MUMBAI: India’s biggest private sector lender ICICI Bank Ltd. posted its highest ever quarterly profit, while state-owned Punjab National Bank disappointed investors with lower profits, sending its shares down more than 7 percent.
The results highlight the contrasting performance of state and private sector lenders in India. During tough spells in the economy, loans made by state-run banks, which account for 70 percent of the market but whose lending decisions are not always driven by purely commercial factors, are more likely to fall into default.
Many government-owned lenders are exposed to the beleaguered state electricity boards, troubled power and infrastructure projects, and debt-laden firms such as Kingfisher Airlines, Air India and Deccan Chronicle.
ICICI posted a forecast-beating net profit for the July-September quarter of 19.56 billion rupees ($ 364.4 million), compared with 15.03 billion rupees a year ago.
By contrast, PNB’s net profit fell 11.5 percent in the same quarter, with bad loans as a percentage of total assets rising to 2.69 percent, from 0.84 percent a year ago.
“It is difficult to say whether the worst is over,” said K. R. Kamath, chairman of Punjab National Bank (PNB), India’s second largest government-owned lender by assets.
“It is a reflection of what is happening in the economy. It all depends how the economy behaves in the next 3-6 months,” he said.
Bad loans at Indian Overseas Bank, a smaller state-run lender, rose to 2.25 percent from 1.21 percent a year ago, it said on Friday, sending its shares down over 8 percent.
India is battling high inflation, a yawning fiscal deficit and flagging growth amid political paralysis. Ratings agency Standard & Poor’s has said the country faces a one-in-three chance of a downgrade over the next 24 months.
Infrastructure and power projects mired in land acquisition hurdles and corruption scandals have already started to pinch banks, which are either restructuring loans to these projects or classifying them as bad. Most private sector banks have stayed away from project financing.
“In general, private sector banks have a larger proportion of retail assets. Retail assets, in terms of quality, have been stable and their performance has been good,” ICICI chief executive Chanda Kochhar said in a post-earnings call.
The ratio of bad loans at ICICI dropped to 0.78 percent in the September quarter compared with 0.93 percent a year ago.
ICICI aims to grow its domestic loan book by around a fifth in the fiscal year ending March 2013, led by consumer loans and working capital, and will be particularly cautious in unsecured retail lending and project finance.
Its net interest income — the difference between interest earned and interest paid out — rose 35 percent to 33.71 billion rupees.
Analysts had on average estimated ICICI to make net profit of 18.8 billion rupees, according to Thomson Reuters I/B/E/S.
Smaller private lenders HDFC Bank Ltd, Axis Bank Ltd. and Yes Bank Ltd. all recently reported strong quarterly profit growth.
ICICI shares have risen nearly 60 percent this year, outpacing 45 percent growth in overall bank stocks and the broader Indian market’s 23.4 percent gain. Its current market value is close to $ 23.3 billion.
State banks including PNB and Indian Overseas Bank have lagged the broader market and their private peers. They have risen nearly 3 and 9 percent respectively this year.
ICICI Bank posts record profit, state banks disappoint
ICICI Bank posts record profit, state banks disappoint
Saudi Arabia’s cultural sector is a new economic engine between Riyadh and Paris, says ambassador
RIYADH: Culture has become a fundamental pillar in bilateral relations between France and Saudi Arabia, according to the French Ambassador to the Kingdom, Patrick Maisonnave.
Maisonnave noted its connection to the entertainment and tourism sectors, which makes it a new engine for economic cooperation between Riyadh and Paris.
He told Al-Eqtisadiah during the opening ceremony of La Fabrique in the Jax district of Diriyah that cultural cooperation with Saudi Arabia is an important element for its attractiveness in the coming decades.
La Fabrique is a space dedicated to artistic creativity and cultural exchange, launched as part of a partnership between the Riyadh Art program and the French Institute in Riyadh.
Running from Jan. 22 until Feb 14, the initiative will provide an open workspace that allows artists to develop and work on their ideas within a collaborative framework.
Launching La Fabrique as a space dedicated to artistic creativity
The ambassador highlighted that the transformation journey in the Kingdom under Vision 2030 has contributed to the emergence of a new generation of young artists and creators, alongside a growing desire in Saudi society to connect with culture and to embrace what is happening globally.
He affirmed that the relationship between the two countries is “profound, even cultural par excellence,” with interest from the Saudi side in French culture, matched by increasing interest from the French public and cultural institutions unfolding in the Kingdom.
Latest estimates indicate that the culture-based economy represents about 2.3 percent of France’s gross domestic product, equivalent to more than 90 billion euros ($106.4 billion) in annual revenues, according to government data. The sector directly employs more than 600,000 people, making it one of the largest job-creating sectors in the fields of creativity, publishing, cinema, and visual arts.
Saudi Arabia benefiting from French experience in the cultural field
Maisonnave explained that France possesses established cultural institutions, while Saudi Arabia is building a strong cultural sector, which opens the door for cooperation opportunities.
This comes as an extension of the signing of 10 major cultural agreements a year ago between French and Saudi institutions, aiming to enhance cooperation and transfer French expertise and knowledge to contribute to the development of the cultural system in the Kingdom.
He added that experiences like La Fabrique provide an opportunity to meet the new generation of Saudi creators, who have expressed interest in connecting with French institutions and artists in Paris and France.
La Fabrique encompasses a space for multiple contemporary artistic practices, including performance arts, digital and interactive arts, photography, music, and cinema, while providing the public with an opportunity to witness the stages of producing artistic works and interact with the creative process.
