ICICI Bank Performance Review — Year Ended March 31, 2002

Business Wire, May 3, 2002

Business Editors

MUMBAI, India--(BUSINESS WIRE)--May 3, 2002

With the completion of all requirements for the merger of ICICI Limited (NYSE:IC) and two of its wholly-owned subsidiaries with ICICI Bank Limited (NYSE:IBN), the combined entity came into existence with effect from May 3, 2002. The Appointed Date for the merger however continues to remain March 30, 2002 as provided for in the Scheme of Amalgamation.

The reconstituted Board of Directors of ICICI Bank at its meeting held at Mumbai today approved the audited accounts of the merged entity for the year ended March 31, 2002 (FY2002). The Board also approved the audited consolidated accounts under Indian GAAP and the audited US GAAP financial statements for FY2002.

The combined entity has emerged as the largest private sector bank in the country marking a new era in Indian banking, adding considerable strength to the Indian financial system. The significant features of the combined entity are:

    --  A highly diversified asset base -- With a balance sheet size
        of over Rs. 104,000 crore, it has 34% in cash and Government
        of India securities, short-term corporate finance loans of
        23%, retail loans of 8% (including operations of ICICI Home
        Finance Company Limited) and long-term project finance loans
        of 23%. The balance assets consist of investments of 5% and
        other miscellaneous assets.

    --  By adopting the purchase method of accounting, based on the
        fair valuation of the loan portfolio by Deloitte Haskins &
        Sells and marking-to-market of the equity and related
        investment portfolio, ICICI Bank has written down assets of
        ICICI to the extent of Rs. 3,780 crore. This amount has been
        utilised as follows:

        --  Marking-to-market ICICI's equity and related investments
            by Rs. 925 crore;
        --  Creating additional provisions in respect of ICICI's
            non-performing loans to the extent of Rs. 902 crore,
            increasing the coverage (provisions and write-offs against
            NPLs as a percentage of gross NPLs) to 63% on ICICI's
            NPLs, and reducing the NPL ratio to below 5.0%, at 4.7%
            for the merged entity; and
        --  Creating additional provisions to the extent of Rs. 1,953
            crore to provide for any future impairment of ICICI's
            legacy assets. As a result of this additional cushioning,
            the general provision against ICICI's performing loans
            stands increased to 4.5% against the regulatory
            requirement of 0.25%.

    --  The Bank has a network of over 400 branches and the largest
        connected ATM network of over 1,000 ATMs in the country
        offering anytime, anywhere banking. In addition, it has over
        120 retail centers across more than 75 geographic locations.

    --  The Bank has deposit customer accounts of 5.0 million, in
        addition to 5.0 million bondholder accounts.

    --  The Bank continues to enjoy a capital adequacy ratio of 11.44%
        (Tier-1 of 7.47%) as against the regulatory requirement of 9%.

Since October 2001, when the merger decision was taken, the Bank has added about Rs. 15,000 crore of deposits, which accounts for a market share of 20% in incremental deposits in the banking system, creating a sound base for the future growth of the Bank. As a part of the merger exercise, ICICI Bank initiated the process of selling down its assets, which created a new market for securitised paper in the country.

Earnings

ICICI Bank's profit after tax as per the audited unconsolidated Indian GAAP increased by 60.2% to Rs. 258 crore in FY2002 from Rs. 161 crore in the previous year. As the merger has come into effect only on March 30, 2002, ICICI Bank's profit of Rs. 258 crore for FY2002 includes only two days profit of ICICI and its merging subsidiaries, amounting to about Rs. 8 crore. The profit of FY2002 for the Bank is therefore largely comparable to FY2001. Net interest income increased 46.7% to Rs. 593 crore from Rs. 404 crore, and core fee income increased 65.5% to Rs. 283 crore from Rs. 171 crore. The average cost of deposits declined to 7.3% in FY2002 from 7.8% in FY 2001.

The profit for the quarter ended March 31, 2002 (Q4-FY2002) was Rs. 57 crore compared to Rs. 50 crore in the corresponding quarter last year. The profit for Q4-FY2002 has been affected due to higher deposit mobilisation and substantial addition to the SLR portfolio to meet the reserve requirements of the merged entity. However, the core fee income for Q4-FY2002 increased by 62.3% as compared to the corresponding quarter in the previous year.

Dividend

In view of the substantial interim dividend of Rs. 2.00 per share declared in January 2002, the Board of ICICI Bank while approving the audited accounts decided not to recommend any further dividend for the year.

US GAAP Accounts

Under US GAAP, business combinations must be accounted for in the accounting period in which they are consummated and not in a previous accounting period, other than in exceptional circumstances. The date of merger for accounting purposes under US GAAP would therefore be April 1, 2002 and not March 30, 2002, as sanction of the High Court of Bombay and approval of RBI were received in April 2002. Accordingly, ICICI Bank's US GAAP accounts for FY2002 do not reflect the results of operations, assets and liabilities of ICICI, ICICI PFS and ICICI Capital, or of subsidiaries of ICICI that have now become subsidiaries of ICICI Bank.