Indian banks are finding the current market situation challenging. The sharp increase in interest rates, negative impact on treasury income and mounting bad loans have hit the bottomlines of top commercial banks in the first quarter ended June 2008. ICICI Bank, the largest private sector bank, reported a 6 per cent fall in the first quarter to Rs 728 crore from Rs 775 crore in the year-ago quarter.Due to huge provisioning, State Bank of India, the largest bank in India, clocked a lower 15.08 per cent rise in its net profit for the quarter ended June at Rs 1,640.79 crore as against Rs 1,425.81 crore in the year-ago period. SBI had posted Q4 profit growth of 26.12 per cent last year and a 48 per cent growth in the full year of 2007-08.Bangalore-based public sector lender Vijaya Bank reported a net loss of Rs 76.64 crore for the first quarter ended June compared to a net profit of Rs 111.35 crore in the corresponding quarter of last financial year. The loss in net profit was mainly attributed to the mark-to-market provisioning of Rs 190 crore made on the investment portfolio covering government bonds, equity and equity linked mutual funds. Earlier, Canara Bank and Union Bank had also come out with lower profits due to depreciation on the investment portfolio.ICICI Bank joint managing director Chanda Kochhar said high interest rates and adverse market conditions significantly affected the bank’s trading portfolio and SLR Securities portfolio and its treasury income during the quarter. “High interest rates have had an impact on our quarter results. However, the corporate and international segments grew by nearly 65 per cent in the quarter and we expect it to grow by around 25 per cent moving ahead,” Kochhar said.SBI registered growth in its auto and housing loans, which went up by 41.31 per cent and 17.4 per cent respectively. On the other hand, retail advances contributed nearly 56 per cent of ICICI's total loan portfolio, while it has also contributed significantly to its bad debts during the quarter, Kochhar said.TOUGH GOING• ICICI gross NPAs zoom to Rs 8,511 cr from Rs 5,292 cr • SBI makes provisioning of Rs 1,656.61 cr on investment portfolio• Retail assets contribute to ICICI’s bad assets• Vijaya Bank hit by Rs 190-crore provisioning
