Chanda Kochhar, managing director and chief executive officer, ICICI Bank, has given a two-year horizon till 2020 for implementing the de-risking strategy. Image source: Reuters
Is the Videocon loan controversy forcing ICICI Bank to do what it knows best retail loans? The focus on corporate loans, specially infrastructure ones, has eaten into the bank’s profitability and impaired its asset quality, forcing it to focus on smaller retail loans. If it was not for a tax write-back of Rs 220 crore and a one-time gain of Rs 3,300 crore the bank would have struggled to report a profit for the quarter ended March 31, 2018. Despite these two gains, the net profit of the bank for the fourth quarter ended was down 50% over to the corresponding period last year to Rs 1,020 crore.
Interestingly Chanda Kochhar, managing director and chief executive officer, ICICI Bank, has given a two-year horizon till 2020 for implementing the de-risking strategy. During this period, the bank will preserve its retail deposit franchise and digital banking initiatives, change its loan mix while growing its balance-sheet.
By 2020, the retail loans will be over 60% of the bank’s total loan book. The bank is also planning to bring down its exposure in corporate groups well below the regulatory requirements Already, the bank has brought down its exposure limits to the top ten borrowers to 14.3% at the end of March 2018 from 20.3% in 2014. The corporate exposure limits will be based on credit ratings and past track record.
ICICI Bank has a retail loan outstanding of Rs 289,900 crore at the end of March 2018. Of this, home loans constituted 51.8% of the book at Rs 1,50,168.2 crore. Vehicle loan comprised 16.1% of the total loans at Rs 46,673.9 crore, rural loans were about Rs 43,195 crore, credit card were 3.2% of the total retail book at Rs 9,276.8 crore and personal loans constituted 7.2% of the total retail book of the bank at Rs 20,872.8 crore.
The markets gave a thumbs-up to the bank’s announcement of a change in growth strategy and upfront recognition of stress. ICICI Bank’s share price rose 6.45% to close at Rs 308.45 on the BSE. During Q4 2018, the gross additions to NPA were Rs 15,737 crore the fourth quarter. This included Rs 9,968 crore of loans which were under RBI schemes and classified as standard under during the third quarter.
Watch this Zee Business video
Ashutosh Kumar Mishra, senior research analyst, Reliance Securities, “Looking ahead, we believe weak performance on the operating profit front and elevated credit cost will continue to negatively impact the bank’s overall performance in the next few quarters. Despite improving performance across the retail business franchise on assets, liabilities and retail fees front, the corporate segment continue to drag its overall performance on asset quality.”
Source: DNA Money
By continuing to browse or use our sites, you agree that we can store and access cookies and other tracking technologies as described in this policy.
A cookie is a small text file that can be stored on and accessed from your device when you visit one of our sites, to the extent you agree. The other tracking technologies work similarly to cookies and place small data files on your devices or monitor your website activity to enable us to collect information about how you use our sites. This allows our sites to recognize your device from those of other users on our sites. The information provided below about cookies also applies to these other tracking technologies.
These are those cookies that belong to us and which we place on your device or are those set by a website that is being visited by the user at the time (e.g., cookies placed by zeenews.india.com)
Some features used on this website may involve a cookie being sent to your computer by a third party. For example, if you view or listen to any embedded audio or video content you may be sent cookies from the site where the embedded content is hosted. Likewise, if you share any content on this website through social networks (for example by clicking a Facebook “like” button or a “Tweet” button) you may be sent cookies from these websites. We do not control the setting of these cookies so please check the websites of these third parties for more information about their cookies and how to manage them.
Session cookies are temporary and deleted from your machine when your web browser closes. We use session cookies to help us track internet usage as described above.
The data collected by the sites and/or through Cookies that may be placed on your computer will not be kept for longer than is necessary to fulfil the purposes mentioned above. In any event, such information will be kept in our database until we get explicit consent from you to remove all the stored cookies.
These cookie are essential to our site in order to enable you to move around it and to use its features. Without these essential cookies we may not be able to provide certain services or features and our site will not perform as smoothly for you as we would like. These cookies, for example, let us recognize that you have created an account and have logged in/out to access site content. They also include Cookies that enable us to remember your previous actions within the same browsing session and secure our sites.
These cookies are used by us or by our third-party service providers to analyse how the sites are used and how they are performing. For example, these cookies track what content are most frequently visited, your viewing history and from what locations our visitors come from. If you subscribe to a newsletter or otherwise register with the Sites, these cookies may be correlated to you.
These cookies let us operate the sites in accordance with the choices you make. These cookies permit us to "remember you” in-between visits. For instance, we will recognize your user name and remember how you customized the sites and services, for example by adjusting text size, fonts, languages and other parts of web pages that are alterable, and provide you with the same customizations during future visits.
If you do not want cookies to be dropped on your device, you can adjust the setting of your Internet browser to reject the setting of all or some cookies and to alert you when a cookie is placed on your device. For further information about how to do so, please refer to your browser ‘help’ / ‘tool’ or ‘edit’ section for cookie settings w.r.t your browser that may be Google Chrome, Safari, Mozilla Firefox etc.
Please note that if your browser setting is already setup to block all cookies (including strictly necessary Cookies) you may not be able to access or use all or parts or functionalities of our sites.
If you want to remove previously-stored cookies, you can manually delete the cookies at any time from your browser settings. However, this will not prevent the sites from placing further cookies on your device unless and until you adjust your Internet browser setting as described above.
For more information on the development of user-profiles and the use of targeting/advertising Cookies, please see www.youronlinechoices.eu if you are located in Europe or www.aboutads.info/choices if in the United States.