Staying close to its strategy of consolidating the loan book, while improving the portfolio quality and driving the current and savings account (Casa) ratio, has paid off for ICICI Bank. The management has guided for 18-20 per cent loan growth for the current financial year, up from 13-14 per cent indicated earlier. The push is also expected to come from international and retail segments.
The loan growth of just around two per cent in the September quarter, driven by a 28 per cent sequential rise in corporate loans, was quite significant, considering that the book has been shrinking for several quarters. Retail disbursements also picked up, matching the rate of repayments.
Other operational parameters like Casa improved nearly 200 basis points sequentially (including Bank of Rajasthan, or BoR) to 44 per cent, with strong uptick in savings accounts. Consequently, management guidance indicated that the average Casa ratio of 40 per cent was sustainable for 2010-11, as against the earlier guided 35 per cent.
An improvement in portfolio quality was a key feature, with quarterly rate of non-performing loan (NPL) accretion slowing remarkably to less than `100 crore from nearly 700 crore for the last several quarters. The September quarter saw a small uptick of about `260 crore (2.6 per cent sequentially) in gross non-performing assets, mainly due to the BoR's additions. The gross NPA ratio was 5.03 per cent of total advances. Provisions fell 40 per cent to `641 crore from `1,071 crore a year ago, helping the bank post a year-on-year jump in consolidated profit to `1,236 crore.
The improved loan growth outlook as well as expected lowering of credit costs have ensured earning upgrades. Given that the BoR merger hasn't thrown major negative surprises, the bank seems to be on track to clock healthy growth again.
Not surprisingly, the stock has surged over 12 per cent in the last two trading sessions. It closed at `1,231 on Monday.
Besides lower provisioning, all-round improvement in operational performance was the key highlight
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