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ICICI Bank posts smallest profit in seven quarters

(Reuters) - ICICI Bank, India’s third-largest lender by assets, reported its smallest profit in seven quarters on lower treasury income and as provisions rose from a year earlier but said bad loan additions were slowing.

A signboard of the ICICI bank is pictured outside a bank in New Delhi, India, March 4, 2016. REUTERS/Adnan Abidi/File Photo

Net profit for the three months to Dec. 31 fell 32 percent year on year to 16.5 billion rupees ($259.4 million), the bank said on Wednesday. That compared with a 19.54 billion rupees average forecast from 24 analysts, Thomson Reuters data shows.

Soured loans have nearly doubled at Indian banks over the past four years as a prolonged economic slowdown took its toll on the ability of companies to repay debt. The rise in non-performing loans has also been blamed on profligate lending in some cases.

While 21 state-run lenders account for bulk of the 9.46 trillion rupees of stressed loans at Sept. 30, private sector banks including ICICI also had more than a trillion rupees of non-performing and rolled-over debt.

ICICI’s gross bad loans as a percentage of total loans was 7.82 percent at the end of December, compared with 7.87 percent at Sept. 30 and 7.2 percent a year earlier.

Growth in bad loans slowed to 43.8 billion rupees in the past quarter, from 46.74 billion rupees in the September quarter. That compared with 70.37 billion rupees a year ago.

Chief Executive Chanda Kochhar told reporters on a conference call that bad-loan additions were at their slowest in nine quarters but forecast provisions for such loans to remain at an “elevated” level as banks set aside more money for defaults by companies being pursued in bankruptcy court.

Provisions including for bad loans rose by 31.6 percent from a year earlier to 35.7 billion rupees in the quarter, the bank said.

Kochhar also said the bank did not need to disclose any additional bad loans for the last financial year to March 2017 after a central bank audit of its books. She did not give details of the audit but said it was below the threshold set by the Reserve Bank of India for banks to report so-called divergence in bad loans.

State-run IDBI Bank, which also reported third-quarter results on Wednesday, posted a fifth straight quarterly loss on higher provisions for bad loans, though the loss narrowed from last year.

($1 = 63.6000 Indian rupees)

Reporting by Krishna V Kurup and Devidutta Tripathy; Editing by David Goodman