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ICICI: Profit growth in 1Q hit by higher NPAs

Jul 29, 2000

ICICI has reported a marginal 9.8% rise in its net profits to Rs 2.9 bn on the interest income of Rs 21 bn in 1QFY01. Its botomline during the year was impacted by higher provisioning towards NPAs (Rs 180 m) and interest expenses for redeeming a significant portion of its preferences shares (Rs 90 m).

(Rs m) 1QFY00 1QFY01 Change
Interest Income 19,820 21,294 7.4%
Other Income 36 160 342.4%
Interest Expenditure 14,506 15,367 5.9%
Operating Profit (EBDIT) 5,314 5,928 11.5%
Operating Profit Margin (%) 26.8% 27.8%  
Other Expenses 1,516 1,963 29.5%
Depreciation 946 990 4.7%
Profit before Tax 2,889 3,135 8.5%
Tax 270 260 -3.7%
Profit after Tax/(Loss) 2,619 2,875 9.8%
Net profit margin (%) 13.2% 13.5%  
No. of Shares (eoy) (m) 783 783  
Diluted number of shares 783 783  
Diluted Earnings per share* 13.4 14.7  

Excluding the impact of these two items the profit has actually increased by 20.1% to Rs 3.1 bn. Further net provision of Rs 210 m against fall in the value of investments contributed in drop in the profits

During the quarter the aggregate approval of ICICI rose by 29% to Rs 162 bn and disbursements grew by 82% to Rs 82 bn. Corporate finance assistance accounted for 50% of total approvals and 77% of total disbursals, while funding of infrastructure and oil & gas sector accounted for 35% of approvals and 7% of disbursals. The increasing proportion of small corporate finance and retail finance will help the institution in reducing its level of NPAs.

The net NPA ratio in 1QFY01 was 7.5% against 7.6% in the previous year. Capital adequacy ratio was on higher side at 17.5%, with Tier-I capital accounting for 11.5%.

ICICI has launched its Internet payment gateway, `Payseal` with online shopping mall, magiccart.com. It is in the process of online testing of its systems with other six sites which are expected to be operational in the next couple of weeks. It plans to offer its payment gateway to about 15 sites within 6 months.

The stock quotes at a P/E multiple of 8 times its 1QFY01 annualised earnings with Price/Book value ratio of 1 time. The lower valuations are due to concern for its higher level of NPAs.

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