ICICI Bank Q3 Profit At Rs 12,538 Crore Despite RBI Provision Hit, Core Income & Asset Quality Stay Strong

Mumbai: ICICI Bank’s consolidated net profit for the December quarter declined 2.68 percent to Rs 12,537.98 crore. The drop was mainly due to a one-time provision of Rs 1,283 crore mandated by the Reserve Bank of India (RBI) on certain agricultural loans.

On a standalone basis, profit fell by over 4 percent to Rs 12,883 crore during the October–December period.

RBI action explained by management

The RBI asked the bank to create additional provisions for agricultural working capital loans that were wrongly classified as priority sector loans. These loans were given over many years since 2012 and total Rs 20,000–25,000 crore.

ICICI Bank said the asset quality of these loans is sound and the provisions will be written back gradually as loans are repaid. Management added that without this RBI-driven provision, standalone profit would have grown by around 4 percent.

Core income shows healthy growth

Despite the profit dip, the bank’s core business remained strong. Net interest income rose 7.7 percent year-on-year to Rs 21,932 crore. This was supported by 11.5 percent loan growth and a slight improvement in net interest margin to 4.30 percent.

Non-interest income (excluding treasury gains) also increased by 12.4 percent to Rs 7,525 crore, reflecting stable fee income.

Provisions rise, asset quality improves

Total provisions doubled to Rs 2,556 crore during the quarter, mainly due to the RBI-mandated agricultural loan provision. The bank also set aside Rs 145 crore due to the implementation of new labour codes. ICICI Bank continues to maintain a strong contingency buffer of Rs 13,100 crore.

Gross non-performing assets improved to 1.53 percent from 1.58 percent in the previous quarter, showing better asset quality.

Loan growth led by business banking

Business banking loans grew sharply by 22.8 percent. Retail loans increased 7.2 percent, while the domestic corporate loan book rose 5.6 percent.

CEO term extended, capital position steady

The board approved a two-year extension for MD & CEO Sandeep Bakhshi. The bank’s capital adequacy ratio stood at a comfortable 17.34 percent, with core capital at 16.46 percent.

Subsidiary performance mixed

ICICI Prudential Life Insurance posted higher profit, ICICI Lombard General Insurance saw a decline, while ICICI’s asset management arm reported strong profit growth.

Disclaimer: This article is based on unaudited financial results released by the company. Figures are subject to revision upon audit and should not be considered as final or audited financial statements.