Bloomberg News

ICICI Bank Reports 22% Increase in Second-Quarter Profit

October 31, 2011

(Updates with share performance from third paragraph.)

Oct. 31 (Bloomberg) -- ICICI Bank Ltd., India’s second- largest lender by assets, said second-quarter profit rose 22 percent as loans increased and it reduced provisions for bad debts.

Net income climbed to 15.03 billion rupees ($308 million), or 13 rupees a share, for the three months ended Sept. 30, from 12.4 billion rupees, or 10.86 rupees, a year earlier, the Mumbai-based bank said in a statement to the Bombay Stock Exchange today. That compares with the 14.5 billion-rupee median estimate in a Bloomberg survey.

Chief Executive Officer Chanda Kochhar, 49, increased ICICI’s loans to companies, home buyers and credit card holders while boosting fee income from distributing insurance and mutual fund products. Shares of the bank posted their worst quarter in 2 1/2 years on concern that the steepest increases in borrowing costs among Asian economies may lead to defaults.

“The year-on-year fall in provisions shows the bank’s success in dealing with some of its legacy problems in retail lending and was a major driver” of profit growth, Brian Hunsaker, a banking analyst at Keefe Bruyette & Woods Inc., said by telephone from Hong Kong.

ICICI Bank’s net interest income, or the difference between revenue from loans and interest paid on deposits, rose 14 percent to 25.1 billion rupees in the quarter.

Fee Income Rises

Income from fees for distribution of mutual funds and investments rose 6.9 percent to 17 billion rupees, according to the statement, helping boost non-interest income by 10 percent, according to the statement.

Shares of ICICI Bank rose 1.4 percent to 946 rupees as of 1:41 p.m. local time today. The stock lost 20 percent in the three months ended Sept. 30, its worst performance in 10 quarters.

ICICI Bank’s total outstanding loans increased 21 percent to 2.34 trillion rupees at the end of September.

The lender’s nonperforming asset ratio narrowed to 0.8 percent from 1.37 percent a year earlier. ICICI decreased provisions by 50 percent to 3.19 billion rupees, it said. The provision coverage ratio expanded to 78.2 percent at the end of September from 69 percent a year earlier.

--With assistance from George Smith Alexander in Mumbai. Editors: Chitra Somayaji, Nathaniel Espino

To contact the reporters on this story: Anto Antony in New Delhi at aantony1@bloomberg.net; Ruth David in Mumbai at rdavid9@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net


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