MUMBAI, India (AP) — ICICI Bank reported a 36 percent rise in June quarter profit as it grew its loan book and improved asset quality, defying India’s broader economic slowdown.
India’s largest private lender Friday reported net income for the April to June quarter of 18.2 billion rupees ($326 million), up from 13.3 billion rupees a year earlier and beating expectations. A FactSet poll forecast net income of 17.4 billion rupees.
The bank managed to grow its loan book and reduce its exposure to bad loans even as the wider Indian economy struggles with slowing growth and high interest rates that have hampered investment.
India’ economic growth has been slipping for four quarters now, hitting a nine-year low of 5.3 percent in the March quarter. Business leaders complain that policy and bureaucratic paralysis have worsened the slide and caught India in an inflation trap. Now, a weak monsoon threatens to further push up food prices and derail India’s vast agricultural economy.
ICICI Chief Executive Chanda Kochhar said that despite such headwinds she maintains her outlook of 20 percent growth in domestic lending for the fiscal year ending in March 2013.
“As of now we are still seeing growth on the retail assets and disbursements,” she said. “On the corporate side our focus is working capital and existing projects being implemented. We are not counting on new project approvals to contribute to the growth this year.”
The bank’s ratio of net non-performing loans to total loans shrank to 0.71 percent, down from 1.04 percent a year earlier, a sign that management’s long struggle to improve the quality of its loan book is paying off.
Bad loans that were restructured on more favorable terms to borrowers to ensure payment, rose to 4.7 billion rupees ($84 million) in June from 4.5 billion ($82 million) a year earlier, which the bank said largely reflected its growing loan portfolio.
The bank’s net interest income rose 32 percent to 31.9 billion rupees ($574 million) from 24.1 billion rupees ($434 million) during the year ago quarter.
Total outstanding loans rose 22 percent, to 2.7 trillion rupees from 2.2 trillion rupees a year earlier.
Angel Broking analyst Vaibhav Agrawal said the results were “decent, given the broader environment.”
“Growth is looking pretty good and asset quality seems to be in control,” he said.
Agrawal said India’s private lenders, such as ICICI Bank, are better positioned to weather the slowdown than state-run banks, which dominate the banking sector. Private banks have managed risk better and are better capitalized than their state-run competitors, giving them the opportunity to gain market share even as overall lending slows along with the economy, he said.
He said he expects domestic lending to grow 15 percent this fiscal year, but added that ICICI could easily outpace that.
“They’ve been adding distribution and they’ve got more capital,” he said. “They’re in a position to gain market share.”
The results sent ICICI’s stock up 2.6 percent.
