ICICI Bank Ltd., India's largest private bank, said Saturday that its quarterly profit slid over 35 percent as the global financial crisis eroded fee income in commercial and retail banking.
The bank said it was also bracing itself for rising bad loans by increasing provisions.
ICICI said its net profit after tax for the January to March quarter was 7.44 billion rupees ($147 million), down from 11.5 billion rupees in the same quarter last year.
Total income slid to 92.0 billion rupees ($1.8 billion) from 103.9 billion rupees.
Chief financial officer Chanda Kochhar told reporters Saturday that she expects to see moderate loan growth of 5 percent to 10 percent during the current fiscal year.
"Given the current scenario, the priority is to conserve capital and maintain the quality of book," she said.
Kochhar is to take over as chief executive after K.V. Kamath retires on April 30.
ICICI said that to conserve capital and contain risk, it trimmed its loan book 3.5 percent to 2.18 trillion rupees ($43 billion) as of the end of March, down from 2.26 trillion rupees at the same time last year.
It also increased provisioning for bad loans over 14 percent last quarter to 10.85 billion rupees ($214 million), up from 9.48 billion rupees during the same period last year.
The bank said deposits slipped 10.7 percent from a year ago to 2.18 trillion rupees ($43 billion).
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Hit by slowdown, ICICI Bank profits drop by 35% in Q4
26 Apr 2009,
MUMBAI: ICICI Bank, the largest private sector bank in India, reported a net profit of Rs 744 crore for the January-March quarter, a drop of 35% from Rs 1,150 crore reported during the same quarter last year. ICICI Bank's profit took a hit because of higher bad debts, slowdown in loan offtake and lower fee-based income that includes income from distribution of financial products. The bank's fourth quarter (Q4) profits were lower than analysts' expectation of Rs 774 crore.
However, for investors the good news is despite a fall in profits, the bank has decided to maintain its dividend payout at Rs 11 per share.
The bank's total income too fell during Q4, by 11.4%, to Rs 9,203 crore from Rs 10,391 crore a year earlier. Lately it has slowed lending as it is trying to tackle a rising bad loans in its main business segment, the retail market. It is also trying to increase the share of low-cost deposits — savings account and current account — in its total deposits.
On a consolidated basis, for the full year ended March 2009 (FY09), the bank's net profit jumped 10.6% to Rs 3,757 crore compared to Rs 3,398 crore during the previous year. Its total income during FY09 rose 6.8% to Rs 64,153 crore from Rs 60,053 crore during FY08.
For the current year, ICICI Bank has decided to slow down its lending activities as bad debts are hurting. Chanda Kochhar, the CEO-designate, said that ICICI Bank's corporate and retail loan is expected to grow at about 5-10%. "This coming year we'll moderate our loan growth," Kochhar said in a post-result call. "Our strategy would be to conserve liquidity, conserve capital, contain risk and watch how the economic scenario moves and actually focus on restructuring our deposit base."
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