ICICI's personal loan, CC exposure doubles

Loan-led consumption doubled the share of personal loans and credit card receivables in ICICI Bank's retail portfolio to 14 per cent in 2006.

The expansion in the non-collateralised loans is also enlarging the bank's bad loans and these consumption loans now account for 53 per cent of the gross non-performing assets (NPAs) in its retail loan book.

The gross retail NPAs of ICICI Bank, the country's second largest bank and the largest retail bank, were Rs 2,540 crore as on December 31, 2006, of which Rs 1,346 crore were on account of defaults in personal loans and credit card accounts.

The increase in non-collateralised products within the retail portfolio explains the rise in NPAs in the retail portfolio as well as the overall loans portfolio of the bank. The bank's retail portfolio grew by 50 per cent year-on-year to Rs 1,17,914 crore as on December 31, 2006.

The net NPAs of the bank has increased to 1 per cent as on December 31, 2006 from 0.7 per cent, 0.8 per cent and 0.9 per cent as on March 31, 2006, June 30, 2006 and September 30, 2006, respectively.

ICICI Bank officials justify the growth in the bank's general consumption loans, saying the average returns on the portfolio cover for the higher defaults.

The defaults in personal loans and credit card receivables portfolio is about 9 per cent.

The bank's personal loans book expanded to Rs 10,800 crore at the end of December 31, 2006 from Rs 4,000 crore a year earlier and credit card receivables to Rs 4,600 crore from about Rs 2,800 crore a year earlier.

Retail loans added the maximum to the bank's gross NPAs in the quarter ended December 31, 2006.

The incremental addition to bad loans by retail segment was Rs 430 crore, out of total addition of Rs 650 crore during the quarter.

Recoveries from bad loans in the non-collateralised products are much lower compared to other loans such as home or corporate loans.

The bank writes off non-collateralised bad loans once they are one year overdue.

The bank's combined gross NPAs as on December 31, 2006 were about Rs 4,350 crore and the write-offs and provisions wee close to Rs 2,500 crore leading to net NPAs of Rs 1,8.57 crore, which is about 1 per cent of its total customer asset portfolio.

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DEFAULT PANGS

Retail portfolio is Rs 1,17,914 crore, 14% of which is personal loans and credit card receivables

Gross retail NPAs are Rs 2,537crore, 53% of which are non-collateralised

Net retail NPAs are Rs1,260 crore, 44% of which are non-collateralised