ICICI Shares Fall to Six-Month Low as Bad Loans Dog Earnings

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A pedestrian walks past a branch of ICICI Bank Ltd. in Mumbai.

A pedestrian walks past a branch of ICICI Bank Ltd. in Mumbai.

Photographer: Dhiraj Singh/Bloomberg

ICICI Bank Ltd. shares fell to a more than six-month low after the Indian lender posted the lowest quarterly profit growth in five years as bad loans increased.

Net income in the three months to March 31 climbed 10 percent to 29.2 billion rupees ($460 million) from a year earlier, the Mumbai-based bank said in a filing Monday. Gross non-performing assets climbed to 3.78 percent of total advances from 3.03 percent a year earlier, ICICI said.

The nation’s largest private sector lender by assets is attempting to curtail soured debt and improve loan growth by passing on two central bank interest-rate cuts this year to consumers. Asset quality at the bank lender will improve from the current financial year, Chief Executive Officer Chanda Kochhar told reporters on a call after the earnings release.

“Asset quality numbers truly disappointed,” Hatim Broachwala, a banking analyst at Nirmal Bang Institutional Equities Ltd. in Mumbai, said by phone. “It remains to be seen how the bank can address the drag on profits by non-performing assets.”

Restructured Assets

Shares of ICICI sank 1.9 percent to 302.30 rupees in Mumbai today. The stock, which slumped 14 percent this year, closed at the lowest level since Oct. 17.

The Mumbai-based lender will restart the so-called Special Asset Management Group that it shut a decade ago to drive the recovery of bad debts, people with knowledge of the matter had said in March.

“Most of the non-performing assets added during the quarter was due to slippage from restructured assets,” Kochhar said on the call. The “year ended March 31 was probably the peak in terms of restructuring and non-performing assets,” she said.

Restructured loans at Indian banks - which give borrowers a moratorium on payments, longer maturities or lower interest rates - as a portion of total loans fell to 5.94 percent as of Dec. 31., from 6.13 percent in September, data provided by India’s finance ministry show.

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