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ICICI Bank Q3 net seen up 60-80%

ICICI Bank, India's second-largest private sector bank, is expected to report on Tuesday a big increase in third-quarter profit, due both to increased lending and deposits and a rise in income on its bond holdings.

ICICI Bank, 60 per cent owned by financial services firm ICICI Ltd, is the first Indian bank to list on the New York Stock Exchange.

It will become India's largest private-sector bank upon completion of its announced merger with another regionally strong private bank, Bank of Madura.

Net profit for the October-December quarter is expected to have risen 60 to 80 per cent from a year earlier, or to Rs 450 million to Rs 508.7 million, according to estimates offered by three analysts interviewed by Reuters.

"Softening interest rates boosted their treasury income and growth continued in their core business as well," said Anand Radhakrishnan, equity analyst at Sundaram Newton Asset Management Company. He forecast overall revenue increased 40-45 per cent.

He said yields on government securities fell by as much as 100 basis points in the quarter, boosting income from treasury operations.

Reuters data showed the 10-year benchmark government bond yield fell 61 basis points during the quarter, to 10.88 on December 30 from 11.49 on September 2.

Analysts said ICICI Bank also gained from the change made in October by India's central bank in the way banks carry bond and equity investments on their books. The change allowed banks to make lower provisions for possible losses on their holdings.

Shares up in anticipation

ICICI Bank's shares have risen steadily over the past week, gaining 12.5 per cent since last Tuesday in anticipation of the good results.

On Monday, the shares jumped Rs 12.20 or 8.0 per cent to Rs 165.35, while the Sensex rose 1.73 per cent.

At the current level, ICICI Bank shares are down 42 per cent from their 52-week high of Rs 285 struck last April, and up 154 per cent from their 52-week low of Rs 65 touched last January.

Analysts said the bank would begin reaping the benefits of its merger with Bank of Madura once the process was completed in six to nine months.

"The growth should continue through the next quarter and the merger with Bank of Madura should see the EPS (earnings per share) sharply up," said Manish Karwa, a banking analyst with Bombay-based Pranav Securities.

The merger has been approved by the shareholders and awaits only a symbolic approval from India's central bank.

ICICI Bank and Bank of Madura's assets totalled Rs 160.51 billion as of last September 30, the bank said.

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