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Chennai Jan. 20 A combination of higher volumes in retail loans (housing, cars, personal) and good treasury income has pushed the third quarter profits of ICICI Bank up by a whopping 42 per cent. Its two closest competitors in the private banking arena, HDFC Bank and UTI Bank, posted a profit growth of 32 per cent and 40 per cent, respectively in the last quarter.

ICICI Bank's loans rose 41 per cent in this quarter. Interestingly, the higher volumes have come despite a couple of rounds of lending rate hikes and on a continuously expanding base. The banking system as a whole has seen loans growing at about 30 per cent for the third year running.

Although there have been indications that there may be a slight slowdown in housing loans, it is unlikely to affect the bank significantly. ICICI Bank has made fresh disbursements of about Rs 7,000 crore to the housing sector during the last quarter.

About 68 per cent of its loans were given to retail customers, where ICICI Bank has managed to dominate the market. Its market share of about 35 per cent across all segments of retail, gives it the confidence to hike rates when costs go up and insulate itself from margin erosion. The bank has preserved its net interest margin at about 2.5 per cent right through this year.

Although this is thinner than the margins earned by others such as HDFC Bank (about 4 per cent) and UTI Bank (about 3 per cent), ICICI Bank's volumes translate into higher gains.

Asset quality concerns remain mild (NPAs at 1 per cent), despite the presence of a large provision of about Rs 85 crore on account of a fraud in agricultural credit.

ICICI Bank has resumed its branch expansion, after a brief lull, adding 35 branches last quarter. It plans to add 110 new branches within next month.

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ICICI Bank Q3 net up 42%

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