Business | Banking
ICICI Bank's profits beat expectations
ICICI Bank, India's second biggest bank, reported fourth-quarter profit that beat analysts' estimates as loan demand from companies and individuals helped the bank offset losses on overseas investments.
- Bloomberg
- Published: 00:45 April 27, 2008
Mumbai: ICICI Bank, India's second biggest bank, reported fourth-quarter profit that beat analysts' estimates as loan demand from companies and individuals helped the bank offset losses on overseas investments.
Net income increased 39 per cent to Rs11.5 billion ($286 million) in the fourth quarter ended March 31, compared with Rs8.25 billion a year earlier, the Mumbai-based company said.
Profit surpassed the Rs9.4 billion median estimate in a survey of five analysts by Bloomberg News.
Chief executive officer K.V. Kamath aims to raise as much as $1 billion from selling shares in the investment banking unit, a plan that stalled as the equity benchmark Sensitive Index dropped 16 per cent this year. ICICI Bank sold $5 billion of shares and borrowed about $10 billion from overseas investors in 2007 to bolster its capital and make more loans.
Lower interest rates
"The bank has benefited from lower interest rates on one-year bank deposits," said A. Balasubramaniam, chief investment officer at Birla Sun Life Asset Management, which manages about $8.7 billion in assets.
"The bank has increased its branch work, which is also benefiting it in terms of accessing more lower-cost deposits.''
Interest rates paid by banks on one-year deposits narrowed to about 9.8 per cent in the quarter, down from 12.5 per cent a year earlier, lowering the cost of funds, Kamath said on April 4.
The results are reported on a stand-alone basis.
Shares of ICICI Bank rose 4.2 per cent to Rs915.65 on Friday in Mumbai trading. They have declined 26 per cent this year, compared with a 16 per cent drop in the Sensex.
Net interest income, the difference between what the bank makes from lending and what it pays on deposits, rose 29 per cent to Rs20.8 billion in the quarter, matching the Rs20.4 billion estimate of analysts.
ICICI Bank also increased funds set aside for bad loans as consumers delay payments due to high interest rates. Provisions rose eight per cent to Rs9.48 billion, from Rs8.76 billion a year earlier.
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