Asset quality woes might not be over yet for ICICI Bank

Analysts are doubtful of ICICI Bank’s prediction of adding less stressed assets in 2015-16 than in the previous year. “Early delinquencies have increased sharply for the bank between 2013-14 and 2014-15. Also, its biggest exposure to a corporate group has increased further,” a report from broking house Ambit said Share Market Astrology

The report added the pressure on ICICI Bank’s asset quality was likely to continue, with addition of fresh bad assets and with increased slippages from restructured assets. The new addition to non-performing assets (NPAs) in the June quarter was Rs 1,672 crore against Rs 3,260 crore in the March quarter. Fresh slippages from the restructured book to NPAs were also Rs 292 crore. As a result, the gross and net NPA ratios improved sequentially to 3.7 per cent and 1.6 per cent,  respectively Jackpot Stocks Trading Tips

“Even if there is a 10-15 per cent improvement in asset quality, that will still be a big number as far as stressed additions are concerned. So, yes, there will be recovery, but that does not mean there won’t be pressure,” said Vaibhav Agrawal, vice-president, research for banking, at Angel Broking. In a post-earnings conference call, Chanda Kochhar, managing director and chief executive officer of ICICI Bank, had said there was some restructuring ahead this year, but yearly addition to NPAs and restructured assets would be lower than in 2014-15. The bank’s total stressed asset formation in 2014-15 was Rs 13,650 crore Stock Market Trading Tips

Another report by UBS pointed out that ICICI Bank’s exposure to stressed assets was considerably high and as a result credit cost for the bank would increase. “As we gain more insight into banks’ exposure to potentially stressed groups, we adjust our impaired loan estimates and build in 0-40 bp (basis point, a hundredth of a percentage point) higher credit costs for YES Bank, ICICI Bank, Axis Bank, State Bank of India, and Punjab National Bank Financial Astrology