Even though ICICI Bank reported a 14% growth in the net profit, its growth in corporate credit at 4% y-o-y was less than 5% it reported in the previous quarter. In an interaction with reporters, managing director and CEO Chanda Kochhar said a recovery in the credit demand will take another two to three quarters. Excerpts:
Could you give a sense of your corporate loan book?
The corporate business grew 4% y-o-y in the last quarter to Rs 1.09 lakh crore.
NPAs have grown. Is there any specific reason?
Provisions are directly related to the NPAs and restructured assets. Because of an uneven recovery in the Indian economy, there were slippages from the restructured book to NPAs. A large part of our NPAs in the year is actually not because of new additions to difficult assets but because of addition of restructured assets into NPAs. For instance, for 9 months, our addition to NPAs was Rs 5,147 crore but of that, Rs 2,300 crore was slippage from the restructured asset. Thus, the fresh addition to NPAs is just about half that amount. In this quarter, the restructured-to-npa slippage was Rs 776 crore. Clearly, the kind of trend that we saw in the previous cycle in the early 2000s, this time, the slippages are higher.
When do you see the asset quality recovering?
I think the positive impact on the asset quality for the banking sector generally comes with a lag with respect to what is happening in the economy. In the economy, we have already started seeing the right steps, so I am optimistic that whatever steps the govt has taken so far are very positive and will lead to better GDP growth in the coming quarters. This will get translated into an improvement in cashflow of the corporates and an improvement of bank’s asset quality. Since all these improvements come with a lag, turn in the asset quality is expected in two to three quarters from now.
Where do you see NPAs going ahead?
In the beginning of year, we had said the addition to restructured assets and NPAs in FY15 should not exceed the FY14 numbers. If we look at our nine-month performance so far and even considering what we expect the trend to be for the rest of the year, I believe if we take out the slippage (movement from restructured to npas) and we look at only the new slippage to restructured to npas then the number should not exceed FY14.
