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Thursday, November 24, 2011

ICICI Bank eyes Indian loans at European banks: Chanda Kochhar, CEO

MUMBAI: India's biggest private lender ICICI Bank is open to buying loan portfolios of European banks, its chief executive said, as banks in the region look to deleverage and offload loans to shore up capital base.

"The opportunity to pick up some good assets at good pricing clearly exists. So, that's what we are looking at all the time and exercising it whenever we see the right opportunity," Chanda Kochhar told the Reuters India Investment Summit on Wednesday.

"We have picked up some which are India-related assets, but I would say not very large number, because given the fact that on the other hand the ability to raise funds currently has also become more expensive," she said.

European banks are struggling to raise their capital cushions to become more resilient against future shocks, which they can do by increasing equity they hold or by shrinking their asset base.

The European Banking Authority has said banks need more than 100 billion euros of new capital, but the International Monetary Fund warned in September EU banks faced possible losses of 300 billion euros as a result of sovereign and interbank lending risks.

Kochhar, who was ranked fifth in Fortune's 50 most powerful women in business, ruled out the acquisition of any European bank.


ICICI sees good credit momentum in India from car loans, mortgages and working capital, Kochhar said.

However, credit demand for new corporate projects was slow, she said, and warned of slowing overall loan growth in the fiscal year 2014 if new projects do not start over the next six to 12 months.

Indian companies have been delaying investment plans as rising interest rates make projects expensive. Indian policy interest rates are at their highest since the global financial crisis in 2008.

Earlier this month, ratings agency Moody's Investor Service downgraded its outlook for India's banking system to "negative" from "stable," as it warned of slowing growth at home and overseas hitting asset quality, capitalisation and profitability.

Kochhar expects asset quality to remain mostly stable for ICICI, although debt restructuring may increase.

"Some projects, some large corporate may need some handholding but I don't see sudden NPA (non-performing assets) shocks coming in the portfolio. I think broadly the credit quality is quite satisfactory," she said.

India's No.2 lender last month beat street estimates with a 21 percent rise in quarterly net profit, led by higher income and lower provisions for bad loans.

Source: EconomicTimes


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