ICICI Bank Ltd, India's biggest bank by market value, said third-quarter profit grew 35 percent as credit demand from companies rose, offsetting any decline in borrowing by individuals.
Net income rose to 12.3 billion rupees (US$313 million) in the three months ended December 31, compared with 9.1 billion rupees a year earlier, the bank said in an e-mailed statement. That's higher than the 11.8-billion-rupee median estimate of five analysts surveyed by Bloomberg News.
"Demand for loans from companies has remained strong as many have announced capital expenditure plans," said Jayesh Shroff, who helps manage 300 billion rupees of assets at SBI Funds Management in Mumbai.
"Still, companies are also conscious of the rate at which they borrow."
Loans grew 25 percent in the quarter, as companies borrowed more in an economy poised to expand more than nine percent for a third year. Income from fees and commissions rose 28 percent to 21.5 billion rupees.
Individuals borrowed 61 percent of all loans, compared with 68 percent a year before, as a rise in interest rates and higher real estate prices slowed borrowing. Home mortgage loans accounted for half the loans to individuals.
"We are seeing a healthy investment pipeline among Indian companies totaling US$700 billion over the next three years or so," Chanda Kochhar, joint managing director and chief financial officer told reporters on a conference call after the earnings. "We see a great opportunity there."
The Reserve Bank of India has raised interest rates nine times since 2004 and told lenders to set aside more funds as reserves five times in the past year to contain inflation below its target of five percent. The central bank is scheduled to announce its quarterly monetary policy on January 29.
The economy grew 8.9 percent in the three months to September 30, the slowest in three quarters, and industrial production rose 5.3 percent, the slowest in 13 months, increasing the likelihood for the central bank to lower rates.
ICICI Bank expects interest rates to be stable in the next couple of months and "soften" from the quarter beginning April, Kochhar said.