ICICI Bank moves HC against Chanda Kochhar, seeks recovery of bonuses

Private lender ICICIBank has filed a civil suit against its erstwhile managing director (MD) and chief executive officer (CEO) Chanda Kochhar in the Bombay High Court, seeking recovery of amounts towards the clawback of bonuses given to her from April 2006 to March 2018 after her termination of services by the bank.
On the other hand, Kochhar is contesting that ICICI Bank should have secured the Reserve Bank of India (RBI) permission first before terminating her services. Kochhar has also challenged the RBI’s approval in terminating her services. She has said the move was illegal and had no legal base. The central bank on March 13 gave its consent to the bank management on Kochhar’s termination, after the bank fired her on January 31, 2019.

The bank has given a composite reply to the court on all the objections that Kochhar has raised. The bank has said that Section 35B of the Banking Regulation Act of 1949, under which Kochhar is seeking nullification of her termination of her services, is a “regulatory provision”.
The bank further said that Kochhar was aware that Section 35B is a part of the RBI’s regulatory and supervisory powers and the Section does not confer any right or protection on her part. Also, the Section does not cast a duty on the bank, but is just a form of regulatory oversight by the RBI for the protection of the banking company and its depositors.
The bank also said, “The said Section does not govern or regulate the petitioner’s (Kochhar’s) contract of services with the respondent (ICICI Bank)”. Therefore, the petitioner has no locus to make a claim in respect of the alleged violation of the said Section.
The bank has raised the objection that Kochhar’s writ petition is not maintainable, that “it is a private banking company and the writ petition seeks to contest what are purely private contractual terms”. Hence, the bank argued that Kochhar’s writ petition did not have legal basis.
Moreover, it has said that none of the reliefs sought by Kochhar — declare termination illegal, refrain from recovering and cancelling early retirement benefits and remuneration, permit exercising stock options — seeks compliance with any statutory provisions whatsoever. Also, the reliefs sought by Kochhar, the bank alleged, are of a purely private character and seek to secure performance of contractual obligations allegedly owed by an employer to an employee.
The bank has also said that the appointment of Kochhar happened in 1984 and the appointment letter specifically says that Kochhar would be bound by the rules and regulations of the bank. After which, Kochhar’s elevation to various positions from 1985-1998 was communicated to her through promotion letters. Further, no fresh appointment letter was issued to her when she was elevated to the post of executive director in 2001 and MD & CEO in 2009.
“Therefore, the petitioner’s (Kochhar) employment with the respondent (ICICI Bank) continued on such terms and conditions as were decided by the board subject to provisions, which were signed by the petitioner from time to time”.
Senior counsels Vikram Nankani and Sujay Kantawala are representing Kochhar in the case, while ICICI Bank is being represented by senior counsel Darius Khambata and law firm Veritas Legal.
The bank has also said, “It is only upon the board approving appointment/reappointment/termination that an approval from the RBI is sought”.
When Kochhar was appointed the executive director of the bank with effect from April 1, 2001, to March 31, 2006, the RBI did not grant prior approval to the appointment before April 1, 2001, but granted its approval subsequently by a letter dated May 29, 2001.
“If the petitioner’s contention is accepted that the prior approval under Section 35B does not include a post-facto approval, the appointment of the petitioner as an executive director of the said respondent is itself invalid. The same principle must necessarily apply to the appointment, as the said Section deals evenly with both appointment and termination,” the bank has said in its reply.
Meanwhile, the Enforcement Directorate has attached assets and cash belonging to Kochhar and her husband Deepak in connection with the Videocon loan case.
The matter will be next heard on January 20.

Six of India's Top 10 firms lose Rs 26,624 cr in m-cap; ICICI bleeds most

Six of India’s 10 most-valued companies together lost Rs 26,624.10 crore in market valuation last week, with ICICIBank hurting the most.
Reliance Industries Limited (RIL), HDFC Bank, Hindustan Unilever Limited (HUL), Kotak Mahindra Bank and State Bank of India were other blue chips that saw a drop in their market capitalisation (m-cap) for the week ended Friday, while Tata Consultancy Services, HDFC, Infosys and ITC ended in the green.

ICICI Bank's valuation tumbled Rs 6,883.44 crore to Rs 3,48,532.24 crore, taking the steepest hit among the top-10 firms.
The m-cap of Kotak Mahindra Bank dropped Rs 5,197.08 crore to Rs 3,16,763.68 crore and that of HUL plunged Rs 4,589.4 crore to Rs 4,17,538.13 crore.
HDFC Bank's market cap tanked Rs 3,724.38 crore to Rs 6,94,541.80 crore and that of State Bank of India (SBI) fell Rs 3,123.61 crore to Rs 2,97,858.91 crore.
The valuation of RIL decreased by Rs 3,106.21 crore to Rs 9,74,494.06 crore. In contrast, Infosys added Rs 3,960.45 crore to its m-cap to stand at Rs 3,17,730.27 crore.
ITC's valuation climbed Rs 1,843.66 crore to Rs 2,93,081.89 crore and that of HDFC went up by Rs 1,772.25 crore to Rs 4,24,432.18 crore. The m-cap of Tata Consultancy Services (TCS) spurted Rs 844.29 crore to Rs 8,25,674.73 crore.
In terms of ranking, RIL retained its number one position, followed by TCS, HDFC Bank, HDFC, HUL, ICICI Bank, Infosys, Kotak Mahindra Bank, SBI and ITC.
During the last week, the Sensex slipped 110.53 points or 0.26 per cent.

MARKET WRAP: Indices end last day of CY19 in the red, Sensex slips 304 pts

A weak trading sentiment across the globe, and concerns over infrastructure output data for November -- due later in the day -- pushed investors towards profit-booking on the last trading day of calendar year 2019. Information Technology (IT) stocks dragged indices lower on the back of a stronger rupee, coupled with decline in automobile counters. That apart, heavyweight private banking stocks, including ICICIBank and HDFC Bank, put pressure on the indices.
The S&P BSE Sensex settled at 41,253.74 level, down 304.26 points or 0.73 per cent, with 24 of the 30 constituents on the index settling in the negative territory. Tech Mahindra, Bajaj Auto, Reliance Industries, and Hero MotoCorp were the top losers today, while NTPC, ONGC, Sun Pharma, and Power Grid ended as the top gainers.
At close, the S&P BSE India Infrastructure index was up 0.8 per cent, after finance minister Nirmala Sitharaman announced plan to provide Rs 102 lakh crore infra-push over the next 5 years. KNR Constructions, IRB Developers, Gujarat Pipavav Ports, and PFC rallied up to 6 per cent. READ MORE
On the NSE, the broader Nifty50 index held the 12,150-mark to close at 12,168.45-level, down 87.4 points or 0.71 per cent. On the sectoral front, all the indices, barring Nifty Realty and Metal indices, slipped in the trade today. Nifty IT and Auto indices gave up 0.8 per cent each, while Nifty Realty index gained 0.7 per cent.
In the broader markets, the small-cap index outperformed the headline indices. The S&P BSE small-cap index ended 0.37 per cent higher at 13,699.37 level, as against a 0.03 per cent decline in the S&P BSE mid-cap index, which settled at 14,967.83.
MARKETS IN 2019
The year 2019 saw benchmark indices scale fresh lifetime highs amid volatility. Trade war concerns, tax proposals for India Inc and foreign portfolio investors (FPIs), the overall slowdown in the economy, rate cuts by the Reserve Bank of India were some of the key factors that guided markets through 2019.
The benchmark S&P BSE Sensex advanced 14.6 per cent in CY19, while the Nifty50 and Nifty Bank indices added 12.2 and 18.5 per cent, respectively. However, the BSE Midcap and SmallCap indices have slipped 3 per cent and 8 per cent, respectively, thus giving a negative return for the second year in a row.
GLOBAL CUES
In a shortened session ahead of the New Year’s Eve celebrations, the pan-European STOXX 600 index shed 0.3 per cent. French, British, and Spanish stocks lost between 0.4 per cent and 0.8 per cent, while Frankfurt and Milan bourses were shut for the year-end holidays.
Asian shares slipped on the last trading day of the decade.
Early in the Asian trading session, MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.39 per cent. Australian shares were 1.69 per cent lower and Hong Kong's Hang Seng dropped 0.32 per cent.
(With inputs from Reuters)
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Closing Bell
>> The S&P BSE Sensex settled at 41,253.74-level, down 304.26 points or 0.73 per cent, with 24 of the 30 constituents on the index settling in the negative territory
>> On the NSE, the broader Nifty50 index held the 12,150-mark to close at 12,168.45-level, down 87.4 points or 0.71 per cent.
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Infra stocks rally
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>> Stock down 7% from its record high level of Rs 1,618 on December 20, 2019
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NEWS ALERT | Intend to launch a National Infrastructure Pipeline: FM
>> To monitor the progress and link all stake holders
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NEWS ALERT | Task force has recommended infra projects worth Rs 102 trillion: FM Sitharaman
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NEWS ALERT | FM begins media address
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Market check | Sudden decline in Sensex
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02:51 PM
BSE500 stocks that hit 52-week high today
COMPANY PRICE(RS) 52 WK HIGH CHG(RS) CHG(%)
AAVAS FINANCIERS 1967.00 1978.00 43.65 2.27
ADANI GREEN 166.50 166.50 7.90 4.98
AMBER ENTERP. 1114.10 1145.90 -16.55 -1.46
APL APOLLO 1880.80 1884.80 43.15 2.35
CHALET HOTELS 358.20 395.00 3.05 0.86
» More on 52 Week High
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Year in Review | In uncertain times, 2019 an eventful year for bonds, rupee
The year 2019 was an interesting one where global, as well as domestic factors, exerted an equal pull to determine the value of the asset classes. Towards the end, the Indian central bank introduced a special open market operations (OMO) to bring down bond yields. But this was not the only new tool that the central bank brought out from its arsenal. READ MORE
02:23 PM
Nifty sectoral indices at this hour
02:14 PM
Global Markets check
European shares looked set to end the decade with a whimper on Tuesday as investors locked in gains after a record rally that was fueled by optimism around trade and easing fears of a global recession.
In a shortened session ahead of the New Year’s Eve celebrations, the pan-European STOXX 600 index shed 0.3 per cent. French, British, and Spanish stocks lost between 0.4 per cent and 0.8 per cent, while Frankfurt and Milan bourses were shut for the year-end holidays.
Asian shares slipped on the last trading day of the decade.
Early in the Asian trading session, MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.39 per cent. Australian shares were 1.69 per cent lower and Hong Kong's Hang Seng dropped 0.32 per cent.
(via Reuters)
02:04 PM
BSE Smallcap index up for 5th straight day; Bodal Chemicals gains 13%
Shares of smallcap companies were in limelight on Tuesday with the S&P BSE Smallcap index trading higher for the fifth straight session on the BSE. At 01:26 pm, the smallcap index, up 0.46 per cent at 13,710 points, was the largest gainer among broader indices. In past five trading days, the smallcap index outperformed the market by gaining 2.5 per cent on the back of a strong rally in beaten down sector stocks like chemicals, auto ancillaries, sugar, media and credit rating agencies. READ MORE
BSE, Bombay stock exchange, NSE, GROWTH, investment, investor, MF, stock, market
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BROKERAGE RADAR | MOFSL on Jubilant Foodworks
CMP: Rs 1,632 | TP: Rs 1,720,( 5% Upside) | Reco: Buy
Jubilant FoodWorks (JUBI) is one of India’s largest food service Company, with a network of 1,200 Domino’s Pizza restaurants across 271 cities (as of Dec 31, 2018). The Company also has exclusive rights for developing and operating Dunkin’ Donuts restaurants for India and has 32 Dunkin’ Donuts restaurants across 10 cities in India.
The challenge of a high SSSG base eases significantly going forward and JUBI has done well in the face of 20% SSSG base in recent quarters.
With demand stabilizing, discretionary players with strong brands offer high scope for upside, in our view.
We expect over 25% EPS CAGR and improving RoEs over FY20-FY22.
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Top technical picks for 2020 by MOFSL
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BROKERAGE RADAR | Reliance Securities on Mangalam Cement
Mangalam Cement (MGC) is likely to witness healthy traction ahead mainly on account of steady realisation in Northern region and cost synergies.
Notably, commissioning of 11MW WHRS in the last month and recent USA petcoke contract at US$70 (US$77/tonne average cost in 2Q) along with likely improvement in utilisation will lead to meaningful decline in opex in the subsequent quarters.
Further, improved fly-ash availability, new coal mining and improved biomass contribution are expected to aid it’s operating performance.
We forecast EBITDA/tonne at Rs707 and Rs696 for FY20E and FY21E, respectively.
We maintain our fundamental BUY recommendation on the stock with a Target Price of Rs 400.
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BROKERAGE RADAR | Emkay Global Financial Services on SBI Life
We believe SBIL is on the right track given the increased focus on improving product mix toward the high-margin protection segment and taking granular steps toward digitalization. Backed by high operational efficiency, it enjoys the lowest cost ratio of ~10--11% (as % of NEP) among its peers. We expect the company to clock 19.9% APE growth over the next three years, with non-par savings/protection growing 47.2%/42.8% over FY19-FY22E. VNB is expected to see 24.4% CAGR over FY19-FY22E. EV is expected to register 17.5% CAGR over the same period. We maintain Buy rating and OW stance in EAP with a revised TP of Rs 1,100 (earlier Rs 965) at 3.3x Sep’21E EV
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Rupee check
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Breakout year? Steel players hope for demand surge, better prices in 2020
After 2019 saw the domestic market grapple with surge in imports, increased dependence on imported coking coal from select countries, the steel ministry will be focusing on managing availability of iron ore as leases of a clutch of mines are scheduled to expire in March next year. READ MORE

01:29 PM
2019 review :: Rusmik Oza, Sr. VP (Head of Fundamental Research-PCG), Kotak Securities
>> The polarisation seen in CY18 continued in CY19 with only a handful of stocks contributing to the returns in Nifty-50.
>> We expect the divide between Indian equities and economy to continue in CY20 because there may not be a quick recovery in the economy but market may do relatively better on account of strong earnings and favourable tax changes.
>> For 2020, we see valuations attractive in sectors like capital goods, utilities, oil & gas, construction, metals & mining and auto ancillaries.
01:17 PM
Top losers on BSE at this hour
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NEWS ALERT | Govt to invite EoI for Air India in a few weeks: Hardeep Singh Puri
>> Got lot of interest from private players
>> Want an Indian airline to acquire Air India for Strategic reasons
>> Govt reluctant to infuse more funds in AI
>> Next meeting on Alternative Mechanism for AI in few weeks
(As reported by CNBC TV18)
01:03 PM
Pre-budget meet: IT industry seeks 15% corp tax for services cos in SEZs
"What we have suggested is that given that they have reduced the manufacturing corporate tax rate to 15 per cent...the fact that the SEZ sunset is happening, at least for the new services companies in SEZs, if you make it 15 (per cent), then you will have one composite rate in SEZ for both manufacturing and services," Nasscom Senior Director and Public Policy Head Ashish Aggarwal told PTI after the over two-hour meeting. READ MORE
12:55 PM
Sector watch | Telecom shares trade mixed
COMPANY NAME LATEST HIGH LOW CHG
(RS) CHG(%) VALUE
(RS CR) VOLUME
VODAFONE IDEA 6.09 6.25 5.97 -0.06 -0.98 8.29 13615532
REL. COMM. 0.86 0.89 0.83 -0.01 -1.15 0.04 499343
QUADRANT TELE. 0.20 0.20 0.19 0.01 5.26 0.00 101092
BHARTI AIRTEL 461.15 462.45 458.60 0.65 0.14 3.85 83564
TEJAS NETWORKS 94.75 96.95 79.35 6.60 7.49 0.66 69579
12:48 PM
NEWS ALERT | DoT to allocate spectrum for 5G trials by Jan: sources to CNBC TV18
>> Spectrum-to-spectrum allocated for a duration of 1 yr
>> All major vendors, including Huawei, present for meeting with Telecom secy

Karvy fiasco: SAT grants no relief to banks on wrongly pledged securities

The Securities Appellate Tribunal (SAT) on Wednesday denied any relief to private-sector lenders HDFC Bank, IndusInd Bank and ICICIBank, which had moved it after the client securities that Karvy Stock Broking had pledged by misusing powers of attorney were restored to affected clients.
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The two-member bench chaired by C K G Nair and Justice M T Joshi said that appellants' plea to recall the shares transferred to close to 83,000 of Karvy's clients or to freeze these securities was "untenable".
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"... without going into the merit of the case, we are of the considered view that beyond the directions passed in our order of Bajaj Finance no further relief can be granted at this stage," the bench said.
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While not disputing the provisions of Depositories Act that were cited by lenders in their arguments, the bench said that in the case of alleged fraud, its implications also need to be factored in.
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"The very purpose of an ex parte ad interim order is to deal with the eventualities arising from such alleged fraud or similar major violations," the bench said in its remarks.
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The bench also rapped appellants for approaching the tribunal on December 2 when the Sebi order was passed on November 22. It observed that "a lot of water has flowed under the bridge" during this time.
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However, appellants were at "liberty" to approach Sebi. They could approach the market watchdog by December 6 if they wished to make any further representations. The whole-time member of Sebi would pass order by December 12 after giving an opportunity to appellants to present pleas.
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On Monday, National Securities Depository (NSDL) said that it had transferred shares of 82,559 (87 per cent) of Karvy’s clients who didn't have any outstanding dues.
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Following the move, Bajaj Finance was first to file its appeal before SAT. On Tuesday, HDFC Bank, ICICI Bank and IndusInd Bank moved SAT. Cumulatively, these four lenders are estimated to have extended loans to Karvy Stock Broking against collateral worth Rs 1,400 crore in shares.
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Lawyers arguing on behalf of the lenders questioned NSDL’s decision to reverse the pledged shares back to clients, stating that the Sebi's interim order on November 22 was aimed at keeping the status quo.
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Lawyers arguing on behalf of NSDL said that Sebi’s June circular had already directed brokers to remove all client securities from pledge. This should have served as notice to lenders exposed to Karvy and the former should have appropriately questioned broker on quality of underlying collateral.
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While no fresh relief was granted by SAT to the banks, further transfer of shares from Karvy Stock Broking's Demat account has been put on hold by SAT after hearing the plea made by Bajaj Finance.

ICICI Bank business approach gets Street thumbs-up; stock at all-time high

The stock of ICICIBank hit an all-time high of Rs 531.35 in intra-day trading on Wednesday, before ending the day with 4 per cent gains over previous close at Rs 529.35. This was a day after the lender presented its business perspective to analysts.
Among the key highlights of the analysts’ day event were ICICI Bank’s digital and technical initiatives, which should help it accelerate growth across all business verticals. The bank said it would focus on opportunities in the entire ecosystem, besides calibrating risk to propel operating profit through its approach of ‘One Bank One RoE’. A profitability indicator, RoE stands for return on equity.

Analysts expect these efforts to provide the bank’s earnings a strong support and help increase its RoE, estimated to be under 10 per cent for FY20, to more than 15 per cent in two years.
For example, the use of technology to garner new quality business will help the bank not only in reducing its overall operating cost but also its credit cost (bad loan provisioning as a proportion of average loan book).
Even as technology and digitisation have always been a focus area for it, the bank has been grappling with asset-quality and management issues for over a year. “With asset-quality issues getting sorted, ICICI Bank appears firmly positioned to deliver healthy sustainable growth, led by continued investments in technology and further expansion in digital offerings,” analysts at Motilal Oswal said in a report.
Further, a holistic approach to corporate lending — for instance, giving loans mostly to corporate borrowers with an A- or better credit rating (indicating high credit quality), and focusing on capital return rather than pricing, are likely to improve the bank’s wholesales business performance.
Overall, analysts see ICICI Bank’s efforts as being in the right direction. Many of them now expect a further re-rating potential for the bank’s stock, despite a rise of rise of 12.5 per cent in the past month, vis-a-vis Nifty Bank’s around 5 per cent rise. “We perceive a further re-rating potential as the market gains confidence in earnings sustainability,” said analysts at Edelweiss Securities.
After Tuesday’s event, many analysts have also raised their target price for the ICICI Bank stock by as much as 19 per cent to Rs 567, show Bloomberg data.

Chanda Kochhar takes ICICI Bank to Bombay HC; hearing on December 2

Chanda Kochhar, ICICIBank’s former managing director and chief executive officer, has moved the Bombay High Court, challenging the decision of the bank’s board earlier this year to terminate her employment and claw back the bonuses and stock options she received between April 2009 and March 2018.
A division Bench of the high court comprising Justice Ranjit More and Justice Makarand Karnik will hear Kochhar’s plea on December 2. With this, the stage is set for an intense legal battle between the bank and its former CEO.

Last year, after media reports raised questions over Kochhar’s dealings with the Videocon group, the bank’s board had initially defended her and rejected any external enquiry, but later changed its stance after the Central Bureau of Investigation (CBI) started its probe into the matter. On June 6, 2018, the bank appointed retired Supreme Court judge B N Srikrishna to enquire into all the allegations.
Chanda Kochhar takes ICICI Bank to Bombay HC; hearing on December 2
In a meeting held on January 30, 2019, the ICICI Bank board announced that it would treat the separation of Kochhar as a ‘termination for cause’ in accordance with the bank’s internal policies and code of conduct. The termination revoked all her entitlements such as any unpaid amounts, unpaid bonuses or increments, unvested and vested but unexercised stock options, and medical benefits, apart from the clawback of all bonuses paid between April 2009 and March 2018.
The board’s decision to remove Kochhar came after the detailed investigation report from Justice Srikrishna, who investigated the allegation that Videocon Industries was granted loans by ICICI Bank and, in quid pro quo, Videocon invested in Chanda Kochhar’s husband Deepak Kochhar’s company, Nupower Renewables. Nupower, Videocon, and Kochhar have denied these allegations.
An email sent to ICICI Bank did not elicit any reply. Kochhar did not reply to text messages.
The allegations against Kochhar were first made by whistle-blower Arvind Gupta, who wrote to the Prime Minister’s Office in 2016 alleging irregularities in ICICI Bank's loan disbursements to corporates under Kochhar’s watch.
The scandal exploded when in March 2018, the media reported that the CBI had filed a preliminary enquiry against Kochhar. In January 2019, the CBI filed an FIR against the Kochhars and Videocon. The Enforcement Directorate is also investigating Videocon and the Kochhars.
Videocon is now facing bankruptcy proceedings after defaulting on bank loans worth Rs 40,000 crore. ICICI Bank has made a claim of Rs 3,318 crore against Videocon in the ongoing insolvency proceedings.
The allegations against Kochhar were first made by whistle-blower Arvind Gupta, who wrote to the Prime Minister’s Office in 2016 alleging irregularities in ICICI Bank's loan disbursements to corporates under Kochhar’s watch. The scandal exploded when in March 2018, the media reported that the CBI had filed a preliminary enquiry against Kochhar. In January 2019, the CBI filed an FIR against the Kochhars and Videocon. The Enforcement Directorate is also investigating Videocon and the Kochhars.

ICICI Bank Q2 net profit down 6% to Rs 1,131.20 crore

Private sector lender ICICI Bank on Saturday posted a 6.09 per cent decline in consolidated net profit for the September quarter at Rs 1,131.20 crore.
It had reported a net profit of Rs 1,204.62 crore for the July-September period a year ago.

Total consolidated income rose 17.26 per cent to Rs 37,424.78 crore during the period under review, as against Rs 31,914.82 crore in the corresponding period of 2018-19, the bank said in a regulatory filing.
On standalone basis, ICICI Bank's net profit was down 27.93 per cent to Rs 654.96 crore in July-September as against Rs 908.88 crore of the corresponding quarter last fiscal.
Total standalone income was up 24.62 per cent to Rs 22,759.52 crore as against Rs 18,262.12 crore earlier.
The lender witnessed an improvement in asset quality as gross non-performing assets (NPAs) fell to 6.37 per cent of the gross advances by the end of September 2019, from 8.54 per cent a year ago.
Net NPAs stood at 1.60 per cent, down from 3.65 per cent a year ago.
Consequently, provisioning for bad loans and contingencies fell to Rs 2,506 crore for July-September 2019, as against Rs 3,994 crore a year earlier.

ICICI Bank Q2 preview: Analysts eye double-digit loan growth, asset quality

Minimal increase in stressed assets, steady slippages, and robust loan growth could make ICICI Bank stand as an outlier among its lending peers for the September quarter results. The bank is scheduled to report its Q2FY20 earnings on Saturday, October 26.
“ICICI Bank will likely be an outlier with lower asset quality issues, steady slippages and very limited additions to stress book” wrote analysts at Prabhudas Lilladher in a results preview note.

They believe a better-than-industry loan growth figure, supported by retail and domestic growth could push the bank’s net interest margin (NIM) slightly upwards. A 14.2 per cent year-on-year (YoY) loan growth at Rs 6.2 lakh crore could take the NIM to 3.68 per cent, while reducing credit cost by 125 bps to 1.68 per cent, they say. The loan book in Q2FY19 and Q1FY20 stood at Rs 5.44 lakh crore and Rs 5.92 lakh crore, respectively.
“ICICI has minimal exposure to the most talked-about stressed groups. This, coupled with high coverage, should lead to normalisation of credit cost,” said analysts at Edelweiss Securities.
Moreover, the gross non-performing asset (GNPA) ratio is pegged at 6.12 per cent for the recently concluded quarter, down from 8.54 per cent reported in the corresponding quarter of the previous fiscal and 6.49 per cent in Q1FY20.
NET INTEREST INCOME AND PROFIT
Analysts at HDFC Securities expect the net interest income (NII) to grow nearly 24 per cent on the back of healthy loan growth. The brokerage pegs the NII at Rs 7,950 crore, up from Rs 6,417.6 crore reported in Q2FY19, for the recently concluded quarter. The NII in the previous quarter of the current fiscal stood at Rs 7,737.4 crore.
As for profits, analysts on average, believe the private lender’s PAT could come in between Rs 2,224.8 crore and Rs 2,769.3 crore, up 144 to 205 per cent YoY. The bank’s net profit was Rs 908.9 crore in the September quarter of FY19 and Rs 1,908 crore in June quarter of FY20.
Analysts at Edelweiss Securities, however, expect the profit to decline 66 per cent YoY and 84 per cent QoQ due to one-time mark-down of deferred tax asset (DTA) to Rs 310 crore.
Meanwhile, Reliance Securities peg the pre-provision operating profit (PPOP) at Rs 6,272.9 crore, up 19.5 per cent YoY, but down 0.2 per cent QoQ.
KEY MONITORABLES
Analysts would watch out for the management’s commentary on further additions, if any, to stressed assets, comments on insolvency and bankruptcy code (IBC) resolutions, margin outlook post linking of fresh retail loans to external benchmarks, and performance of the bank’s subsidiaries.
So far in calendar year 2019, the stock of the private lender has outperformed the benchmark S&P BSE Sensex by surging 26.5 per cent, as against an 8 per cent rise in the index.

Fairfax offloads 4.9% stake in ICICI Lombard for Rs 2,627 crore

Prem Watsa’s Fairfax on Thursday sold 4.91 per cent stake in ICICI Lombard General Insurance Company, exiting the firm it co-founded with ICICI Bank in 2001.
FAL Corporation, a subsidiary of Canada-based Fairfax, sold 22 million shares at Rs 1,178 apiece via block deals, the data provided by stock exchanges showed. The company has mopped up Rs 2,627 crore through the stake sale. The stake was bought by a clutch of buyers whose names couldn’t be ascertained.

This comes after the insurance regulator relaxed the five-year lock-in rule for Fairfax’s stake in ICICI Lombard, which was scheduled to end in March 2021. Watsa has also invested in digital general insurance player Digit General Insurance. Shares of ICICI Lombard fell nearly 5 per cent in the secondary market to end at Rs 1,207 because of poor performance of the company in September.
The total premium collection for ICICI Lombard in September fell 23 per cent. Also, in the first half of 2019-20, the company’s premium collection contracted 11 per cent, compared to the same period last year.
On September 27, Fairfax had sold nearly 5 per cent stake in ICICI Lombard for Rs 2,562 crore. Back then, L&T Mutual Fund (MF), SBI MF, ICICI Prudential MF, and Aditya Birla Sun Life MF were among the buyers.
ICICI Lombard was set up in 2001, a 64:36 joint venture (JV) between ICICI Bank and Fairfax. The latter has reduced its stake in the JV over the years. When ICICI Lombard came out with an initial public offering in September 2017, Fairfax had sold its 12 per cent stake, while ICICI Bank had sold nearly 7 per cent.
Shares of ICICI Lombard have more than doubled since its listing. Currently, ICICI Bank holds 55.86 per cent in the general insurer.
Currently, Fairfax has investment in other Indian companies, including Thomas Cook India, Quess Corp, India Infoline, and Catholic Syrian Bank. The firm has proposed to invest billions of dollars more in India over the next five years.

ICICI Bank back in the black in Q1 with net profit of Rs 1,908 crore

Private sector lender ICICI Bank on Saturday reported a net profit of Rs 1,908.03 crore for the April-June quarter (Q1FY20), aided by good interest income and lower provisioning, against a loss of Rs 120 crore in the year-ago quarter. Analysts were expecting a profit of little more than Rs 2,000 crore for the first quarter.
The bank, however, showed improvement in asset quality, as its gross non-performing assets (NPA) ratio fell -- both year-on-year and sequentially -- and the gross additions to NPAs were lower than the year-ago quarter.

The gross NPA ratio was 6.49 per cent for the June quarter, compared to 8.81 per cent in the year-ago period and 6.70 per cent in the March quarter.
The net NPA ratio decreased to 1.77 per cent at the end of June 30 this year, which is the “lowest in 14 quarters”, said the bank’s executive director, Sandeep Batra, in a conference call with the media. In the year-ago quarter, the net NPA ratio was 4.19 per cent.
The bank’s management did not offer any guidance on slippages, or even credit and deposit growth, but said rather than chasing a growth target, the bank would be focusing on choosing customers that pass through their “filters”.
“As of now, we are stable (in terms of asset quality). We have our risk filters which are pretty tight. We continue to recalibrate the segments that we are not comfortable with. Whatever we are writing, we are quite comfortable with that,” said Batra.
“We are not targeting a number, but as long as the customer passes the risk filter, we are happy to grow our loan book,” said Rakesh Jha, group CFO.
ICICI Bank back in the black in Q1 with net profit of Rs 1,908 crore “We do expect a credit cost within tolerable level and our overall outlook on credit cost is stable. We continue to monitor these credit qualities across our portfolios,” Jha said.
The bank’s net interest income (NII) increased by 27 per cent year-on-year to Rs 7,737 crore in the first quarter. NII in the current quarter includes Rs 184 crore of interest on income-tax refund, compared to Rs 8 crore in the year-ago quarter, and Rs 414 crore in the March quarter, the bank said in a statement.
Core operating profit (profit before provisions and tax, excluding treasury income) increased by 21 per cent year-on-year to Rs 6,110 crore from Rs 5,042 crore a year ago.
Net interest margin, or the difference between the yields on advances and cost of deposits, was 3.61 per cent compared to 3.19 per cent in the year-ago quarter and 3.72 per cent in the March quarter. Non-interest income, excluding treasury income, was Rs 3,247 crore compared to Rs 3,085 crore in Q1FY19. Also, fee income grew 10 per cent to Rs 3,039 crore.
“Retail fees constituted 72 per cent of total fees,” the bank said. Treasury income in the quarter was Rs 179 crore compared to Rs 766 crore in the year-ago period. However, last year’s treasury income included a gain of Rs 1,110 crore on sale of shareholding in ICICI Prudential Life Insurance.
Provisions for the quarter were Rs 3,496 crore compared to Rs 5,971 crore in the year-ago period.
The bank’s domestic loan book grew 18 per cent year-on-year, while total loan growth was 15 per cent. The CASA ratio was 45.2 per cent as of June 30, 2019, compared to 49.6 per cent on March 31, 2019, and 50.5 per cent on June 30, 2018.
Recoveries and upgrades of non-performing loans were Rs 931 crore in the first quarter. “At June 30, 2019, the fund-based and non-fund based outstanding to borrowers rated BB and below (excluding nonperforming assets) was Rs 15,355 crore ($2.2 billion) compared to Rs 24,629 crore ($3.6 billion) at June 30, 2018,” the bank said. These BB rated loans don’t necessarily mean they are due to slip into NPAs, the management clarified. “It doesn’t mean that the entire book will slip into NPA. Any bank, at any point, will have BB assets,” said Batra.
According to the management, the share of unsecured credit loans in the total loans is 8 per cent, and the BB-rated loans constitute 3.5 per cent of the total loans.
On a consolidated basis, profit after tax was Rs 2,514 crore in the first quarter, against Rs 1,170 crore in the fourth quarter and Rs 5 crore in the year-ago quarter. The bank said it was not planning to raise any capital, and that it was well capitalised.
The bank said it would continue to lend to good quality. The bank did not buy much securitised assets from NBFCs in the June quarter, and will buy those assets only if the retail loans pass the bank’s set ‘criter

ICICI Bank posts standalone net profit of Rs 1,908 crore for June quarter

ICICI Bank on Saturday reported a standalone net profit of Rs 1,908 crore for the first quarter ended June 2019.
The bank had posted a net loss of Rs 120 crore in the same quarter a year ago.

Total income on standalone basis in the reported quarter rose to Rs 21,405.50 crore from Rs 18,574.17 crore a year earlier, the bank said in a regulatory filing.
On a consolidated basis, its net profit for the April-June period sttod at Rs 2,513.69 crore as against Rs 5 crore in the corresponding quarter of 2018.
The bank's income (consolidated) rose to Rs 33,868.89 crore in the said quarter from Rs 27,174.12 crore in April-June 2018.
The lender witnessed an improvement in asset quality as gross non-performing assets (NPAs) fell to 6.49 per cent of the gross advances by the end of June 2019, from 8.81 per cent a year ago.
Net NPAs were 1.77 per cent, down from 4.19 per cent a year ago.
Thus, the provisioning for bad loans and contingencies fell to Rs 3,495.73 crore for April-June 2019, as against Rs 5,971.29 crore a year earlier.
Read our full coverage on ICI

ICICI-Videocon case: Chanda Kochhar, husband appear before ED in Mumbai

Former ICICI Bank CEO Chanda Kochhar and husband Deepak Kochhar appeared before the Enforcement Directorate in Mumbai Saturday in connection with a money-laundering case related to a bank loan fraud, officials said.
The two reached the central agency's regional office in Ballard Estate area around noon, a day after the ED raided their premises.

Officials said the investigating officer of the case will record their statements under the Prevention of Money Laundering Act (PMLA).

The ED on Friday conducted searches at the premises of Chanda Kochhar, former chairman ICICI Bank, and Venugopal Dhoot of Videocon Group in Mumbai and Aurangabad, respectively.
A total of five premises were covered, officials said.
The two were grilled by the agency officials on Friday too.
It is expected that Dhoot, a Videocon Group promoter, who was also questioned on Friday, will appear before the agency on Saturday.
ALSO READ: ICICI-Videocon case: ED raids offices, homes of Chanda Kochhar, Dhoot
The ED has registered a criminal case under the PMLA early this year against Chanda Kochhar, Deepak Kochhar, Dhoot and others to probe alleged irregularities and corrupt practices in sanctioning of Rs 1,875-crore loans by ICICI Bank to the corporate group.
The CBI has named all the three and Dhoot's companies -- Videocon International Electronics Ltd (VIEL) and Videocon Industries Limited (VIL).
The CBI also named Supreme Energy, a company founded by Dhoot, and NuPower Renewables, a company controlled by Deepak Kochhar, in the FIR.

Videocon loan case: ED books Chanda, Deepak Kochhar for money laundering

The Enforcement Directorate (ED) has registered a criminal case of money laundering against former ICICI Bank CEO Chanda Kochhar, her husband Deepak Kochhar, Videocon Group promoter Venugopal Dhoot and others to probe alleged irregularities and corrupt practices in sanctioning of Rs 1,875-crore loan by the bank to the corporate group, officials said Saturday.
They said the central probe agency filed an Enforcement Case Information Report (ECIR) under the Prevention of Money Laundering Act, taking cognisance of a CBI complaint filed on the matter last month.

An ECIR is the ED's equivalent of a police FIR.
The officials said the agency would probe if alleged kickbacks generated in the loan deal were laundered to create tainted assets.
The ED is soon expected to summon the accused named in the ECIR. The list of accused in the ED case is the same as that of the CBI, they said.
ALSO READ: Chanda Kochhar held guilty in ICICI probe report, will lose her perks
The CBI had named Chanda Kochhar, Deepak Kochhar, and Dhoot and his companies -- Videocon International Electronics Ltd (VIEL) and Videocon Industries Limited (VIL). It also named Supreme Energy, a company founded by Dhoot, and Nupower Renewables, a company controlled by Deepak Kochhar, in the FIR.
The CBI has slapped sections of the Indian Penal Code related to criminal conspiracy, cheating and provisions of the Prevention of Corruption Act on all the accused.
It had also conducted raids in the case.
ALSO READ: Chanda Kochhar says 'hurt and shocked' by ICICI Bank's decision to sack her
It is alleged that Dhoot had invested in Deepak Kochhar's company Nupower through his firm Supreme Energy a quid pro quo to loans cleared by ICICI Bank after Chanda Kochhar took over as the CEO of the bank on May 1, 2009.
The ownership of Nupower and Supreme Energy changed hands through a complex web of shared transactions between Deepak Kochhar and Dhoot, the CBI alleged.
During its preliminary enquiry, the CBI found that six loans worth Rs 1,875 crore were sanctioned to the Videocon Group and companies associated with it between June, 2009 and October, 2011 in alleged violation of laid-down policies of ICICI Bank, which have now become part of the probe.
ALSO READ: CBI files FIR against Nupower, raids group in ICICI Bank-Videocon loan case
"Existing outstanding in the accounts of these private group companies were adjusted in Rupee Term Loan of Rs 1,730 crore sanctioned by ICICI Bank under refinance of domestic debt under consortium arrangement on April 26, 2012," a CBI spokesperson had said.
The loans were declared non-performing assets in 2012, causing a loss of Rs 1,730 crore to the bank, it alleged.

CBI names former ICICI Bank CEO Chanda Kochhar in Videocon loan case

The Central Bureau of Investigation (CBI) has charged former ICICI chief Chanda Kochhar, her husband Deepak Kochhar and Videocon group MD Venugopal Dhoot in connection with alleged cheating and irregularities in loans sanctioned by the bank to Videocon group in 2012, officials said Thursday.
The CBI Thursday carried out searches at multiple locations, including the offices of Videocon group in Mumbai and Aurangabad, offices of Nupower Renewables Pvt Limited, a company run by Deepak Kochhar, and Supreme Energy after registering a case.
"It was alleged that the accused sanctioned certain loans to private companies in a criminal conspiracy with others to cheat ICICI bank," said a CBI spokesperson.
The agency has also named companies Nupower Renewables, Supreme Energy, Videocon International Electronics Ltd and Videocon Industries limited as accused in the FIR registered under IPC sections related to criminal conspiracy and provisions of prevention of corruption act, they said.
Dhoot allegedly invested crores of rupees in Nupower months after the Videocon group got Rs 3,250 crore as loan from ICICI Bank in 2012.
The CBI’s action comes 10 months after it started a preliminary enquiry (PE) against Dhoot, Deepak Kochhar and other unidentified people in March 2018.
A PE is a precursor before the agency lodges an FIR to probe criminal charges on the basis of evidence collected during the former exercise.

Banks have dominated in top management changes this year: Report

Banks have dominated in top management changes this year, a sector analysis done by ICICI Securities shows. There have been as many as 18 top management changes in listed public sector banks, and another nine in the private banking space. The energy sector has seen the second-most changes in the top rung, at 18. All changes took place in public sector companies. The FMCG, power, and auto sectors are among the top five with the highest number of management changes, shows the data.

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ICICI Bank okays independent probe into allegations against Chanda Kochhar

The board of India's largest private sector lender ICICI Bank has ordered an independent probe into allegations of 'conflict of interest' and 'quid pro quo' in bank's MD and CEO Chanda Kochhar's dealing with certain borrowers.
There are allegations of involvement of Kochhar and her family members in a loan provided to Videocon group on a quid pro quo basis.

It was alleged that Videocon Group pumped money into NuPower Renewables, a firm owned by Deepak Kochhar, husband of Chanda Kochhar.
Last week, market regulator Sebi had served a notice on Kochhar on dealings of the bank with Videocon Group and Nupower.
The enquiry was ordered by the board, at its meeting yesterday, on a complaint by an anonymous whistle-blower against Kochhar, the bank said in a regulatory filing today.
"...the enquiry to be headed by an independent and credible person (will) examine and enquire into an additional anonymous whistle-blower complaint...," it said.
The scope of enquiry would be comprehensive and include all relevant matters arising out of and in course of examination of the facts and wherever warranted, use of forensics/email reviews and recordal of statements of relevant personal, it said.
The enquiry, the bank said, will be conducted by an 'independent and credible' person.
The whistle-blower had alleged that the bank's MD and CEO had not adhered to provisions relating to code of conduct of the bank and legal and regulatory provisions relating to conflict of interest over a period of time and also alleged quid pro quo in the course of Kochhar's work in dealing with certain customers/borrowers of the bank.
Interestingly in April, the board had expressed full confidence in Kochhar and ruled out any quid pro quo as alleged with regard to certain loan given to Videocon group.
The regulator filing, which came today after close of stock market, further said the enquiry will cover all "connected matters" in the course of investigations to bring the matter to a final close.
In keeping with the whistle-blower policy of the bank, its board mandated the audit committee to appoint an independent and credible person to head the enquiry and also define the terms of reference, including timeline.
There are also allegations that NuPower got investments of Rs 3.25 billion from Mauritius-based Firstland Holdings, a company owned by Nishant Kanodia, son-in-law of Essar Group co-founder Ravi Ruia.
The investments from Ruia's son-in-law's firm into NuPower started in December 2010. Incidentally, the same month ICICI Bank was lead banker in a consortium of Indian banks that extended a USD 530 million loan to Essar Steel Minnesota LLC on December 29, 2010. This loan was later classified as NPA.
The Reserve Bank in its 2016 investigation in the matter had raised questions over the ownership of the Mauritius-based entity, First Land Holding, which had invested Rs 325 crore in NuPower.
Also, there was no clarity over the alleged Rs 640 million loan (unsecured fully convertible debentures) given to NuPower by Supreme Energy, which was 99.99 per cent owned by Videocon chief Venugopal Dhoot at that time.
While Chanda Kochhar sat on the credit committee that approved the loan to Videocon, there are allegations of conflict of interest in her husband's brother, Singapore-based Rajiv Kochhar, performing debt-restructuring work on errant corporate borrowers from ICICI, including Videocon.
The restructuring wasn't commissioned by the bank but by the borrowers.
Interestingly, the board of ICICI Bank expressed full faith in Chanda Kochhar, whose current tenure as CEO is set to end on March 31, 2019. It had reviewed credit approval processes and found them to be robust, according to a March 28 filing by the bank.