ICICI bank climbed higher today on buying support at the lower levels.

The scrip of the second largest bank in India in terms of assets jumped 4.98% on BSE in mid-afternoon trades to Rs 138. The scrip was trading close to the day's high of Rs 138.30. 2.3 lakh ICICI Bank shares changed hands on BSE by 14:50 IST.

The rally on the counter today was also part of a broad-based rally in private sector banks. A host of private sector bank scrips surged today. Top gainers were UTI Bank (up 7% to Rs 50), Global Trust Bank (up 7.4% to Rs 17.40), Bank of Punjab (up 6.7% to Rs 19.10), Federal Bank (up 3.7% to Rs 141.60) and HDFC Bank (up 2.7% to Rs 249).

ICICI Bank has been witnessing alternate bouts of buying and selling on the bourses. It came off sharply from the higher levels in recent months after which it witnessed a recovery. Hectic volatility was witnessed in the stock recently when it tumbled 5.9% in a single trading session on 22 May 2003 to Rs 131.15. The stock remained range bound and flat on the next day to settle at Rs 131.45. The stock surged today on fresh buying interest.

Banking analysts are bullish about the private sector bank. "We have a buy recommendation on the stock," says a banking analyst with a local brokerage.

ICICI Bank got 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 the post-merger operation, 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 of the bank to strategic and institutional investors, held by a trust on transfer from the erstwhile ICICI in accordance with the scheme amalgamation. Having received the above amount, the bank made provisions of Rs 1686 crore against loans and other assets, primarily relating to 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.

ICICI Bank is one bank that 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.

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.