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Dividends, interest income drive ICICI Bank's profit up 31%

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ICICI Bank, the largest private sector lender in the country, on Friday said its standalone net profit for the quarter ended March 31 had expanded 31 per cent to Rs 1,902 crore from Rs 1,452 crore a year earlier. Higher interest income from advances and dividend from its subsidiaries aided the period’s earnings.

The standalone net profit grew 26 per cent to Rs 6,465 crore during 2011-12 (April-March). On a consolidated basis, net profit for the full year was up 25 per cent at Rs 7,643 crore. The standalone net interest income, or the difference between interest income and interest expense, was Rs 3,105 crore during the January-March quarter, up 24 per cent from a year before. Net interest margin improved 27 basis points (bps) from a year earlier to three per cent during the fourth quarter; it was 2.7 per cent in 2011-12.

The bank reportedly aims to improve the margin by 10-15 bps in the current financial year.

“We have had healthy growth. We followed a strategy of profitability, growth and risk management during the year. We saw a healthy increase in other income, mainly due to dividend from our subsidiaries. This was the year when our subsidiaries started becoming profitable and contributed handsome dividends for the parent,” Chanda Kochhar, managing director and chief executive, told reporters in her post-earnings comments.

The bank’s other income grew 36 per cent from a year before, driven by dividend earnings and increase in treasury income. Operating expenses rose 20 per cent from a year earlier, as the bank opened more branches to support its expansion plans. The cost to income ratio was 41.6 per cent during the three-month period. closed the January-March quarter with 2,752 branches and 9,006 ATMs. The bank’s board has recommended a dividend of Rs 16.5 per equity share for 2011-12.

Asset quality
The bank made higher provisioning during the quarter, despite improvement in its non-performing loan ratios, at Rs 469 crore, about 22 per cent higher than a year before. The net non-performing asset ratio declined 32 bps to 0.6 per cent as of March-end. The provision coverage ratio was 80 per cent. In January-March, the bank restructured Rs 1,200 crore on a net basis. Net restructured loans were Rs 4,256 crore as of

March 31. “There is still a small pipeline for restructuring. But the bulk of it has been done and we expect additional restructuring to remain low in the current year,” Kochhar said.

The bank’s advances expanded 17 per cent year-on-year to Rs 2,53,728 crore. On a sequential basis, loan growth was muted, with only a three per cent rise. The growth in advances was driven by those to domestic firms, which expanded 26 per cent during the year. The growth in retail loans was eight per cent. Retail advances account for 36 per cent of the total credit portfolio.

“We are estimating that our domestic loan growth this year will be about 20 per cent. I’m not putting a number on the international book’s growth rate because the exchange rate is volatile and the numbers will depend on it. For deposits, we are looking at 16-18 per cent growth,” Kochhar said.

The bank’s total deposits as of March-end were Rs 255,500 crore, up 13 per cent from a year before. On a sequential basis, deposits shrunk two per cent. The share of low-cost current account/savings account (Casa) deposits was 43.5 per cent compared to 43.6 per cent a year earlier. The average was 39 per cent during the fourth quarter.

The bank closed the quarter with a capital adequacy ratio of 18.5 per cent.

ICICI Prudential Life Insurance, the largest private sector life insurer, reported a profit after tax of Rs 1,384 crore in 2011-12, compared with Rs 808 crore in the previous year. The assets under management were Rs 70,771 crore as of March-end.

ICICI General Insurance incurred a net loss of Rs 416 crore in the last financial year after providing Rs 685 crore in January-March towards additional motor pool losses.

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