ICICI Bank says quarterly profits up 20.6 percent

MUMBAI, India - ICICI Bank Ltd., India's largest private bank, said Saturday that its quarterly profit rose 20.6 percent, as it cut costs and boosted income from trading government bonds.

Net profit for the quarter ended June 30 was 8.78 billion rupees ($183 million), up from 7.28 billion rupees ($152 million) in the year-ago quarter.

Total income fell 2.2 percent, to 92.2 billion rupees ($1.93 billion), from 94.3 billion rupees ($1.97 billion) the same period a year ago.

ICICI said it earned 7.14 billion rupees ($149 million) from trading during the quarter, which for Indian banks mainly comes from dealing in government bonds.

Net interest income and fee income both fell.

ICICI slashed operating expenses by 20 percent, to 14.9 billion rupees ($312 million) from 18.6 billion rupees ($389 million) a year ago.

Vaibhav Agrawal, an analyst at Mumbai's Angel Broking, said the results were roughly in line with expectations.

"In terms of what the bank has set out to do, the execution is commendable. It is well known that the bank is in a consolidation phase," he said. "They're going to be well positioned six to nine months down the line to take advantage of the GDP growth in India."

ICICI bank has been working to stabilize its loan portfolio and boost low-cost checking and savings account deposits, he said.

Total deposits shrank slightly, to 2.10 trillion rupees ($43.9 billion) as of June 30th, compared with 2.18 trillion rupees ($45.6 billion) at the end of March, but the quality of those deposits rose. Investors in India like banks to have about a third of their deposits in low-interest-bearing checking and savings accounts, as opposed to fixed deposit accounts, on which the bank must pay 8 or 9 percent interest.

During the quarter, ICICI increased its savings account deposits by 34.2 billion rupees ($715 million), boosting its ratio of low-cost deposits — the so-called CASA ratio — to 30.4 percent as of June 30 from 27.6 percent a year ago.

The bank said it was bracing itself for rising bad loans by increasing provisioning to 13.2 billion rupees ($276 million), up from 7.9 billion rupees in the year-ago quarter, but Agrawal said bad loans have stabilized.

"Overall asset quality is now stabilizing for the bank," Agrawal said.

ICICI said it continues to expand its branch network. As of July 24, ICICI had 1,471 branches across India and said it plans to open another 580.

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