ICICI Bank on Saturday missed Street estimates as a one-time tax adjustment saw the private sector lender reporting a 28 per cent drop in standalone net profits for the September quarter.

Net profits at ICICI Bank came in at Rs 654.96 crore compared with Rs 908.88 crore a year ago. During the period, tax expenses rose to Rs 3,712.27 crore from Rs 346.54 crore in the year-ago period.

In its notes to accounts, the lender said it and certain group companies have decided to exercise the option of a lower tax rate available under the recent changes announced by the government with effect from this fiscal.

Accordingly, they “re-measured the accumulated deferred tax asset on March 31, 2019’’ based on the rate prescribed under the revised norms. It added that this re-measurement of accumulated deferred tax asset has resulted in a one-time additional charge of Rs 2,919.75 crore in standalone financial numbers.

ICICI Bank said excluding the impact of this one-time additional charge, profit after tax would have come in at Rs 3,575 crore.

However, there was an improvement in its asset quality with gross non-performing assets (NPAs) at Rs 45,638.79 crore compared with Rs 45,763.08 crore on a sequential basis.

Similarly, the percentage of gross NPA to gross customer assets stood at 6.37 per cent against 6.49 per cent in the first quarter.

Net NPAs declined 51 per cent from Rs 22,086 crore as on September 30, 2018 to Rs 10,916 crore as on September 30, 2019. During the quarter, slippages also showed a decline.

As on September 30, the fund-based and non-fund based outstandings to borrowers rated BB and below (excluding non-performing assets) was Rs 16,074 crore compared with Rs 15,355 crore as on June 30.

ICICI Bank added that the year-on-year growth in domestic advances was 16 per cent in the September quarter of 2019.

The bank continued to benefit from its strong retail franchise, resulting in a 22 per cent year-on-year growth in the retail loan portfolio. Retail was 49.9 per cent of the total portfolio as on September 30, 2019.

ICICI Bank’s core net interest income (NII) increased 26 per cent to Rs 8,057 crore in the second quarter from Rs 6,418 crore in the corresponding period last year.

On the other hand, the non-interest income, excluding treasury income, was Rs 3,854 crore, up from Rs 3,191 crore in the same period last year.