The Hindu Business Line : ICICI Bank: In line with expectations

ICICI Bank's performance, of an 18 per cent growth in profits, in the third quarter of fiscal 2005 is in line with expectations and the credit expansion seen during the past year.

Its nearest competitors in the private bank sector, HDFC Bank and UTI Bank, have reported 30 per cent-plus growth in profits during the third quarter.

Loan growth in the banking sector was particularly robust in the third quarter. The banking system lent a little over Rs 105,000 crore during the three months ended December 2004. There has apparently been a pick-up in corporate borrowing apart from the continuing growth in the retail sector — principally the home loans, car loan and personal loans segment.

For ICICI Bank, growth seems to have come principally from the retail segment. Of the Rs 14,000-crore incremental growth in loans during the nine- month period ending December 2004, about Rs 12,771 crore has been to the retail sector.

ICICI Bank was also able to cut funding costs, benefiting from the generally low deposit rates prevailing for the past couple of months, as well as repaying some high cost deposits contracted earlier.

The bank has taken a hit on treasury income (down by 48 per cent to Rs 188 crore) as yields on government securities went up during the past year. A year ago, the yields on the benchmark 10-year paper were 5.20 per cent. As of December 2004, yields had moved to 6.50 per cent.

A number of banks are expected to report drops in treasury income in this backdrop. For ICICI Bank, the gains in interest income made by giving out more loans, as well as growth in fee income seemed to make up for the drop in treasury income.

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