The Hindu Business Line : ICICI Bank’s Q3 net rises 35% on higher biz volume

Mumbai, Jan. 19 ICICI Bank’s net profit for the quarter ended December 31, 2007 increased 35 per cent to touch Rs 1,230 crore from Rs 910 crore in the same quarter last year mainly on account of growth in its business volume.

But the bank also saw its non-performing assets rise, due to an increase in its unsecured loans.

For the third quarter, the bank’s net non-performing assets were at Rs 3,227.82 crore (Rs 2,814.82 crore). The proportion of net NPAs to total advances increased to 1.5 per cent (1.1 per cent).

Ms Chanda Kochhar, Joint Managing Director and CFO, ICICI Bank, said, “The increase in NPAs is due to the change in our portfolio composition. The unsecured portion as percentage of total loan portfolio is going up. While this segment has credit loss, it has higher income.”

Unsecured loans account for about Rs 22,000 crore or more than 16 per cent of the total retail loan portfolio of Rs 1,32,311 crore. “While there has been no slowdown in this segment, we have tightened the credit flow,” Ms Kochhar said.

Home loans rule

Home loans continue to contribute the largest chunk to retail segment at around Rs 67,000 crore, which is about 50 per cent.

Retail advances now form 61 per cent of the total advances against 68 per cent last year.

Cost of deposits was at 7.4 per cent, which is sequentially lower compared to the first and second quarters of this fiscal. The bank had cut rates on its term deposits in the third quarter up to 1 percentage point.

The low-cost CASA deposits (current and savings account) increased 33 per cent to Rs 62,494 crore (Rs 47,062 crore).

Fee income increased 33 per cent to Rs 1,785 crore (Rs 1,485 crore).

Net interest margin was at 2.3 per cent (2.2 per cent). The bank is not expecting any impact on its interest margins in the next quarter, as liquidity is comfortable, said Ms Kochhar.

“We have not seen interest rates going up because of the comfortable liquidity. Any expectation of softening of rates would be after this fiscal,” she said.

Corporate demand

The bank is also hopeful of maintaining its growth in the next quarter, as demand from Indian corporates is likely to be strong, Ms Kochhar said. “There is lot of opportunity as the investment pipeline by Indian corporates is very strong,” she said.

According to a banking analyst with a broking firm, the profit figures of ICICI Bank are largely in line with expectations. “While the asset growth is a bit of a disappointment, the improvement in margins is a positive factor. However, the poor asset quality is a reason for concern. Other positives include the strong growth in fee income and strong performance by subsidiaries,” he said.

On Friday, shares of ICICI Bank closed at Rs 1,245.45, down 5.78 per cent from the previous close of Rs 1,321.8 on the Bombay Stock Exchange.

Related Stories:
Advances push ICICI net up 33%
ICICI Bank Q3 net up 42%

More Stories on : Financial Performance | Private Banks | ICICI Bank Ltd

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