Icici Banks Project Finance Share May Drop

The share of project finance in the overall portfolio of ICICI Bank is likely to go down to around 16 per cent this fiscal compared with 23 per cent in fiscal 2002. The drop will be on account of a marked increase in the bank's retail portfolio.

According to H N Sinor, deputy managing director, "The share of project finance in the overall portfolio is likely to go down from 23 per cent to around 16 per cent. This will be more owing to an increased focus on retail loans where the business is likely to increase from 8 per cent in last fiscal to around 22 per cent this fiscal. The share of corporate finance in the total portfolio, which was at 23 per cent in last fiscal, is likely to remain unchanged."

 

Around 50 per cent business in the retail loans would come through housing finance, while the remaining would come through a mix of two-wheeler and car loans, and consumer finances.

ICICI Bank had a retail loan portfolio of Rs 7,986 crore in last fiscal. Of this, home loans were at Rs 2,852 crore.

"There are going to be some banks which are good at originating loans and there will be other banks which will take over these loans. ICICI Bank will continue to originate and sell loans on the corporate side," said Sinor.

The bank has sold around Rs 800 crore of loans this fiscal to insurance companies, and private sector and nationalised banks.

The bank is not likely to go in for an accelerated provisioning this fiscal. "The incidence of provisioning would be much less compared to the previous year. The bank has already provided for a large part of the assets," he added.

ICICI Bank had made a provision of Rs 3,780 crore based on the fair valuation of ICICI by Deloitte Haskins & Sells.

"The bank had made a provisioning of around Rs 2,300 crore for standard and structured assets. However, many of these assets have started performing well due to a change in economic circumstances such as an increase in steel prices. This extra provisioning can help us in two ways -- if some of the assets become non-performing, additional provisioning would not be required as it has already been provided for. Also many of the assets which were restructured have turned around and are likely to become standard assets. This write-back in provisions would be used for any unforeseen provisioning. This year's profit and loss will not be affected by additional provisioning," Sinor added.