ICICI Bank net income up 126% as per US GAAP

ICICI Bank today reported its net income under the US generally accepted accounting practices (GAAP) for the nine months ended December 2004 was up by 126 per cent year-on-year. Under Indian GAAP, the bank's net profit for the period was up 17.66 per cent.

US GAAP accounts put ICICI Bank's net profit at Rs 525 crore ($121 million) for April-December 2004 against Rs 232 crore ($54 million) in the same period of preceding year.

ICICI Bank normally prepares its accounts under US GAAP on an annual basis. It released US GAAP accounts for the nine months as part of the process for its sponsored ADS offering.

The bank said there are significant differences in the basis of accounting between US GAAP and Indian GAAP. In the merger of erstwhile ICICI Limited with ICICI Bank, the Bank was the legal acquirer. Under Indian GAAP, ICICI bank is the accounting acquirer.

Under US GAAP, ICICI is deemed to have acquired ICICI Bank. Therefore, the financial statements under US GAAP and Indian GAAP for the bank are not comparable and these differences are expected to continue in future years.

ICICI's assets were fair valued while accounting for the merger under Indian GAAP.

The primary impact of the fair valuation was the creation of additional provisions against ICICI's loan and investment portfolio, reflected in the Indian GAAP balance sheet at March 31, 2002. Under US GAAP, ICICI Bank's assets were fair valued while accounting for the merger.

There is also a difference in the basis of computation of provision for restructured loans under US GAAP, which discounts expected cash flows at contracted interest rates, unlike Indian GAAP, under which current interest rates are used.