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ICICI Bank Denies Rumours

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Written on 1:21 AM by Reethi

ICICI Bank Ltd clarified today that rumours are being repeatedly circulated regarding the financial strength of the bank. These rumours, the bank states, are baseless and malicious.

A message from the MD and CEO Mr.Kamath on the ICICI Bank stability reads:


Firstly, on the global events. The current situation has two aspects.
There is inadequate capital in certain large institutions, as they have
sustained losses that they cannot absorb. And there are concerns about
the financial sector in general, which are significantly reducing
liquidity in the markets and thereby severely impacting the ability of
some institutions to carry on business as usual. Both these aspects are
being addressed through concerted regulatory efforts, such as the
proposed buyout of troubled debt in the US, government capital support
to systemically important troubled institutions and injection of
liquidity by central banks across the world. Private sector solutions,
in the form of mergers and acquisitions and capital raising from private and public markets, are also being rapidly executed.

Our own position is very strong and we are well-placed to meet the
challenges of this market environment and, indeed, capitalize on the
business opportunities that are emerging. Let me reinforce some key
points:

* ICICI Bank Limited has a very strong capital position. We
pro actively raised Rs. 20,000 crore (about US$ 5 billion) in June
2007, almost doubling our capital base. We now have a net worth of
over Rs. 47,000 crore (i.e. over US$ 10 billion) and a capital
adequacy ratio of 13.4% at June 30, 2008. Our capital adequacy is
the highest among large Indian banks. Our banking and non-banking
subsidiaries are well-capitalized and we have adequate capital to
continue to support their growth.

* We have consolidated total assets of over Rs. 484,000 crore (over
US$ 105 billion), which is diversified across a wide range of
asset classes in India and overseas. ICICI Bank's international
banking subsidiaries have, as part of their normal treasury
operations, a diversified investment portfolio, which includes
investments in financial institutions, primarily commercial banks.
The widening of market credit spreads would have a mark-to-market
impact on this portfolio, the extent of which will depend on the
market yields as conditions normalize. The absorption of this
impact will not pose any challenge to the Bank's capital position.

* ICICI Bank is profitable. We made a profit of Rs. 4,158 crore
(over US$ 900 million) in FY2008 and Rs. 727 crore (over US$ 155
million) in the first quarter of this year. This was due to the
strong core performance, which more than offset the impact of
adverse debt and equity market conditions in India and globally
since the second half of FY2008.

We have proactively taken several steps over the last year in the
context of the emerging environment. We raised capital, recalibrated the growth of certain business lines, sharpened the focus on cost efficiency and worked towards reducing our dependence on wholesale funding. All
these measures were designed to enhance our resilience to potential
challenges in market conditions. At the same time, we significantly
expanded our branch network to strengthen our presence nationwide,
indicating our continued confidence in our growth path.

While there are near-term uncertainties, India is on a sustained growth
path in the medium to long term. This will mean exciting opportunities
for us across our businesses both in India and overseas. We have the
financial capital, technology, distribution and brand to leverage this
opportunity. And most importantly, we have the unique team of people
that make the ICICI Group what it is. You are the face of the Group. I
would ask all of you to be conscious of our strengths and communicate
them to all stakeholders. Let us move ahead to realise our shared
vision.

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