MUMBAI India's ICICI Bank Ltd expects additions to its bad loans to be "significantly lower" this financial year, its chief executive said on Wednesday, as the lender reported a smaller than expected rise in quarterly profit.
India's third-biggest lender by assets said its standalone net profit nearly tripled to 20.25 billion rupees ($315.7 million) in its fourth quarter to the end of March, though that lagged analysts' expectations of 22.04 billion rupees.
Bad loans at Indian banks have surged in the past year or so after an asset quality review ordered by the central bank as part of a clean-up exercise. It continues to tighten rules around bad assets, which hit a record $150 billion in December.
ICICI, which has the highest amount of bad loans among India's private sector lenders, said additions to its non-performing assets (NPA) in the fourth quarter were "elevated" by one borrower in the cement sector but it expected part of that loan to be upgraded on the conclusion of a pending deal.
"Going forward for the year FY18, we believe that the NPA additions for the year will be significantly lower than FY17," Chief Executive Chanda Kochhar told reporters, referring to the bank's financial years that run from April to March.
"We also expect some of the resolutions to get completed during the year, we also expect some upgrades from NPAs," Kochhar said on a conference call.
The amount of bad loans at the Mumbai-based bank rose 335 billion rupees on a gross basis during its last fiscal year. Gross bad loans at the end of March stood at 425.5 billion rupees, or 7.89 percent of total loans, up from 7.2 percent at the end of December and 5.21 percent a year earlier.
Kochhar predicted the bank's domestic loan book would grow by 15 percent to 16 percent in the current financial year, with retail loans increasing by 18 percent to 20 percent.
That compares with 14 percent growth in domestic loans in the year to the end of March, driven by a 19 percent rise in retail loans.
The bank's net interest margin for the March quarter was 3.57 percent.
ICICI also said it would issue one free share for every 10 held.
Shares in the lender, valued at about $25 billion, fell about 1 percent on Wednesday ahead of the results released after the market close.
The stock is up 6.8 percent so far in 2017, lagging a 22.7 percent gain in the banking sector index and a 13.8 percent rise in the main market index.
($1 = 64.1500 rupees)
(Editing by Keith Weir and David Clarke)