Despite the lender reporting a 13% y-o-y rise in net profit in Q3, ICICI Bank MD & CEO Chanda Kochhar says asset quality concerns persist and there will be further restructuring in the coming quarters. Excerpts from a call with the media:
What is the restructuring pipeline for the coming quarters?
We have a restructuring pipeline of R3,000 crore as of now. The industry continues to see additions to NPAs and restructured assets. I think we have not yet seen their full impact and will see more additions in the next few quarters. But, overall, even taking into account the higher provisions due to these additions, our provisions charge is about 85 bps for the quarter. We don?t expect it to exceed 1%.
What are the reasons for profitability in the quarter?
We?ve been continuing to strengthen our retail franchise and pursuing growth in retail assets, mainly on the secured retail side (housing and auto loans). And q-o-q, with our increased reach, we have been able to raise the rate of growth on these assets. Retail assets are about 37% of our loans and advances. Last year, they constituted 35%. Because of our retail franchise, we have seen a healthy growth in current and savings account (Casa) deposits also. That has given us the ability to withstand the volatility in the financial markets.
What about the growth in the corporate portfolio?
The corporate growth was 7% y-o-y. But compared to, say, the 22% growth in the retail segment, or the fact that even in the last quarter, corporate assets grew 11%, we are calibrating the growth there.
Could you talk to us about the unsecured lending portfolio?
We are still following our policy that we give unsecured retail loans only to customers who have other product relationships with us. So, given that, we have seen growth in credit cards and personal loan portfolio, but still it is less than 2% of our total loans and advances. In absolute terms, the outstanding amount on the portfolio is R6,200 crore; last quarter, it was R5,500 crore.
What is your guidance on NIMs, considering that the RBI has raised the repo rate by 25 bps?
Our reliance on short-term wholesale funds is low. Our funding really comprises stable Casa and fixed deposits from the retail side. So, the market volatility does not impact us so much. I am expecting our NIMs to remain stable for the next quarter.
