ICICI Q3 net up 42%, beats forecast
Bank's net profit rises to Rs 9.1 billion for the fiscal third quarter ended Dec 31 from Rs 6.40 billion a year earlier.india Updated: Jan 20, 2007 15:54 IST
India's second-largest lender, ICICI Bank, posted a 42 per cent rise in quarterly earnings on Saturday, beating forecasts as it rode surging demand for loans, and gained from fees and the sale of equity investments.
The New York-listed bank expects to maintain its profitability and grow its loans despite a steady increase in lending rates, as wage increases have provided more room for borrowers.
"There has been very strong growth in fee income," Kalpana Morparia, joint managing director at ICICI Bank, told reporters. "We have not seen any slowdown."
Investors are bullish on Indian banks as they see them as a proxy for growth in an economy growing at more than 8 per cent.
Demand for loans from firms to expand capacity and individuals to buy homes and cars is expanding at about 30 per cent a year, even after the central bank raised lending rates by 100 basis points in 2006 to fight inflation pressures.
ICICI said net profit rose to 9.1 billion rupees ($205.4 million) for the fiscal third quarter ended Dec. 31 from 6.40 billion rupees a year earlier. A Reuters poll had forecast for a net profit of 8.18 billion rupees.
Its net interest income rose 32 per cent to 17.09 billion rupees from 12.96 billion rupees a year ago.
Fee income -- mainly derived from selling insurance and mutual fund products -- surged 53 per cent to 13.45 billion rupees, from 8.81 billion rupees a year earlier.
A strong equity market also helped it benefit by selling some stakes in a few companies.
"A large portion of treasury income is from capital gains in equity investments," said Morparia, adding that treasury gains were more than 3 billion rupees.
She said the bank hoped to maintain its net interest margins at around 2.6 per cent, but expected interest rates to be under pressure.
"I don't rule out the possibility of a rate hike," said Morparia, adding that a 25 basis points increase was unlikely to influence borrowing decisions.
The central bank is expected to raise rates during its review on Jan. 31 as inflation is at a two-year high of 6.12 per cent.
However, Morparia said she expects home loans growth to slow to about 25 to 30 per cent, from 30-35 per cent, due to a steep rise in real estate prices.
Shares in ICICI Bank rose 27 per cent in the December quarter, outpacing a 10.7 per cent gain in the BSE's main index and a 17 per cent gain in the banking sector benchmark.