ICICI Bank surged today on renewed buying interest.

The scrip of the second-largest bank by assets edged up 2% to Rs 139.55 on BSE in afternoon trades. It gained as much as 3.5% to a high of Rs 141.60. The stock rallied on decent volumes of over 2 lakh shares on BSE.

Even as the stock has seen high volatility over the last few months on alternate bouts of buying and selling , banking analysts remain bullish on the stock. The stock witnessed a recovery from a low of Rs 121 level of early May 2003 to Rs 138.05 on 19 May 2003. In the next few trading sessions, the stock moved between Rs 130 and Rs 140.

ICICI Bank has been aggressive on the retail segment of late. For instance, the bank has now emerged as among the leading players in the housing loan segment. Its retail portfolio more than doubled in 2002-03 against the previous fiscal. Retail advances for 2002-03 stood at Rs 19,100 crore against Rs 7,500 crore in 2001-02. The retail portfolio, which was 8% of the bank's total business in 2001-02, grew to 18% last year.

ICICI Bank was transformed into a universal bank with the merger of the erstwhile ICICI along with its subsidiaries, ICICI Personal Financial Services and ICICI Capital Services w.e.f. 30 March 2002. During the first year of post-merger operations, the bank has seen a steady improvement in profitability and achieved market leadership in retail finance. Also, it has successfully shifted to a stable, lower-cost funding profile.

The bank received Rs 1,191 crore as gains from the sale of equity shares, held by a trust, to strategic and institutional investors. Having received the above amount, the bank made provisions of Rs 1,686 crore against loans and other assets, primarily relating to the erstwhile ICICI's portfolio.

As on 31 March 2003, the bank's net non-performing customer assets were Rs 3151 crore constituting 4.9% of customer assets, while gross non-performing assets were about Rs 5900 crore constituting 8.5% of customer assets. The bank's standard assets included net restructured assets stood at Rs 8,943 crore.

For FY 2002-03, ICICI Bank posted a net profit of Rs 1,206.18 crore (Rs 258.30 crore) on total income of Rs 12,526.88 crore (Rs 2,726.59 crore). The results for the year ended 31 March 2003 include the results of the erstwhile ICICI and its subsidiaries ICICI Personal Financial Services and ICICI Capital Services, amalgamated with ICICI Bank with effect from 31 March 2002 and are therefore not comparable.

The Securisation Act has come as a big booster for the whole banking sector. The Securitisation Act aims at speeding up recovery of sticky assets without additional court procedures. The Securitisation Act augurs well for the lending business as it would reduce incremental non-performing assets (NPAs) i.e. willful defaults by borrowers may come down drastically.

However, a court case is pending as to whether banks would be able to dispose off assets of defaulting borrowers. Pending this clarification, not much recovery is taking place on the corporate recovery front, banking analysts said.