'We have enough liquidity to tide over the situation'

ICICI Bank Joint Managing Director Chanda Kochhar said today that the country’s second largest lender has adequate rupee liquidity to tide over the current tightness in the market.

Kochhar said the ICICI Bank has liquidity to the tune of Rs 12,000 crore in its overseas subsidiaries. The bank, she asserted, has never used rupee funds for its international growth initiatives.

In an interaction with Business Standard, she said that of the total overseas exposure, around $3.5 billion was in the form of investments in liquid securities. In line with the accounting norms, this exposure has been marked-to-market to factor in the movement in interest rates.

 

“This money has been invested in AA and A- bonds of banks. We have zero non-performing assets (NPAs) in our overseas portfolio, which comprises loans to Indian corporates,” she said.

ICICI Bank shares fell 19.71 per cent on Friday to close at Rs 364.10 with the Street concerned about the bank’s liquidity position. Investors have been worried about rising non-performing assets, especially in the retail portfolio, given the slowdown in the economy.

In recent weeks, there have been rumours that have reportedly prompted to withdraw funds in certain pockets of the country. Kochhar reiterated the bank had enough funds to meet its obligations to depositors and their money was safe.

Media reports that the bank has been borrowing at very high rates of interest also contributed to investor anxiety.

Asked about the exposure to the Bakri group, which owns the Bumi mines in Indonesia, Kochhar told a television channel that the bank’s total loans to Bumi Group was around $150 million for which there was a cash collateral of $45 million.

“We have cash collateral against it to the extent of $45 million. So, the net loan amount is close to $100 million. Against that, we have more than adequate cover... We have adequate security not just in the form of shares or other security, but in the form of pure cash collateral,” she said.

Besides, ICICI Bank said that transactions that are not related to India was less than 10 per cent of the global loans and advances. Kochhar said that on the ICICI Bank balance sheet there were no international investments as such. “There are only loans which are primarily to Indian companies for their global operations. While they are foreign currency loans, they are related to the global operations on the Indian companies. As far as our UK subsidiary is concerned, yes, we do have certain amount of investments.”
 

ICICI bANK NOW AT LESS THAN BOOK VALUE
	ICICI Bank					Average Private Bank

 Average
All Banks

 2003-042004-052005-062006-072007-08 2007-08 2007-08 Business per employee^1010.00880.00905.001027.001008.00717.52634.09 Profit per employee^12.0011.0010.009.0010.005.724.67 Return on Advances# 6.945.754.584.084.334.874.11 Wages as % to expenses5.707.477.417.016.5710.3413.96 Return on Asset1.311.481.301.091.121.151.16 CRAR10.3611.7813.3511.6913.9714.3013.00 Net NPA ratio2.211.650.721.021.551.091.00 Networth (Rs cr)8011.0012550.0022206.0024313.0046470.002213.003298.00 Mcap (Rs cr)18240.0028956.0052436.0076717.0085688.0012364.0010685.00 Price/Bk value (x)2.282.312.363.161.842.431.83 Price /Bk value* (x) (Oct 10)    0.871.581.36 ICICI Bank Mcap as on Oct. 10, 2008 Rs. 40, 536.71 cr.                                            # Adjusted to CoF,  ^Rs lakh      Source: RBI 

In addition, she said, that the NBPA level was not seeing any significant increase. “The corporate sector profitability is still holding up and the repayment and payment obligations are all coming absolutely on time. So, on that count there shouldn’t be a worry at all.