ICICI surges after CEO says bad-loan ratios will improve

Bloomberg

ICICI Bank Ltd., India’s second-largest private sector lender by assets, was Asia’s best-performing bank stock on Tuesday after its top official said bad-loan ratios will improve.
ICICI jumped 7.1 percent, set for the biggest gain since October 25, and was the top stock on Bloomberg’s Asia Pacific Banks Index. Chief Executive Officer Chanda Kochhar, who has been assuring investors since 2015 that the bank has gained control over its bad-loan problem, guided that the net ratio will narrow to about a quarter of the current level over the next two years.
ICICI’s net income halved from the previous year to 10.2 billion rupees ($152 million) in the three months ended March 31, despite a 33.2 billion rupee gain from the sale of the bank’s stake in its ICICI Securities Ltd. unit, the Mumbai-based lender said in an exchange filing after the market had shut. Provisions more than doubled.
While the guidance on asset quality is comforting investors, it’s dependent on too many moving parts including timely resolution of stressed assets under India’s bankruptcy process, said Kranthi Bathini, director of Mumbai-based financial advisory company WealthMills Securities Pvt. “The rally may have limited legs as investors remain unhappy about the way in which the bank’s board addressed corporate governance issues.”