ICICI Bank posted Q4FY07 net profit at Rs 825 crore versus from Rs. 790 crore (US$ 182 million) in Q4FY06, up 4% YoY. KV Kamath, Managing Director and Chief Executive Officer, ICICI Bank expects growth to be robust on the back of the large investment pipeline, which is almost USD 500 billion.

Excerpts from an exclusive interview with KV Kamath:

Q: You are doing an international as well as domestic issue. When do you plan to hit the market and what are your deployment plans?

A: We believe that the Indian economy has been growing at 10% for the past couple of years. We expect the growth to be robust on the back of the large investment pipeline that we see, which is almost USD 500 billion. Other parts of the economy are also strong. With such robust situation on the economic front, we believe that as a bank we have to prepare ourselves for our opportunities.

As a strategy ICICI Bank has always tried to be proactive and this capital raising has to be put in that context. I believe that this is a time for a step change in this country as India's GDP crosses trillion and keeps growing at the rate that was mentioned before. We need to prepare ourselves for opportunities and in that context we thought that a significant increase in capital is warranted. As far as the timing is concerned, we try to do things as fast as possible, while issuance will be subject to approvals from various authorities, which will be done in the next eight weeks.
 
Q: Can you give us your perspective on the economy as well as the interest rate environment right now, prospects of the economy and the banking sector and where do you see that growing?

A: The economy is in a robust shape and I think monetary and policy measures that have been taken are such that there is very serious effort to contain any negative implication for the economy, be it in the inflationary context or in any other. The investment pipeline is very robust. I think the good news is that corporate India's cash flows are very robust. If you look at corporate India’s free cash flows, they are about USD 125 billion a year. I expect this investment to happen in three years time. The significant part of that investment is going to be met via internal accruals of corporate India. So there is going to be significant change in the economy and that is what all of us will have to be prepared for.

Q: What if there is a downturn? Do you think there will be some risk involved?

A: There is always a risk in business but in the just ended quarter, corporate India has shown robust numbers. Today, corporate India is significantly different from what it was 10 years back. It has deleveraged itself; is globally competitive as well as efficient and produces quality. As such I believe that they are on a sustainable growth path. Indeed there are challenges in the economic context but this will be there in any growth economy. I am sure that these challenges will be met as we go along. That is the reason why I am confident about corporate India.

Q: If you are constantly rebalancing your portfolio with ICICI Bank, what is your stronger focus area going forward for the next two years?

A: I won’t make any forward looking statements but would only say that ICICI Bank has capabilities in project finance, which it had in the past and has never dismantled. It built capabilities in retail credit and we are in the process of building our capabilities in rural India. At the same time we have also looked at the global context and built our global capabilities. All these drivers will continue to serve us as we go along and depending on opportunities and challenges we will rebalance our portfolios as required.

Q: You talked about challenges. What would you think is a big challenge besides infrastructure that the country needs? What do you think is the biggest challenge today for corporate India?

A: In any country’s context, whether it is corporate India or whether it is the consumer or the lay citizen, the biggest challenge is when there is an economic downturn. I think almost everything else can be managed but when there is serious economic downturn things become difficult to manage. I am maintaining that we don’t see a downturn and that is the basis on which we are actually preparing for the future.