* ICICI posts record quarterly profit, up 30 pct
* ICICI NIM steady at 3 pct, bad loans fall y/y
* NPAs at government-owned banks PNB and IOB rise
* PNB, IOB shares fall 7.5 and 8 pct respectively
(Recasts, adds comments from ICICI and PNB)
By Swati Pandey
MUMBAI, Oct 26 India's biggest private sector
lender ICICI Bank Ltd posted its highest ever
quarterly profit, while state-owned Punjab National Bank
disappointed investors with lower profits, sending its
shares down more than 7 percent.
The results highlight the contrasting performance of state
and private sector lenders in India. During tough spells in the
economy, loans made by state-run banks, which account for 70
percent of the market but whose lending decisions are not always
driven by purely commercial factors, are more likely to fall
Many government-owned lenders are exposed to the beleaguered
state electricity boards, troubled power and infrastructure
projects, and debt-laden firms such as Kingfisher Airlines
, Air India and Deccan Chronicle.
ICICI posted a forecast-beating net profit for the
July-September quarter of 19.56 billion rupees ($364.4 million),
compared with 15.03 billion rupees a year ago.
By contrast, PNB's net profit fell 11.5 percent in the same
quarter, with bad loans as a percentage of total assets rising
to 2.69 percent, from 0.84 percent a year ago.
"It is difficult to say whether the worst is over," said K.
R. Kamath, Chairman of Punjab National Bank (PNB), India's
second largest government-owned lender by assets.
"It is a reflection of what is happening in the economy. It
all depends how the economy behaves in the next 3-6 months," he
Bad loans at Indian Overseas Bank, a smaller
state-run lender, rose to 2.25 percent from 1.21 percent a year
ago, it said on Friday, sending its shares down over 8 percent.
India is battling high inflation, a yawning fiscal deficit
and flagging growth amid political paralysis. Ratings agency
Standard & Poor's has said the country faces a one-in-three
chance of a downgrade over the next 24 months.
Infrastructure and power projects mired in land acquisition
hurdles and corruption scandals have already started to pinch
banks, which are either restructuring loans to these projects or
classifying them as bad. Most private sector banks have stayed
away from project financing.
"In general, private sector banks have a larger proportion
of retail assets. Retail assets, in terms of quality, have been
stable and their performance has been good," ICICI chief
executive Chanda Kochhar told reporters in a post-earnings call.
The ratio of bad loans at ICICI dropped to 0.78 percent in
the September quarter compared with 0.93 percent a year ago.
ICICI aims to grow its domestic loan book by around a fifth
in the fiscal year ending March 2013, led by consumer loans and
working capital, and will be particularly cautious in unsecured
retail lending and project finance.
Its net interest income - the difference between interest
earned and interest paid out - rose 35 percent to 33.71 billion
Analysts had on average estimated ICICI to make net profit
of 18.8 billion rupees, according to Thomson Reuters I/B/E/S.
Smaller private lenders HDFC Bank Ltd, Axis Bank
Ltd and Yes Bank Ltd all recently reported
strong quarterly profit growth.
ICICI shares have risen nearly 60 percent this year,
outpacing 45 percent growth in overall bank stocks
and the broader Indian market's 23.4 percent gain. Its current
market value is close to $23.3 billion.
State banks including PNB and Indian Overseas Bank have
lagged the broader market and their private peers. They have
risen nearly 3 and 9 percent respectively this year.
(Additional reporting by Manoj Kumar in New Delhi; Editing by