ICICI Bank Q4 profit beats forecast, sees bad loans situation improving

By Devidutta Tripathy

MUMBAI (Reuters) - ICICI Bank Ltd , India's biggest private sector lender by assets, said it expects the new financial year to be better in terms of bad loans, after reporting an increase in sour assets in its fiscal fourth quarter.

ICICI , which is also traded in New York, on Monday reported net profit rose 10 percent to a record 29.22 billion rupees ($458.9 million) for the three months ended March, ahead of analysts' estimate of 28.65 billion rupees. Its gross bad loans ratio, however, rose to 3.78 percent from 3.4 percent in the third quarter and 3.03 percent a year earlier.

 

"I would believe that FY15 was probably in that sense the peak as far as the addition to NPA (non-performing assets) and restructured assets is concerned as well as credit cost," Chief Executive Chanda Kochhar told reporters.

She said much of the addition to bad loans was from assets that were already troubled and had been restructured and not due to "new problem assets", adding she expected the new fiscal year that began in April to be "better".

Indian banks have been hurt by two years of slower economic growth that led to projects being stalled and corporate balance sheets getting stretched. That has led to a slow down in corporate credit demand and also caused a surge in bad loans.

Prospects of the economy growing faster this financial year have raised hopes that this will help to curb additions to bad loans and also improve credit demand. Demand for loans from companies has yet to revive significantly although consumer lending is growing fast.

Kochhar forecast ICICI Bank's local credit growth would be between 18 percent and 20 percent this financial year. She expected corporate credit growth to improve from last year's 10 percent, but to be outpaced again by consumer loans growth.

ICICI Bank's retail loans grew 25 percent last quarter, faster than an 18 percent growth in total credit. Net interest income, the difference between interest earned and paid, grew 17 percent on year in the March quarter to 50.79 billion rupees.

The lender is looking to grow unsecured businesses such as credit cards and individual loans, Kochhar said, adding the bank was interested in selling a stake in its local life insurance joint venture with UK insurer Prudential.

ICICI Bank shares closed nearly 2 percent lower in a Mumbai market <.NSEI> that fell 1.1 percent.

($1=63.6700 rupees)

(Writing by Sumeet Chatterjee; Editing by Clarence Fernandez and Mark Potter)