UPDATE1-INTERVIEW-ICICI Bank plans to cut bad debt ratio

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By Narayanan Somasundaram

MUMBAI, Aug 18 (Reuters) - ICICI Bank (ICBK.BO: Quote, Profile, Research), India's second-largest lender, is working towards cutting its bad debts ratio as its growth slows due to high interest rates and double-digit inflation, its joint managing director said.

India's leading private-sector bank, which is also listed in New York (IBN.N: Quote, Profile, Research), has stopped several products such as small personal loans and is increasing vigilance on credit cards dues, Chanda Kochhar told Reuters in Mumbai on Monday.

"Recognising the fact the rate of our balance sheet growth is slower, we have to work towards reducing the quantum or ratio of non-performing assets. That is the next step," she said.

ICICI Bank posted an unexpected 6 percent fall in June quarter profit. Net non-performing assets rose to 1.8 percent of total advances in the June quarter from 1.35 percent a year earlier. The value of bad debts rose 51 percent to 40.3 billion rupees ($924 billion) from 26.7 billion rupees.

ICICI Bank had a net non-performing assets of 0.71 percent of total advances as at March 2006.

Kochhar said asset quality was not a case for concern as credit losses had not surged. "It is not a significant change, but a quiet manageable change."

Annual balance sheet growth had halved from about 35 percent to 15-20 percent pushing up the ratio, but the quantum of bad debts is still in the comfort zone, she said.