ICICI net up 30% to Rs 755 cr

ICICI Bank, the country's second-largest bank, today reported a higher than expected 30 per cent rise in net profit in the second quarter ended September 30, 2006, riding high on a sharp rise in fee income and profit from the sale of equity investments.

The bank's net profit, which increased to Rs 755 crore in July-September 2006 from Rs 580 crore in the corresponding quarter a year ago, would have been much higher but for an over eight-fold rise in provisioning for consumer and commercial banking.

The bank's total provisioning was up 133 per cent to Rs 709 crore in the second quarter ended September 2006 from Rs 304 crore in the same quarter last year.

The provisioning for consumer and commercial banking rose to Rs 474.04 crore in the second quarter from Rs 54.67 crore in the corresponding quarter last year, while provisioning in the investment banking segment was nearly flat at Rs 235 crore against Rs 249 crore in the same quarter last year.

Vishakha Mulye, ICICI Bank group chief financial officer, said the reasons for higher provisioning included an increase in general provisioning on standard existing and new loan assets, stiffer provisioning for certain assets like personal loans, real estate loans and home loans above Rs 20 lakh and provisions for non-performing assets.

The Reserve Bank of India (RBI) has sought to move towards a general provisioning of 100 basis points (a basis point is a hundredth of a percentage point) on standard assets in a phased manner from 40 basis points at the beginning of this year.

As a result of higher provisioning, the contribution of consumer and commercial banking to ICICI Bank's profit before tax dropped nearly 15 per cent to Rs 595.69 crore in the second quarter of 2006-07 from Rs 696.32 crore in the same quarter last year. The profit before tax from investment banking was up nearly six-fold to Rs 316.45 crore from Rs 53.55 crore in the corresponding quarter last year.

ICICI Bank said its customer assets increased 47 per cent to Rs 1,63,785 crore on September 30, 2006, from Rs 1,11,514 crore in the same period a year ago. Retail assets constitute 66 per cent of customer assets. Retail assets in the quarter ended September 30, 2006, increased 57 per cent to Rs 1,07,679 crore from Rs 68,537 crore in the same quarter last year.

"The pace of home loan growth in the second quarter was similar to what was seen in the first quarter. There is a slowdown in demand for home loans from the speculative category following stiffer regulatory norms. The demand from genuine home buyers remains robust. We have also seen a rise in the demand for home loans from Tier-2 and Tier-3 cities," said V Vaidyanathan, ICICI Bank's newly promoted executive director.

In the first half of 2006-07, the bank's total retail disbursements were about Rs 33,500 crore, including home loan disbursements of about Rs 13,400 crore.

The bank's net interest income increased 47 per cent to Rs 1,577 crore in the second quarter of 2006-07 from Rs 1,070 crore in the same quarter last year and fee income rose 62 per cent to Rs 1,138 crore from Rs 704 crore in the corresponding quarter a year ago.

The bank's total deposits increased 57 per cent to Rs 1,89,499 crore on September 30, 2006, from Rs 1,20,452 crore in the corresponding quarter last year.