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Don’t worry, be happy, says ICICI Bank but there’s just one problem

31 Jan
icici bank

ICICI

ICICI Bank has surprised the Street positively with its third-quarter results. Not only is net profit up a healthy 20 percent, its deposit and credit growth has also been quite good.Credit grew by a handsome 19 percent and Chanda Kochhar, CEO and managing director of the bank, assured that loan growth would be maintained at 18 percent for the financial year ending March 2012. She also predicted domestic credit growth for the next year at 18 to 20 percent. She said it was too early to talk about how the bank’s international portfolio of loans would perform next year

It seems the only worry for the bank lies with its restructured assets. Net restructured loans at the end of the quarter totalled Rs 3,070 crore, an increase of Rs 800 crore over the previous quarter. Kochhar said there would be more restructuring of corporate debt in coming quarters. Nevertheless, the bank’s asset quality is expected to remain under control.

Quelling concerns about where credit growth had come from, Kochhar explained the growth main came from working capital requirements for companies and loans that had been sanctioned in the past but had been disbursed only recently. She added that  project, however, were now taking longer to start and loan sanctions for new projects had also slowed down.

In such a scenario, an interest rate cut or more liquidity into the system cannot be the  real fix. The investment situation definitely has to improve for the bank to maintain its current formFor now, the Street is celebrating the bank’s upbeat performance:  the stock ended 5.87 ercent at Rs 902.

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Posted by on January 31, 2012 in Entertainment

 

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