Lower provisioning for bad loans and healthy net interest margins helped ICICI Bank report 20 per cent increase in net profit at Rs 1,728 crore for the December quarter compared with Rs 1,437 crore in the same quarter a year ago.

The bank decreased provisioning for bad loans by 27 per cent to Rs 341 crore, while net non-performing assets fell by 28 per cent to Rs 2,082 crore. Net non-performing asset ratio decreased to 0.7 per cent during the quarter from 0.8 per cent in the previous quarter and 1.16 per cent in the December quarter of 2010-11.

Net interest margin (NIM) remained steady at 2.7 per cent compared with 2.63 per cent in the previous quarter.

“Our non-performing assets have been under control and provisioning has fallen by 28 per cent,” ICICI Bank managing director and CEO Chanda Kochhar said in a conference call with reporters.

Net interest income, the difference between interests earned and paid out, increased 17 per cent to Rs 2,712 crore. Fee income rose 5 per cent to Rs 1,701 crore.

The bank increased advances by 19 per cent to Rs 2.46 lakh crore during the quarter. The Casa (current account, savings account) ratio increased to 43.6 per cent from 42.1 per cent in the previous quarter.

“We expect credit and deposits to grow by 18 per cent,” said Kochhar. “Our unsecured retail loans are down by 35 per cent from the same period last year while secured loans, corporate assets and retail assets are growing. Our credit quality continues to remain strong,” she said.

“The growth momentum has come on the corporate side while it is building on the retail side. The retail book has started growing, but it has been slower than the corporate book,” Kochhar said.

Net restructured assets at December 31, 2011 stood at Rs 3,070 crore and constituted 1.2 per cent of the loan book. Its power sector exposure stood around 7 per cent of the total loan book.

Anish Damania, head of research at Emkay Global, said, “In the last 2-3 years, ICICI Bank grew slower than the industry. Our recommendation is to hold on stock with a target price of Rs 1,200.”

ICICI Prudential life insurance that has completed 10 years of operations has for the first time paid a dividend of Rs 150 crore.

ICICI Life’s profit after tax for nine months of 2012 was Rs 1,056 crore compared to Rs 513 crore for nine months of 2011.