Net income climbed 17 percent to 26.6 billion rupees ($440 million), or 22.8 rupees a share, in the three months ended June 30, from 22.7 billion rupees, or 19.61 rupees, a year earlier, the Mumbai-based lender said in an exchange filing today. That was more than the 25.7 billion-rupee median of 35 analyst estimates compiled by Bloomberg.
ICICI shares are trading close to the highest level since its listing in 1997 as analysts forecast that India’s economy will strengthen over the rest of this year and into 2015. Chief Executive Officer Chanda Kochhar has focused on boosting loans to individuals and attracting low-cost deposits to help keep funding costs down.
“Strong growth in retail loans and wider net interest margins are driving the bank’s profit,” Vishal Narnolia, a Mumbai-based banking analyst at SMC Global Securities Ltd., said by phone after the announcement.
ICICI shares fell 0.6 percent to 1,480 rupees at 2:41 p.m. in Mumbai trading amid a decline in emerging-market stocks. That pared the bank’s gain this year to 35 percent. The S&P BSE India Bankex Index, which tracks 12 lenders, is up by the same amount for 2014.
ICICI’s total outstanding loans increased 15 percent to 3.5 trillion rupees as of June 30 from a year earlier, filings to the exchange showed. Retail loans jumped 26 percent. The lender’s net interest margin widened to 3.4 percent from 3.27 percent a year earlier, ICICI said.
While India’s gross domestic product grew only 4.7 percent in the year through March, close to a decade-low expansion of 4.5 percent in the previous 12 months, Prime Minister Narendra Modi’s landslide election victory in May coincided with more positive signs. Industrial output rose by the most in 19 months and consumer inflation moderated.
Economic expansion will pick up each quarter for the rest of this year and through 2015, according to the median estimate of analysts surveyed by Bloomberg News. That may help to spur banking industry loan growth which has this year touched the weakest levels since the global financial crisis.
ICICI may also benefit from the central bank this month easing rules to allow lenders to sell long-term bonds for infrastructure without setting aside extra reserves. More than 10 percent of ICICI’s outstanding loans are to infrastructure projects, according to Asutosh Kumar Mishra, a Mumbai-based banking analyst at Karvy Stock Broking Ltd.
The lender’s ratio of bad loans to total advances rose to 1 percent as of June 30 from 0.82 percent a year earlier. In comparison, HDFC Bank Ltd. (HDFCB), India’s most valuable lender by market capitalization, had a ratio of 0.3 percent. ICICI’s capital-adequacy ratio stood at 17 percent, the filings showed.
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