ICICI, Indian Lenders May Grow 2.5-Times as Economy Expands, Kochhar Says
“The Indian banking sector can grow at at least twice the GDP growth rate,” Kochhar said in an interview with Bloomberg Television in London. “I’m actually quite confident that India can very soon get to the double digit growth rates, so move from maybe a 9 percent growth rate in the GDP in the immediate future and then get on to 10 percent.”
ICICI aims to tap rising demand for credit as Kochhar forecasts that Indian companies are likely to invest $250 billion in manufacturing and infrastructure projects in the next three years. India’s growth potential is attracting overseas rivals such as Standard Chartered Plc, which listed shares in what may be the U.K. bank’s most profitable market this year.
“Clearly there is a huge growth opportunity awaiting us,” Kochhar, 49, said yesterday.
Still, the entire Indian banking system’s 33.1 trillion rupees ($707 billion) in outstanding loans last month is less than the $895 billion in loans that Industrial & Commercial Bank of China Ltd., the world’s largest lender, had at the end of the first quarter. Mumbai-based ICICI reported total loans of about $39 billion as of March 31.
Shares of ICICI rose 1.9 percent to 898.2 rupees as of 12:22 p.m. local time today, extending its gains for the past year to 30 percent. That compares with a 47 percent advance in India’s Bankex index, which tracks 14 lenders, in the past 12 months.
The South Asian nation’s $1.2 trillion economy has averaged 8.5 percent growth in the past five years. Prime Minister Manmohan Singh’s government, which forecasts expansion exceeding 10 percent in the next five years, has doubled its target for infrastructure spending in the country to $1 trillion in the five years starting 2012.
ICICI, whose overseas branches account for 25 percent of its total loans, will also aim to extend more credit to companies in Europe since banks there may have less capital to commit following the global financial crisis, Kochhar said.
The Indian bank will be part of syndicated-loan deals, instead of buying assets or entering joint ventures, she said.
ICICI is “very well capitalized” to handle growth in the next few years and doesn’t need to add to its capital base “any time soon,” said Kochhar. The bank’s capital adequacy ratio is 19 percent, she said.