ICICI Bank sees lending rates moving up after September

Soon after revising deposit rates by up to 75 basis points, ICICI Bank has said the lending rates are expected to go up after September, even as some leading public sector banks have already increased rates for their existing customers.

There is clearly an upward bias. An increase in deposit rates does not translate into a rise in the cost of funds immediately. It usually happens with a lag, ICICI Bank Managing Director and Chief Executive Chanda Kochhar said.

“My expectation is that it is in the second half of the year that you will really see lending rates going up,” she said.

However, some leading public sector banks like Punjab National Bank and Union Bank of India have already upped their lending rates up to 75 bps for existing customers.

ICICI expects a credit growth of 20 per cent in this fiscal on the back of improving loan demand in the retail, small and medium enterprise and corporate portfolios. “The domestic loan growth in the FY11 is expected to be 20 per cent but the total growth, which includes international loans, will be around 15 per cent,” Kochhar said.

The outstanding loan of ICICI Bank at the end of March 2010 stood at Rs 1,81,206 crore. The bank, however, had saw a decline in credit offtake in the last fiscal from Rs 2,18,311 crore in the year-ago period, mainly due to repayments from the retail loan portfolio and the loan portfolio of overseas branches.

ICICI Bank hiked deposit rates across various maturities by up to 0.75 per cent.

For the first quarter ended June, ICICI Bank reported 16.8 per cent jump in net profit at Rs 1,026 crore compared to Rs 878 crore in the same quarter a year ago. However, the bank said its total income fell by 18.7 per cent at Rs 7,493 crore against Rs 9,223 crore in the year-ago period.

Net interest income increased marginally to Rs 1,991 crore compared to Rs 1,985 crore in the same quarter a year ago, while non-interest income came down to Rs 1,680 crore from Rs 2,090 crore in the corresponding quarter last fiscal.

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