Q2 Results: One-Time Tax Expense Hits ICICI Bank’s Bottomline In Q2
ICICI Bank’s asset quality improved sequentially while a one-time tax expense impacted the bottomline.
ICICI Bank Ltd.’s net profit missed analyst estimates due to a one-time tax adjustment of Rs 3,020 crore.
The bank reported a net profit of Rs 655 crore for the June-September quarter, as per exchange filings. This was 27 percent lower than the Rs 909 crore profit it reported during the corresponding quarter last year. It was also lower than what analysts tracked by Bloomberg had estimated. The net profit was aided by a 33 percent rise in other income and treasury gains of Rs 341 crore. The bank had a treasury loss of Rs 35 crore in Q2FY19.
Tax expenses in the last quarter includes one-time additional charge of Rs 2,920 crore “due to re-measurement of accumulated deferred tax assets consequent to a reduction in marginal tax from 35 percent to 25 percent”, according to the bank’s press release.
Net interest income, or the core income of the bank rose 25 percent compared to last year, to Rs 8,057 crore. This was in-line with analyst estimates of Rs 7,863 crore. Net Interest Margins stood at 3.64 percent compared to 3.61 percent on a sequential basis.
The lender’s gross non-performing assets in absolute terms stood at Rs 45,638 crore compared to Rs 45,763 crore in the previous quarter. In percentage terms, it stood at 6.37 percent compared to 6.49 percent sequentially. Provisions for non-performing assets fell 28 percent versus the April-June quarter to Rs 2,506 crore.
Slippages for the bank declined on a sequential basis to Rs 2,482 crore compared to Rs 2,779 crore in Q1FY20. The bank’s corporate book rated BB and below increased to Rs 16,074 crore compared to Rs 15,355 crore in the previous quarter.
In a conference call after the earnings announcement, ICICI Bank’s management said the lender does not have any meaningful exposure to stressed non-banking finance companies and housing finance companies.
- Domestic loan growth was 16 percent higher than last year, driven by the retail portfolio.
- Retail loans saw a growth of 22 percent on a year-on-year basis.
- Advances grew 12.6 percent compared to last year while deposits grew 24.6 percent during the same period.
- Excluding non-performing and restructured loans, the growth in domestic corporate loans stood at 7 percent versus last year.
- Recoveries and upgrades of non-performing loans stood at Rs 1,263 crore compared to Rs 1,006 crore in the second quarter of FY19.
- Provision Coverage Ratio for the lender stood at 85 percent.
Shares of ICICI Bank have given returns of 30 percent so far this year. This compared to the 8.2 percent upside seen by the Nifty Bank index.