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Ahead of MPC meet, ICICI Bank cuts MCLR by 10 basis points

Three days before the outcome of the Reserve Bank of India (RBI)’s monetary policy committee meeting (MPC) on Thursday, ICICI Bank on Monday reduced the marginal cost of funds-based lending rate (MCLR) by 10 basis points (bps) across tenors.

 

The one-year MCLR of ICICI Bank, to which many of the consumer loans are linked, will come down to 7.45% after the reduction. The bank has effectively reduced one-year MCLR by 75 bps this year in response to 115-bps reduction in the repo rate by the RBI.

 

The monetary policy committee of RBI is set to meet from August 4-6.

 

After 10-bps reduction, overnight and one-month MCLR of ICICI Bank stands at 7.2%. Three-month and six-month MCLR remains at 7.25% and 7.4%, respectively. The reduction in lending rates will be effective from August 1, 2020.

 

HDFC Bank had earlier reduced its MCLR by 20 bps across tenors last month. Private lender’s overnight MCLR stood at 7.1% and one-month MCLR was at 7.15%. HDFC Bank’s one-year MCLR stood at 7.45%, while three-year MCLR had been set at 7.65%.

 

Largest lender State Bank of India (SBI) had reduced the MCLR for shorter tenors by 5-10 bps last month. However, one-year MCLR of SBI stood unchanged at 7%.

 

According to a Kotak Institutional Equities report last month, private and public sector banks have cut MCLR by an average of 90-100 bps in the past 12 months. The lending rates are likely to soften further as per report.

 

ICICI Bank reported a 36% year-on-year rise in its net profit to Rs 2,599 crore for the June quarter, despite additional Covid-related provisions of Rs 5,550 crore. The bottom line was supported by Rs 3,092-crore income from the stake sale in subsidiaries. ICICI Bank had sold 3.96% stake in ICICI Lombard for Rs 2,250 crore and 1.5% in ICICI Prudential Life for Rs 840 crore during the June quarter. The bank has plans to garner money from more stake sale in subsidiaries in the current financial year.

 

ICICI Bank will take shareholders’ approval to raise Rs 15,000 crore at the annual general meeting to be held on August 14.

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