ICICI profit rises on lower provisions
Higher fee from distributing mutual funds and insurance products helps lender match estimates
Mumbai : ICICI Bank, India's second-biggest lender, said first-quarter profit rose 17 per cent, as it cut provisions for bad loans and increased fee income from distributing mutual funds and insurance products.
Net income advanced to Rs10.3 billion (Dh858 million), or Rs9.16 a share, in the three months ended June 30, from Rs8.78 billion, or Rs7.87 a share, a year earlier, the Mumbai-based bank said in a statement. Profit matched the Rs10.3-billion average of 18 analyst estimates compiled by Bloomberg.
Branch network
The second consecutive quarter of profit growth may bolster Chief Executive Officer Chanda Kochhar's efforts to tap accelerating credit demand in an economy that is forecast to grow at 8.5 per cent in the year to March 31. In May, ICICI offered to buy Bank of Rajasthan in a transaction that valued its smaller rival at Rs27.9 billion to expand its branch network by a fifth.
Total income declined to Rs74.9 billion, from Rs92.2 billion, it said.
Fee income gained 7 per cent in the quarter to Rs14.1 billion, while net bad loans declined 25 per cent to Rs35.1 billion, the bank said.
On Friday, India's central bank fined ICICI Bank as well as Standard Chartered Bank Rs500,000 each for violating regulations, bank authorities said.
The Reserve Bank said ICICI Bank was fined for violating central bank guidelines on "know your customer" compliance and money laundering standards.
ICICI Bank said the violations referred to an account opened for a single customer for which the lender had obtained a government identity card and introduction from an existing customer.
"RBI concluded that the substitution of introduction [by an existing customer] for address proof was not in accordance with RBI guidelines," ICICI Bank said in a statement.
Penalty
Standard Chartered was penalised for not furnishing within the stipulated time information on a foreign currency loan facility arranged by the bank for an offshore special purpose vehicle, RBI said.
"We have received the RBI notification. Standard Chartered Bank follows the highest standards of compliance in all its markets and will continue to do so," a spokeswoman for the British bank in India said.
Last week, ICICI's shares fell heavily on the Mumbai stock exchange after the Financial Times reported the nation's central bank plans to conduct stress tests on its banks twice a year to check credit and interest rate risks.
