Why ICICI Bank continues to be slow on personal loans

MUMBAI: ICICI Bank Ltd, in a quarter of stable finance, cannot completely avoid the impact of asset quality issues plaguing the Indian banking sector. The lender’s retail and rural loans slipped, or loans soured, even as its personal loan growth also slowed.

ICICI Bank’s total loans slip ₹6,085 crore in December quarter ₹Retail and rural loans slip to `5,304 crore, including ₹71.4 billion from Kisan (farmers) credit card portfolio. the remaining ₹The slip of 7.81 crore came from corporate and commercial banking books.

The bank said it typically sees higher non-performing loans or non-performing assets (NPAs) from Kisan’s credit card portfolio in the first and third quarters of a financial year. In the recent third quarter, ICICI Bank saw loan recoveries ₹3,392 crore, of which the retail recovery rate is ₹2,786 crore. it also writes worth the loan ₹2,011 million.

In the nine months to December, ICICI Bank recovered a total of ₹390 billion. While retail recycling will continue, revenue on company books will slow as most recycling takes place, he said.

The bank’s gross NPA ratio stood at 1.96% in December, higher than the previous quarter’s total of 1.97% and 2.30% a year ago. The net NPA ratio was unchanged at 0.42% in the quarter and was marginally higher at 0.44% in the previous year. Net reserves in the third quarter were at ₹1,227 crore, a quarterly growth of 16.8% and a quarterly growth of 0.5%.

Batra said ICICI Bank remains focused on the quality of the books it carries and continues to “closely monitor and identify early pressure build-ups”, but added that the overall quality of the books is stable.

“Our retail portfolio is built on the fundamental premise of capital returns and cash flow assessment without any focus on specific segments and products,” Batra said. The level was 30 in the same period last year. “It was a conscious decision. From our perspective, it was more about risk assessment.”

Batra said ICICI Bank has been tightening underwriting and risk assessment parameters and calibrating growth in the unsecured loan space following the Reserve Bank of India’s warning last year.

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ICICI Bank loan growth

ICICI Bank grew 15.1% in domestic lending business in December quarter, up 3.2% quarterly ₹12.8 trillion. The retail loan portfolio grew 10.5% for the year and 1.4% sequentially to ₹$7.0 trillion, accounting for 52.4% of the lender’s total loan portfolio.

The bank’s personal loan portfolio grew 8.8% annually but fell 1.3% quarterly ₹$1.2 trillion, accounting for 17.2% of total retail loans. Credit card portfolio grew 17.9% year on year, followed by 2.8% ₹56,847 crore, accounting for 8.1% of retail loans.

Commercial bank portfolios grew 31.9% for the year, rural portfolios rose 12.2%, while domestic corporate reads grew 13.2%. Total progress increased by 13.9%, sequentially by 2.9% ₹As of December 31, 13.1 trillion.

While there is “fair competition” among corporate loans, ICICI Bank’s focus is on maintaining pricing discipline, Batra said, adding that the lender is also seeing good prospects in the commercial banking space as the segment is formalized Chance.

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‘Profits will obviously be affected’

ICICI Bank’s deposits grew 14.1% year-on-year and 1.5% quarterly ₹15.2 trillion at the end of December. Low-cost current and savings account deposits up 16.6% ₹6.2 trillion, accounting for 40.5% of total deposits.

Net interest income increased 9.1% annually in the December quarter, with quarterly net interest income rising 1.6% ₹20,371 crore. Net interest margin was 4.25%, down from 4.27% a year ago and 4.43% a year ago.

Margins are expected to be broadly stable till the rate cycle begins, Batra said, adding that once the rate reduction begins, margins will obviously be affected “due to lead lag effect” as floating loans will be faster than fixed ones Much more. sediment.

“We will continue to remain disciplined in pricing across the lending space while we focus on having a healthy funding profile,” he said.

12.1% for the year and 3.1% for other income sequentially ₹6,697 crore to support ICICI Bank’s bottom line. This is due to an increase in fiscal growth to help ₹371 million for the quarter ₹123 million last year. Fees for retail, rural and commercial banking customers account for approximately 78% of total fees.

ICICI Bank’s profit after tax rises 14.8% on year, but quarterly profit is 0.4% ₹1,17.92 crore in the December quarter.

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