Private sector lender ICICI Bank reduced its marginal cost of lending-based funds (MCLR) by 5 basis points (bps) through tenors on Tuesday (1st September 2020). After the cut, the ICICI Bank’s one-year MCLR, to which many of the consumer loans are related, would fall to 7.4 per cent.
The bank has effectively reduced this year’s one-year MCLR by 80 bps, in response to the RBI’s 115 bps decline in repo rate. On 6th August 2020, the Monetary Policy Committee (MPC) retained an accommodating posture and set a repo rate of 4% unchanged. ICICI Bank’s overnight and one-month MCLR stood at 7.15 per cent after the decrease. Similarly, MCLR stood at 7.2 per cent and 7.35 per cent respectively for three months and six months. The loan rate reductions are effective from 1st September 2020.
Another private lender, HDFC Bank, had the previous month reduced its MCLR by 10 bps through tenors. The overnight MCLR of HDFC Bank stood at 7% and the one month stayed at 7.05%. The one-year MCLR of the bank stood at 7.35%, while the three-year MCLR was set at 7.55%. Similarly, the largest SBI lender had previously reduced MCLR by 5-10 bps for shorter tenors. SBI’s one-year MCLR, however, remained unchanged at 7%.
Private-sector lender ICICI Bank posted a 36 per cent year-on-year (YoY) increase in its net profit in the June quarter to Rs 2,599 crore earlier. Rs 3,092 crore revenue from the stake sale in its subsidiaries helped the bottom-line.
Although ICICI Bank is the second-largest private sector lender, it lowered rates by 5 bps across all tenors and Bank of Maharashtra also lowered rates by up to 45 bps in January, HDFC bank MCLR remains lower for one-year tenor. Borrowers usually opt for the one-year MCLR.
During the quarter of June, ICICI Bank sold a 3.96 per cent stake in ICICI Lombard for Rs 2,250 crore and a 1.5 per cent stake in ICICI Prudential Life for Rs 840 Crore. Last month, via an open market deal for Rs 310 crore, the bank has further divested a 2 percent stake in its subsidiary ICICI Securities.
