| Morparia: Eye on rates
Mumbai, July 22: ICICI Bank’s first-quarter net profit rose 17 per cent to Rs 620 crore from Rs 530 crore in the corresponding previous period. Core operations performed well, so did fee-based income.
Net interest income, which represents its core operations, increased 52 per cent to Rs 1,475 crore from Rs 969 crore. Fee income rose 50 per cent to Rs 985 crore from Rs 658 crore in the year-ago period.
While both net interest income and net profit were above market expectations, the bank’s bottomline was hit by a drop in treasury income and higher provisioning. The bank’s treasury income came down to Rs 88 crore from Rs 183 crore in the corresponding previous quarter and provisions were higher at Rs 483 crore compared with Rs 298 crore.
The Rs-483-crore provisioning figure also included additional general provisions for standard assets of Rs 47 crore following a Reserve Bank of India (RBI) directive in April this year. Even as the period saw ICICI incurring higher expenses on direct market agents, non-interest income gained 31 per cent to Rs 1,190 crore.
The bank’s deposits increased 61 per cent to Rs 183,006 crore as on June 30, 2006, from Rs 1,13,778 crore in June 2005.
The bank’s net customer assets increased 50 per cent to Rs 154,796 crore in 2006 compared with Rs 103,487 crore in 2005. It also maintained its growth momentum and market leadership in the retail segment. In the first quarter of this fiscal, ICICI Bank’s total retail disbursements were about Rs 15,900 crore, including home loan disbursements of about Rs 6,300 crore. Retail assets constituted 67 per cent of advances and 64 per cent of customer assets.
Moreover, the loan portfolio of its international branches (including foreign currency financing to Indian companies) increased to about Rs 13,400 crore from Rs 7,000 crore.
The bank’s capital adequacy in the quarter was 12.5 per cent, above the RBI’s requirement of a total capital adequacy of 9 per cent. Its unaudited capital adequacy estimates based on the RBI’s draft guidelines issued in February 2005 on the implementation of revised capital adequacy framework (Basel II), would be about 12.8 per cent in June 30, 2006, the bank added.
Morparia on rates
ICICI Bank today said an overall hardening of interest rates was very much possible in the remaining months of the current fiscal in the wake of current inflationary pressures.
“I will not rule out an overall hardening of interest rates in the rest of the nine months,” ICICI Bank joint managing director Kalpana Morparia told reporters here.
When asked about her expectations from the forthcoming RBI credit policy review scheduled for July 25, Morparia said she would not like to speculate on the apex bank's proposed moves.
“It is not good to play a guessing game,” she said.
On the bank's future course regarding its interest rates, Morparia said a decision will be taken after the RBI's credit policy review.
“We will study the impact of the RBI’s decisions before making any announcements on our interest rates," she said.
In the last 12 months, the bank’s overall lending rates have increased by 200 bps while the deposit rates have moved northward by 80 bps.
ICICI Bank and Prudential plc, which floated ICICI Prudential Life Insurance, would infuse Rs 150 crore into the joint venture in the ratio of 74:26, taking the total capital of the insurance company to Rs 1,335 crore.
The additional capital has been infused to expand the insurance company’s business operations further, said Shikha Sharma, ICICI Prudential’s managing director and CEO after signing an MoU with 10 regional rural banks (RRBs)
The 10 RRBs sponsored by Bank of India will distribute ICICI Prudential’s life insurance products in five states.
ICICI Prudential is the largest private sector insurance company in the country with Rs 9,000-crore funds under its management.
It has sold 2.5 million policies so far and the sum assured in force stands at Rs 56,000 crore.