ICICI Bank 2006 Annual Report Download - page 54

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53
Annual Report 2005-2006
SEGMENTAL INFORMATION
The Bank’s operations are classified into the following segments: commercial banking segment and
investment banking segment. Segment data for previous periods has been reclassified on a comparable
basis.
The consumer & commercial banking segment provides medium-term and long-term project and
infrastructure financing, securitization, factoring, lease financing, working capital finance and foreign
exchange services to clients. Further, it provides deposit and loan products to retail customers. The
investment banking segment includes treasury operations.
Consumer & Commercial Banking Segment
Profit before tax of the consumer and commercial banking segment increased to Rs. 26.55 billion in fiscal
2006 from Rs. 18.95 billion in fiscal 2005.
Net interest income, increased by 51.6% to Rs. 37.51 billion in fiscal 2006 from Rs. 24.74 billion in fiscal
2005, primarily due to an increase in the interest income on advances and investments and a reduction
in the interest expense on borrowings, offset, in part, by an increase in the interest expense on deposits.
Non-interest income increased by 46.7% to Rs. 37.17 billion in fiscal 2006 from Rs. 25.34 billion in fiscal
2005 primarily due to growth in commission and brokerage income. Commission and brokerage income
increased mainly due to growth in credit card related fees and third-party product distribution fees,
increase in income from remittances and other fees from international products and services and growth
in fees from corporate customers.
Non-interest expenses increased by 34.6% to Rs. 40.81 billion in fiscal 2006 from Rs. 30.32 billion in fiscal
2005, primarily due to enhanced operations and the growth in the retail franchise, including maintenance
of ATMs, credit card expenses, call centre expenses and technology expenses.
Provisions for contingencies (excluding provisions for tax) in fiscal 2006 was Rs. 7.32 billion compared to
Rs. 0.81 billion in fiscal 2005 primarily due to increased provisions on standard assets as per RBI guidelines
in fiscal 2006 and higher level of write-backs in fiscal 2005.
Investment Banking Segment
Profit before tax of investment banking segment was Rs. 4.80 billion in fiscal 2006 as compared to
Rs. 6.71 billion in fiscal 2005.
Net interest income increased by 19.2% to Rs. 4.35 billion in fiscal 2006 compared to Rs. 3.65 billion in
fiscal 2005 mainly due to 80.4% rise in interest income from government securities, offset in part by
increase in interest on inter-bank borrowings.
Non-interest income increased by 43.5% to Rs. 12.66 billion in fiscal 2006 from Rs. 8.82 billion in fiscal
2005 primarily due to higher capital gains realised on sale of equity investments.
Non-interest expenses increased by 57.2% to Rs. 3.60 billion in fiscal 2006 from Rs. 2.29 billion in fiscal
2005 primarily due to increase in employee expenses and other administrative expenses.
Provisions increased to Rs. 8.62 billion in fiscal 2006 compared to Rs. 3.47 billion in fiscal 2005. The sharp
increase in provisions reflects the increase in the amount of amortisation of premium on government
securities.
CONSOLIDATED FINANCIALS AS PER INDIAN GAAP
The consolidated profit after tax for fiscal 2006 was Rs. 24.20 billion including the results of operations of
ICICI Bank’s subsidiaries and other consolidating entities. Future bonus provisions and non-amortisation
of expenses by ICICI Prudential Life Insurance Company in line with the insurance company accounting
norms had a negative impact on the Bank’s consolidated profits. Life insurance companies worldwide
require five to seven years to achieve break-even, in view of the business set-up and customer acquisition
costs in the initial years as well as reserving for actuarial liability. The deficit in the initial years is usually
higher for faster growing companies; the profit streams, after break-even is achieved, are expected to be
correspondingly higher.