Mumbai: ICICI Bank, India’s second-largest lender, posted its best quarterly profit growth in two years, helped by an increase in fee income and reduction in operational costs.
Smaller rival HDFC Bank reported a 32.6% rise in its quarterly profit, beating market estimates, bolstered by a pick-up in credit demand in Asia’s third-largest economy.
Bank credit in India grew an annual 17.05% in early April, according to the central bank’s provisional data, in tune with a rise in business and consumer confidence, from a low 9.7% in October and compared with 16.7% at end-March.
Analysts expect loan demand to pick up further in the first half of 2010-11 that started on 1 April as industries will need more funds to expand operations in an economy forecast to grow more than 8% in this fiscal year.
The central bank sees non-food credit growth of commercial banks at 20% in 2010-11, still a far cry from growth rates of above 30% in the pre-crisis period.
ICICI Bank said its fee income increased 13% in the March quarter to Rs15.21 billion and operating expenses fell 6% to Rs15.04 billion. The bank’s earnings were also helped by an increase in low-cost deposits. But the bank’s loan book fell 17% from a year ago to Rs1.81 trillion at end-March.
ICICI said its January-March net profit rose 35% to Rs10.06 billion ($227 million) from Rs7.44 billion. A Reuters poll of analysts had forecast net profit of Rs10.89 billion.
New York-listed HDFC Bank said its January-March net profit rose to Rs8.37 billion ($188 million) from Rs6.31 billion. A Reuters poll had projected net profit at Rs8.15 billion.
Shares in ICICI Bank, valued at nearly $24.5 billion, have risen 11.4% this year and HDFC has gained over 14%, beating the sector index. The main Mumbai market is up 1.3%.