* Oct-Dec net profit 25.3 bln rupees vs 24.6 bln rupees
* Net non-performing loans rise to 0.94 pct of total assets
* To see more defaults, debt restructuring - CEO
(Recasts, adds CEO comments, updates shares)
By Swati Pandey
MUMBAI, Jan 29 ICICI Bank Ltd sees the
amount of corporate defaults rising in coming quarters as
borrowers succumb to the pressures of a sluggish economy which
has already pushed profit growth to a four-year low.
India's biggest private sector lender by assets, like rivals
HDFC Bank Ltd and Axis Bank Ltd, has had to
contend with a wave of defaults over the past year by companies
struggling with high interest rates.
As a result, banks have been reducing their reliance on
corporate lending and opening branches in new regions to
stimulate demand for consumer home and car loans.
That shift helped ICICI on Wednesday report October-December
net profit of 25.3 billion rupees ($404.12 million) compared
with the 24.6 billion rupee mean estimate of 23 analysts polled
by Thomson Reuters I/B/E/S. The growth rate, at 12.5 percent,
was the slowest since December 2009.
Net interest income, or the difference between interest
earned and paid, rose about 22 percent to 42.6 billion rupees.
Net non-performing loans as a percentage of total assets
rose to 0.94 percent from 0.76 percent, primarily because of
corporate defaults. The industry average is 2 percent.
"Given the challenging operating environment, we continue to
see additions to non-performing assets and restructured assets,"
Chief Executive Chanda Kochhar told reporters on a post-earnings
call, referring to "the next couple of quarters."
Profit also took a knock from tax expenses rising 45 percent
to 12.1 billion rupees, and because the bank almost doubled the
amount of funds it sets aside for bad debt, Kochhar said.
Shares of ICICI, with a market value of $18.6 billion, ended
down 1.7 percent on Wednesday compared with a 0.1 percent
decline in the benchmark stock index.
PAST ITS BEST
ICICI's earnings have exceeded analyst estimates in each
quarter over at least the past two years. Of 50 analysts
tracking the bank, 44 recommend or strongly recommend buying its
shares, according to Thomson Reuters Starmine.
The remaining six advise investors to stick with their
current ownership, as some expect revenue growth to slow in
coming quarters and credit costs to rise.
"We believe the bank is past its best in earnings, at least
in the medium term," Kotak Securities banking analyst M. B.
Mahesh said this month in a research note.
Net interest margin, a gauge of profitability, is likely to
narrow because of the switch in focus to retail lending, said
Mahesh, who currently recommends buying the stock.
ICICI, which has 3,588 branches across the country, lent 22
percent more funds to retail consumers in the third quarter than
a year earlier, mainly for home and car loans. Lending to
companies grew 7 percent.
The bank's net interest margin grew to 3.32 percent from
3.07 percent, higher than an industry average of around 3
percent and a level Kochhar expects the bank to maintain.
($1 = 62.6550 Indian rupees)
(Reporting by Swati Pandey; Editing by Christopher Cushing)