ICICI Bank Q2 net up 12% at Rs3,030 crore; retail loans grow 25%

ICICI Bank, the country's largest private sector lender, has posted a 12 per cent increase in net profit at Rs3,030 crore for the quarter ended September 2015, helped by a sturdy 25 per cent growth in retail loans.

The bank had reported a net profit of Rs2,709 crore for the year earlier quarter.

ICICI Bank reported overall credit growth of 17 per cent for the July-September 2015-16 quarter despite muted loan demand from corporate borrowers, which has fallen to 7 per cent.

''We will grow more than the industry in segments which we have chosen to grow," said Chanda Kochhar, MD and CEO of ICICI Bank. She expects corporate demand to improve in the coming quarters as the bank expects double-digit growth in wholesale credit for the current financial year.

While the net interest income for the lender grew by 13 per cent to Rs5,251 crore fee income growth was muted at 7 per cent, reflecting subdued corporate activity, Kochhar said.

The bank's profitability was aided by Rs 222 crore gains from treasury operations, apart from Rs360 crore dividend income from subsidiaries.

Net interest margin improved to 3.52 per cent during the reporting period, up 10 bps from the comparable period last year, mainly due to improved margins from international operations. The bank expects margins to be stable despite sharp cut in base rate recently.

"Our cost of funds has also come down. We expect costs to come down further," Kochhar said. The bank has reduced its reduced its base rate by 65 bps since April.

Retail loans of ICICI Bank now constitute 44 per cent of its total loan book as compared to 40 per cent a year ago.

Meanwhile, the bank also said on Friday that it is selling a 9 per cent stake in its general insurance joint venture to partner Fairfax Financial Holdings Ltd in a deal that would value the venture - ICICI Lombard General Insurance Co Ltd - at $2.6 billion.

India's banking sector has been hobbled by slower loan growth and a surge in bad loans as economic growth slowed in the past three years.

ICICI's gross bad loans as a percentage of total loans were 3.77 per cent in the September quarter, compared with 3.68 per cent in the previous three months. State-run lenders who dominate the nation's banking system with a more than 70 per cent share of loans, also account for bulk of the bad loans estimated at nearly $50 billion.