ICICI Bank 2005 Annual Report Download - page 53

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The following table sets forth, for the periods indicated, the profit/(loss) of the principal subsidiaries of ICICI
Bank.
RECONCILIATION OF PROFITS AS PER INDIAN GAAP AND US GAAP
There are significant differences in the basis of accounting between US GAAP and Indian GAAP. In the
merger of ICICI with ICICI Bank, the Bank was the legal acquirer. Under Indian GAAP, the Bank is the
accounting acquirer. Under US GAAP, ICICI is deemed to have acquired ICICI Bank. Therefore, the financial
statements under US GAAP and Indian GAAP for the Bank are not comparable and these differences are
expected to continue in future years. ICICI’s assets were fair valued while accounting for the merger under
Indian GAAP. The primary impact of the fair valuation was the creation of additional provisions against
ICICI’s loan and investment portfolio, reflected in the Indian GAAP balance sheet at March 31, 2002. Under
US GAAP, ICICI Bank’s assets were fair valued while accounting for the merger. There is also a difference in
the basis of computation of provision for restructured loans under US GAAP, which discounts expected
cash flows at contracted interest rates, unlike Indian GAAP, under which current interest rates are used.
Net income as per US GAAP increased 63.4% to Rs. 8.53 billion in fiscal 2005 from Rs. 5.22 billion in fiscal
2004 primarily due to a 27.2% increase in net interest income to Rs. 23.85 billion and a 74.2% increase in
fee income, offset, in part, by a 22.1% increase in operating expenses.
As a result of the significant differences in the basis of accounting under US GAAP and Indian GAAP, the
Bank’s US GAAP accounts showed a profit of Rs. 8.53 billion as compared to Rs. 18.52 billion under Indian
GAAP in fiscal 2005.
The following table sets out a condensed unaudited reconciliation of consolidated profit after tax as per
Indian GAAP with net income as per US GAAP for fiscal 2005.
(1) Certain items have been aggregated/ combined as considered appropriate.
(2) All amounts have been rounded off to the nearest Rs. 10.0 million.
Management’s Discussion & Analysis
ICICI Securities Limited
ICICI Prudential Life Insurance Company Limited
ICICI Lombard General Insurance Company Limited
ICICI Venture Funds Management Company Limited
ICICI Home Finance Company Limited
FY2005
0.64
(2.12)
0.48
0.32
0.10
FY2004
1.65
(2.22)
0.32
0.26
0.10
Rs. in billion
Audited consolidated profit after tax as per Indian GAAP
(1)
Adjustments :
Higher provision for restructured loans
Other higher provisions under US GAAP
Amortisation of debt issue cost and intangible assets
Unamortised loan origination cost written off on sale of assets
Deferred tax benefit
Net impact of fee and expense amortisation
Other adjustments
Audited net income as per US GAAP
18.52
(10.61)
(4.06)
(0.83)
(0.62)
4.04
2.67
(0.58)
8.53
Rs. in billion
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