In the context of restructured loans, there is some lumpiness in terms of one or two assets and if they slip, they create a bit of volatility in the provision, says ICICI Bank
After a rise in bad loans during 2014-15, ICICI Bank has decided to change its lending and underwriting norms, to contain the rise in its non-performing assets (NPAs) and the restructuring book.
During fiscal 2015, the aggregate addition to NPAs was Rs. 80.78 billion. Of this, the fresh NPA addition was Rs. 35.49 billion which is lower than the previous year.
However, slippage from restructured loans to the NPA category was Rs. 45.29 billion in FY2015. Loans restructured during this period were Rs. 53.94 billion.
Thus, the sum of loan restructuring during the period and NPA additions, excluding slippages from the restructured portfolio was Rs. 89.43 billion, about Rs. 15 billion lower compared to the previous year.
According to the new norms, ICICI Bank will be more careful in lending to the construction sector. “In this space, where there are lots of receivables, things have got delayed, which in turn has put pressure on those companies, leading to devolvement of guarantees. That is one sector, where one has to be a bit careful,” said NS Kannan, executive director, in an analyst conference call.
ICICI Bank has been continuing to grow its corporate book cautiously. In the fourth quarter, domestic corporate loan growth was 9.8 per cent year on year; the retail loan book grew at 24.6 per cent over a year. Kannan says they’ve decided to move towards lending to higher-rated companies.
“In the context of our restructured loans, there is some lumpiness in terms of one or two assets and if they slip, they create a bit of volatility in the provision. We would aim to minimise a similar situation, going forward. Incrementally, we are looking at tighter concentration thresholds, so that anything above, say, a particular number gets highlighted and escalated to the higher level committees,” said Kannan.
During fiscal 2015, the aggregate addition to NPAs was Rs. 80.78 billion. Of this, the fresh NPA addition was Rs. 35.49 billion which is lower than the previous year.
However, slippage from restructured loans to the NPA category was Rs. 45.29 billion in FY2015. Loans restructured during this period were Rs. 53.94 billion.
Thus, the sum of loan restructuring during the period and NPA additions, excluding slippages from the restructured portfolio was Rs. 89.43 billion, about Rs. 15 billion lower compared to the previous year.
According to the new norms, ICICI Bank will be more careful in lending to the construction sector. “In this space, where there are lots of receivables, things have got delayed, which in turn has put pressure on those companies, leading to devolvement of guarantees. That is one sector, where one has to be a bit careful,” said NS Kannan, executive director, in an analyst conference call.
ICICI Bank has been continuing to grow its corporate book cautiously. In the fourth quarter, domestic corporate loan growth was 9.8 per cent year on year; the retail loan book grew at 24.6 per cent over a year. Kannan says they’ve decided to move towards lending to higher-rated companies.
“In the context of our restructured loans, there is some lumpiness in terms of one or two assets and if they slip, they create a bit of volatility in the provision. We would aim to minimise a similar situation, going forward. Incrementally, we are looking at tighter concentration thresholds, so that anything above, say, a particular number gets highlighted and escalated to the higher level committees,” said Kannan.
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