With public sector banks coming under the radar due to mounting losses and rising bad loans, private sector banks have also seen a deterioration in credit quality and consequent fall in profits. Net non-performing assets of ICICI Bank, more than doubled to 3.01 per cent in April-June quarter of 2016, from 1.40 per cent in the same quarter previous year. The bank's gross NPA ratio jumped to 5.28 per cent in April-June 2016 from 3.29 per cent in the same quarter previous year.
ICICI Bank expects NPA additions and credit costs to be at elevated levels in the current fiscal year. "About 77 per cent of the gross additions to NPAs for the wholesale and SME businesses in Q1 of 2017 were on account of slippages from companies internally rated below investment grade in key sectors, and slippages from the restructured portfolio," the bank said. To strengthen monitoring of its corporate and SME portfolio, the lender has formed a dedicated credit monitoring group, responsible for leveraging analytics, developing predictive models and parameters for early warning signals, said ICICI Bank's MD and CEO Chanda Kochhar.
Shares of ICICI Bank fell from Rs 270 to Rs 245 in two trading sessions since the announcement of its quarterly results. The bank had reported a 25 per cent drop in profits in the April-June quarter, to £223.23 million from £297.62 million in same quarter a year ago. Axis Bank’s net NPA also more than doubled to 1.08 per cent in April-June quarter of 2016 (or £440.10 million), from 0.48 per cent in the same quarter previous year (or £146.10 million). The bank’s gross NPA ratio jumped to 2.54 per cent or (£955.30 million) in April-June 2016 from 1.38 per cent (£425.10 million) in the same quarter previous year. Axis Bank had last month reported a 21 per cent (YoY) decline in its net profit to £155.60 million for the April-June quarter because of an 88.7 per cent (YoY) rise in provisions necessitated by a 124.7 per cent jump in gross NPAs.
