‘COVID-19 related provisions of Rs. 5500 cr will give prudence to the banks balance sheet’, added Sandeep Batra, President, ICICI Bank
ICICI Bank has reported a profit after tax of INR 2599 cr for the quarter ended June 30, 2020, witnessing a 36% rise from last year’s net profit of INR 1908 cr.
The private lender also saw a promising 15% year-on-year rise in its core operating profit (profit before tax and provisions, excluding treasure income) to INR 7014 cr in Q1-2021 from INR 6110 cr in Q1-2020. Interestingly, while the interest on income tax refund was INR 24 cr in Q1-2021, it had amounted to INR 184 cr in Q1-2020. Thus, one can say that the core operating profit essentially grew by 18% YoY, excluding the interest on income tax refund.
It’s also quite noteworthy that the lender has recorded a significant improvement in its asset quality as its gross NPAs have reduced to 5.46% in Q1-2021, from 6.49% recorded in Q1-2020. There has also been a reduction in the Net NPA ratio from 1.41% in Q4-2020 to 1.23% in the June 2020 quarter. The same period saw an increase in the provision coverage ratio (excluding the technical write-offs) from 75.7% to 78.6%.
Sandeep Batra, President talks about ICICI Bank’s Credit & Deposit Growth
Sandeep Batra states that ICICI Bank has recorded a significant 10% YoY growth in domestic credit advances in Q1-2021. On the other hand, the retail loan portfolio has grown by 11% YoY on June 30, 2020, and also accounted for 54.4% of the total portfolio at June 30, 2020, including non-fund outstanding, while the domestic corporate portfolio clocked a growth of about 8% YoY. The bank has seen an increase in total advances by 7% YoY, from INR 592,415 cr in Q1-2020 to INR 631,215 cr in Q1-2021.
The bank has also recorded a spike in total deposit growth by 21% YoY for the quarter ended June 2020, with the average current account deposits increasing by 20% YoY. The average savings account deposit too has risen by 14% YoY in Q1-2021, and the average CASA ratio stands at 41% in Q1-2021, as compared to a 43.4% in Q1-2020.
Provisions for COVID-19
While the provisions (excluding COVID-19 provisions and tax provisions) have declined by 42% YoY, the lender has made additional COVID-19 related provisions of INR 5500 cr. Sandeep Batra, President of ICICI Bank, has stated that “the additional provisions were made on a prudent basis in Q1-2021 to ensure that the balance sheet is completely cushioned from the economic impacts of COVID-19.”
Digital Adoption for Seamless Banking during COVID-19
To ensure an uninterrupted, hassle-free banking experience from the safety of one’s home, ICICI Bank has introduced many digital initiatives catering to its customers’ banking needs. To speed up the process of onboarding new savings account customers during the nationwide lockdown, the bank had introduced the Video Know-Your-Customer (KYC) facility. The service was also offered to personal loan accounts, salary accounts, and Amazon Pay Credit Card users. The initiative ensured that the process of customer verification could be done remotely. This contactless onboarding process helped the bank gain new customers despite the lockdown and gave customers access to a seamless banking experience, without needing to step out and risk exposure to the virus. The bank has also launched ease-to-use, cutting-edge, and secure digital payment solutions for customers and businesses. For example, an online food delivery platform used the bank’s ‘Insta Wallet’ offering to launch its own digital wallet, thereby facilitating safe and contactless payments. It’s heartening to note that the number of users of its WhatsApp banking platform, launched only 3 months ago, has already surpassed one million, indicating that banking customers are increasingly getting comfortable, adopting digital banking solutions. On its part, the bank has ensured to provide maximum convenience and security and extend all the required support to its customers and will continue to do so in future.