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May 4, 2001
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Money > Business Headlines > Report May 4, 2001 |
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ICICI to focus on fee based income in 2001-02Netscribes/Radha Ganesan NPA provisioning to the tune of Rs 14.21 billion for the year ended March 31, 2001; a net loss of 2.57 billion in Q4 of 2000-01; and ICICI is ready to shift focus to fee-based activities to improve margins. At present however, the institution's 'fee based income' is a mere 0.82 per cent of total assets ! Announcing the annual results for FY2001, KV Kamath, MD and CEO, ICICI, said that the institution expects to maintain a stable interest spread around 1.8 per cent this fiscal -- the same as in FY 1999-2000 and FY 2000-01 -- despite the current softening in interest rates. "The current falling interest rate regime is not expected to hurt margins since loans will always be priced over the deposit cost," he said. "Deposits rates would also go down, parallel to the lending rates, " he added. Currently, ICICI's cost of funds is over 11 per cent while the lending rates average around 13 per cent. Kamath said that ICICI is looking at fee-based income to help increase spreads under the current economic scenario. "Higher fee income would give us more leeway and spreads could improve," he said. For the year ended March 31, 2001, ICICI recorded a 55 per cent drop in net profits to Rs 5.37 billion. This is against the 5-9 per cent drop expected by analysts. This sharp drop is primarily due to accelerated provisioning to the tune of Rs 8.13 billion. Net interest income has moved up to Rs 12.99 billion in FY2000-01 from Rs 12.05 billion for the same period last year. On Thursday, the ICICI scrip fell by Rs 1.45 on the Bombay Stock exchange, closing at Rs 81.90 per share. Around 68,800 scrips were traded at the ICICI counter. Analysts do not expect any significant movement in the scrip over the next few months. ICICI's fee income has increased by 61 per cent to Rs 5.22 billion as against Rs 3.24 billion in FY2000. The percentage of fee income to assets has hence moved up marginally from 0.57 per cent to 0.82 per cent in FY2000-01. Fund based which accounts for the remaining 99 per cent of ICICI's business has grown marginally by just 7.7 per cent to 81.44 billion in FY 2000-01. |
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