3,018.13 crore.
The market analysts are of the opinion that earnings given by the bank are more or less in line with expectations and for the next few quarters they will remain muted only. The shares of the bank did fell down post result announcement on Tuesday by 0.7% but today after the budget speech by the Finance minister, the markets are all green and the shares of the ICICI bank is also up by nearly 4% just after the speech.
In the last three months (October-December), loans worth of Rs 7057 crore turned bad but 40% of these loans were on the watch list that the bank has released in the month of March 2016.
Chanda Kochchar, the managing director and chief executive officer of the largest private sector bank in India specified on the watch list and the loans turning bad. She said, “The watch list, which includes sub-investment grade loans given to troubled sectors, declined to Rs.27,536 crore at the end of December from Rs 44,065 crore nine months earlier. Around Rs12,057 crore worth of loans from the watch list went bad and Rs 4165 crore worth of loans were resolved during the last nine months.” Kochchar was skeptical on giving any guidance citing that in the case of stressed assets there are too many things involved and hence to tell by when the issue can be resolved is difficult.
The fact of the matter is that ICICI is not the only bank that is bearing the brunt of bad loans and dwindling interest incomes. Many other banks gave the similar kind of results. For the Axis bank, the net profit for Q3 fell by a humongous 73.4%. Another major player in the segment, HDFC Bank came up with the weakest quarterly profit growth in the last 20 years.