India's largest private sector lender ICICI Bank reported a 25 percent fall in its net profit for the June quarter on Friday. From Rs. 2,976 crore seen last year, the bank's net profit fell to Rs. 2,232 crore.
The drop was mainly driven by higher provisioning against bad loans. It was 163 percent higher at Rs. 2,514 crore from Rs. 955 crore in the corresponding quarter previous year.
The bank's net interest income grew marginally by 0.85 percent to Rs. 5,159 crore during the period. Net interest income is the interest earned on loans minus the interest given on deposits. The total interest earned by the bank during Q1 was Rs. 13,330 crore and the interest it expended was Rs. 8,171 crore.
"As companies get downgraded to non performing assets, we stop accruing income from them. This impacts the net interest income and the net interest margin," said Chanda Kochhar, CEO & MD.
ICICI Bank's asset quality deteriorated as its gross non-performing assets (NPAs) as a percentage of gross advances increased to 5.87 percent from 5.82 percent seen in the earlier quarter of March 2016. In the same period, its net NPAs jumped to 3.35 percent from 2.98 percent.
The bank's total income for the quarter grew 6 percent to Rs. 16,760 crore from Rs. 15,802 crore seen in the corresponding quarter a year ago. However, on quarter-over-quarter period, revenues fell 11 percent from Rs. 18,590 crore seen in March quarter or Q4 of 2016.
The bank's capital adequacy ratio (CAR), which measures a bank's capital as against its risks and liabilities, was 16.22 percent in this quarter as against 16.37 percent seen a year ago.
At the close of market hours, shares of the bank were down by 3.40 percent at Rs. 262.85 in anticipation of a dull quarterly result.