The Hindu Business Line : ICICI Bank housing loan growth slows to 20%

RISING INTEREST: Mr K.V. Kamath, Managing Director & CEO, ICICI Bank, and Ms Chanda Kochhar, Deputy Managing Director, at a press conference in Mumbai on Thursday.— Shashi Ashiwal

Mumbai June 14 ICICI Bank's housing loan portfolio business is currently growing at 20 per cent, down from 45 per cent earlier.

A senior official of the bank said this during a news conference convened to announce the details of the bank's forthcoming public issue of shares on Wednesday.

"The real estate business, which was earlier growing at 45 per cent, is now growing at 20 per cent and this is sustainable," said Mr V. Vaidyanathan, Executive Director.

He also said that the rise in interest rates had not affected the repayment of the loans, as incomes have also gone up.

"Besides, the value of property has increased, which has led to a decline in the loan-to-asset value." Every third ICICI Bank home loan customer has seen an increase in equated monthly instalments, while the rest have seen an increase in the loan tenor, according to him.

Mr K.V. Kamath, Managing Director and CEO, said: "The primary reason customers are holding back is to see where the property prices are headed. There is a lot of unmet demand."

Currently, 50 per cent of the bank's retail book is contributed by housing loans.

Follow-on offer

Meanwhile, the bank is planning to exercise the greenshoe option, taking the total sum to be mobilised through domestic follow-on offer to Rs 10,062.5 crore.

It hopes to raise an equivalent amount through an ADS issue on the NYSE.

The issue will open on June 19 and close on June 22.

According to senior bank officials, the price band will be decided on June 17.

Listing

Ms Kalpana Morparia, Chief Strategy and Communications Officer, said that the proposed subsidiary, ICICI Financial Services, would be listed only after a year or more.

The bank had earlier announced that it would sell 5.9 per cent stake in ICICI Financial Services - the holding company of its insurance and mutual fund businesses.

"The amount raised through the sale of the stake will meet the immediate capital requirements of our insurance and mutual fund businesses for a year. So, we will look at an IPO only after a year or more."

The current market capitalisation of ICICI Bank is around Rs 81,000 crore, while ICICI Financial Services is valued at Rs 44,000 crore on a post-issue basis, said Ms Morparia.

Asked if ICICI Bank was undervalued in comparison to the proposed subsidiary, she said: "That is for you to calculate."

According to a banking analyst, the bank's shares may be undervalued and a true picture will emerge only after the fundraising through domestic and overseas issues of shares.

After the issue, the market will have a better valuation of the bank's equity.