ICICI Bank to grow its domestic loans by 20%

The bank aims to regain market share this fiscal year.

India’s largest private sector bank suffered heavily from overly aggressive and risky loans during the global financial crisis. Its loan portfolio quality is improving, however, and ICICI Bank looks forward to growth that is faster than the industry’s, but also more prudent.

“Growth for the sake of growth can get into asset quality problems,” said CFO N.S. Kannan.

Led by consumer loans, ICICI aims to grow its domestic loans by around one-fifth this fiscal year. But will be especially cautious with project finance, Kannan said. In the last fiscal year, ICICI cut overall loan growth to 17% from its initial target of 20%.

“For retail unsecured loans, we have clearly tightened the filters. We are very careful in project finance and in identifying the projects that are worthy of financing,” Kannan said.

ICICI shares are up more than one-third compared to 28% industry growth. This growth is, however, lower by nearly a quarter compared to 2008. Shares of rival HDFC Bank Ltd, the second largest private sector lender, are up nearly 75%.

ICICI’s price-to-book ratio of 1.8, however, is the lowest among India’s four largest private sector banks.

During the financial crisis that began in 2008, the bank’s bad loans exceeded 5% of total assets by March 2010. It has cut that to about 3.5%.

After the Lehman collapse, worries about ICICI’s overseas exposure saw a 50% drop in its shares in just one month. ICICI was involved in some of India’s most notorious troubled corporate loans, including to Kingfisher Airlines Ltd,

ICICI expects its asset quality to improve and its restructured loans more than doubled last year. Kannan also expects the overall group’s return-on-equity to grow to 15% by next March.