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ICICI Bank in the black under US GAPP

Our Bureau

Mumbai , May 22

ICICI Bank is in the black posting a net profit of Rs 522 crore ($116 million) as per US Generally Accepted Accounting Principles (GAAP) accounts in FY2004 compared to a net loss of Rs 798 crore ($177 million) in FY2003.

The US GAAP accounts show a profit before provisions against loans and investments, taxation and effect of accounting changes, of Rs 2,451 crore ($ 545 million) against Rs 1,122 crore ($ 249 million).

ICICI Bank's net worth on March 31, 2004 as per US GAAP was Rs 9,453 crore ($ 2,100 million), said a press release from the bank.

As per Indian accounting, the bank had posted a net profit of Rs 1,637 crore for the year ended March 2004.

The financial statements under US GAAP and Indian GAAP for the bank are not comparable and these differences are expected to continue in future years, said the release. This is mainly because according to US GAAP, ICICI was deemed as the acquirer in the merger of erstwhile ICICI Ltd (ICICI) with ICICI Bank, while under Indian GAAP, ICICI Bank is the accounting acquirer.

Under US GAAP, ICICI Bank's assets were fair valued while accounting for the merger. The total additional provisions charged to the profit and loss account under US GAAP in FY2004 were Rs 1,252 crore($ 278 million), of which Rs 665 crore ($ 148 million)is due to the difference in the basis of computation of provision for restructured loans under US GAAP. US principles discount expected cash flows at historical interest rates, unlike Indian GAAP, in which current interest rates are used.

Under Indian GAAP, ICICI's assets were fair valued while accounting for the merger. The primary impact of the fair valuation was the creation of additional provisions against ICICI's loan and investment portfolio reflected in the Indian GAAP balance sheet on March 31, 2002.

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