UPDATE 2-India’s ICICI, HDFC Bank Q4 net up, eye credit pickup

* ICICI sees credit demand growth of 16-20 percent in FY11

* ICICI CEO: don’t see immediate reason to up lending rates

* ICICI Q4 net 10.06 bln rupees vs 10.89 bln estimates

* HDFC Q4 net 8.37 bln rupees vs 8.15 bln estimates

(Adds management comments)

By Sumeet Chatterjee and Bharghavi Nagaraju

MUMBAI, April 24 (BestGrowthStock) – ICICI Bank (ICBK.BO: ) and HDFC
Bank (HDBK.BO: ), India’s top two private sector lenders, said on
Saturday quarterly profit grew by a third, and forecast strong
growth in credit demand in a fast expanding economy.

ICICI, which posted its best quarterly profit growth in two
years, expects credit growth of 16-20 percent in this financial
year that began in April after seeing its loan book contract by
17 percent in 2009/10.

“Clearly, I see a very positive outlook for growth,” Chief
Executive Chanda Kochhar told reporters. “I expect in the system
the credit growth to be strong. I expect for us also the credit
growth to be strong and it has already commenced.”

Kochhar said the bank saw signs of a strong revival in the
January-March quarter itself with improving business and
consumer confidence bringing back corporate, housing, auto and
retail demand in Asia’s third-largest economy.

Bank credit in India grew an annual 17.05 percent 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
percent in October and compared with 16.7 percent at end-March.

Analysts expect loan demand to pick up further in the first
half of 2010/11 that started on April 1 as industries will need
more funds to expand operations in an economy forecast to grow
more than 8 percent in this fiscal year.

The central bank sees non-food credit growth of commercial
banks at 20 percent in 2010/11, still a far cry from growth
rates of above 30 percent in the pre-crisis period.

HDFC Bank’s executive director Paresh Sukthankar said that
the second-largest private sector lender expected to grow its
loan book at a faster clip in the year to March 2011 than the
central’s bank target of 20 percent.

The central bank raised policy rates by a quarter-point for
the second month in a row last Tuesday, but commercial banks are
unlikely to increase their lending rates in the near term
because of large deposit base. [ID:nSGE63J098]

“I don’t see any immediate reason to increase lending rates,
but over this financial year clearly there is an upward bias on
the interest rates so some increase over the year is not ruled
out,” Kochhar said.

Shares in ICICI Bank, valued at nearly $24.5 billion, have
risen 11.4 percent this year and HDFC has gained over 14
percent, beating the sector index (.BSEBANK: ). The main Mumbai
market (.BSESN: ) is up 1.3 percent.
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ICICI MISSES FORECAST, HDFC BEATS

ICICI, India’s No. 2 lender after state-run State Bank of
India (SBI.BO: ), said January-March net profit rose 35 percent to
10.06 billion rupees ($227 million) from 7.44 billion rupees a
year earlier.

Net interest income, the difference between interest earned
and interest paid, rose by 5 percent to 21.39 billion rupees.
The net interest margin, a key measure of efficiency, was at 2.6
percent, unchanged from the preeceding quarter.

A Reuters poll of analysts had forecast net profit of 10.89
billion rupees and net interest income of 21.08 billion rupees.

ICICI said earning was helped by fee income that rose 13
percent in the March quarter to 15.21 billion rupees and a 6
percent drop in costs. Increase in current and savings accounts
that cost zero to 3.5 percent also boosted profit.

HDFC Bank (HDB.N: ) exceeded forecast with a 32.6 percent rise
in March quarter profit (Read more your timing to make a profit.) to 8.37 billion rupees, as its advances
saw a 27 percent jump in the year to March. A Reuters poll had
projected net profit at 8.15 billion rupees for the bank.

Both ICICI and HDFC Bank said they were seeing an improvment
in their asset quality, as strong economic and corporate growth
reduces the pace of loan defaults and banks pare their focus on
unsecured loans such as personal loans and credit cards.
($1=44.4 rupees)
(Editing by William Hardy)

UPDATE 2-India’s ICICI, HDFC Bank Q4 net up, eye credit pickup