Profits up for ICICI Bank, but growth in advances lags
ICICI Bank reports profits for the 4th quarter and for the financial year 2007. However, growth in advances and deposits have not kept pace with previous years. MC Vaijayanthi reports.india Updated: Apr 27, 2008 23:49 IST
ICICI Bank, India’s second largest bank, reported profits for the fourth quarter and for the financial year 2007. Net profits for the quarter ended March 31 was up by 39 per cent to Rs 1,150 crore and for the full year it was up 34 per cent at Rs 4,158 crore. The bank has also hiked the dividend payout to shareholders to 110 per cent (Rs 11 per equity share) from 100 per cent paid last year. However, growth in advances and deposits have not kept pace with the kind of increase shown in previous years.
Total loans increased by 15 per cent for the full year and the deposits it raised grew by 6 per cent. Overall loan growth including that of the home finance subsidiary has been at 19 per cent. While increasing its focus on the corporate loans, especially tapping the booming mergers and acquisitions last year, the bank had reined in on its retail loan growth. After accounting for the loans its sold down retail loan growth for the year ended March 31, 2008 stood at 3 per cent. "We tightened the loan delivery norms… In collection and recoveries there are a lot of challenges. The risk, reward is not in favour," explained Chanda Kochhar, joint managing director, ICICI Bank.
V Vaidyanathan, executive director, ICICI Bank in charge of retail banking said it is factors like high interest rates and high cost of houses and non availability of low cost homes, which contributed more to a slowdown in housing loans than the tightening of loan norms. "Review of credit norms is a continuous process towards evaluating loans that qualify for better underwriting," Vaidyanathan said.
Advances to corporate and international loans rose by 20 per cent. Similarly on the deposit side the bank consciously cut down on costly deposits and increased the money held under current and savings deposits which grew by 27 per cent.
ICICI Bank's total income for the year was up from Rs 28,923 cr in financial year 2007 to Rs 39,599 cr in 2008 and the operating profit for the banks is up from Rs 5874 cr to Rs 7960 cr. The bank had set off $100 million (Rs 400 crore) against the income it earned from treasury operations to provide for mark to market losses in the credit derivative portfolio and with that the total set off for year ending March 31 was Rs 680 cr.