ICICI Bank sees slower rate of new troubled loans

By Devidutta Tripathy

MUMBAI (Reuters) - ICICI Bank Ltd (ICBK.NS) said on Friday it saw the rate of new troubled loans slowing as the nation's biggest private sector lender by assets reported a better-than-expected quarterly profit.

A drop in the bad-loan ratio for the three months to June from a quarter earlier helped send the bank's stock as much as 6.2 percent higher.

Indian banks have seen their bad loans almost double in the past three years as a weak economy limited companies' ability to service debt. While the dominant state-run lenders account for the majority of the bad loans, private sector lenders like ICICI have also seen their problem loans rise.

"There is currently a lot of stability that we are seeing," ICICI Bank Chief Executive Chanda Kochhar said on a conference call, reiterating that the lenders' fiscal fourth-quarter ended March was the worst in terms of asset quality.

"We have been working very hard and in a very focused manner in terms of improving recoveries," she said, adding the bank was working with big shareholders in distressed companies getting them to sell assets and repay loans.

Kochhar also said ICICI bank was growing its retail loans faster than corporate loans, and was reducing concentration of the top corporate borrowers.

ICICI Bank's first-quarter net profit rose 12 percent to a record 29.76 billion rupees ($465 million), ahead of analysts' estimates of 29.2 billion rupees.

Gross bad loans as a percentage of total loans fell to 3.68 percent from 3.78 percent in the March quarter although they were higher than the 3.05 percent reported a year earlier. Bad loans additions in absolute terms was 16.72 billion rupees in the June quarter, nearly half of 32.6 billion rupees added in the previous three months.

Net interest income grew 14 percent over a year earlier, while non-interest income rose 5 percent. Net interest margin rose to 3.54 percent from 3.4 percent a year earlier. Retail loans grew 25 percent, faster than the 15 percent increase in overall credit.

ICICI Bank shares closed 3.9 percent higher in a Mumbai market that gained 1.5 percent. The stock has underperformed the Bank Nifty and the Nifty this year.

($1 = 64.0000 rupees)

(Additional reporting by Shilpa Murthy in Bangalore; Editing by Muralikumar Anantharaman and David Evans)