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While delivering a strong set of earnings for the second quarter, ICICI Bank ó India's largest private bank ó has again shifted its lending priorities in keeping with the economic environment. The bank has calibrated its corporate lending due to fear of rising defaults in the second quarter, and has indicated that its retail loan growth will be stronger in the quarters ahead. In a conference call with the media, Chanda Kochhar, managing director & chief executive officer of ICICI Bank, explains the outlook.
You have calibrated corporate loan growth down to 11% from 20% in the June quarter. Do you think this will continue for the rest of the year? What is your outlook on credit growth?
We calibrate our strategy with the environment. As the environment moves and so do some projects, we would also increase (lending to this space). On the retail side, our credit growth will be around 23%, going forward. We have already achieved about 20% growth in the retail portfolio. While we have the ability to grow even faster than 11%, we will watch the environment. We are quite selective in the kind of credit we choose. We should see corporate credit growth of 14-15%.
How have you tried to manage the volatility in the corporate book?
One, we have been quite selective in underwriting. We choose projects that are good for us. Even for increasing our working capital, we decide on a company-by-company basis. We have also put some exposure-wise limits on ourselves: We have limited ourselves in certain sectors, groups and companies. So, we are being a little bit more cautious in giving out new loans.
Your net interest margins (NIMs) have expanded during the quarter. What contributed to this?
This is really coming from two things. On the domestic side, our reliance on wholesale funds was very minimal. We have a diverse funding base, which is retail-oriented and that is why we did not feel the impact of the volatile interest rates in the previous quarter. Wholesale deposits form less than 30% of our total deposit base. Therefore,