FORM 6-K
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
Report of Foreign Issuer
 
 
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
 
 
For the month of December 2008
Commission File Number: 001-15002
 
 
ICICI Bank Limited
(Translation of registrant’s name into English)
 
 
ICICI Bank Towers,
Bandra-Kurla Complex
Mumbai, India 400 051
(Address of principal executive office)
 
 
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.
 
Form 20-F   X 
   
Form 40-F      
 
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(1):
 
Yes       
 
No   X 
 
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(7):
 
Yes      
 
No   X 
 
Indicate by check mark whether by furnishing the information
contained in this Form, the Registrant is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b)
under the Securities Exchange Act of 1934:
 
Yes      
 
No   X 
 
If “Yes” is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g 3-2(b): Not Applicable
 

 
 
Table of Contents



Item
 
   
1.
 
 
Semi-Annual Report filed with the Kanto Local Finance Bureau, Japan on December 26, 2008
 
 
 
 


 
SIGNATURE

 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 

 
    For ICICI Bank Limited  
       
       
Date:
December 30, 2008
  By:
/s/ Mehernosh Kapadia
 
       
Name:
Mehernosh Kapadia
 
       
Title:
General Manager
&
Joint Company Secretary
 




 
[Form No. 10]

Cover Page

Document Name:
Semi-Annual Report
 
Filed with:
Director of Kanto Local Finance Bureau
 
Date of Filing:
December 26, 2008
 
For Six-month Period:
From April 1, 2008 through September 30, 2008
 
Corporate Name:
ICICI Bank Limited
 
Name and Title of Representative:
Sandeep Batra
 
 
Group Compliance Officer and Company Secretary
 
Location of Registered Office:
Landmark, Race Course Circle, Vadodara 390 007, Gujarat, India
 
Personal Name or Corporate Name
of Attorney-in-Fact:
Hironori Shibata, Attorney-at-Law
 
Address or Location of
Attorney-in-Fact:
Anderson Mori & Tomotsune
 
Izumi Garden Tower
 
6-1, Roppongi 1-chome
 
Minato-ku, Tokyo
 
Telephone Number:
03-6888-1182
 
Name of Person to Contact with:
Akitaka Anzai, Attorney-at-Law
 
Place to Contact with:
Anderson Mori & Tomotsune
 
Izumi Garden Tower
 
6-1, Roppongi 1-chome
 
Minato-ku, Tokyo
 
Telephone Number:
03-6888-5820
 
Place(s) for Public Inspection:
Not applicable.
 
Notes:
 
1.
ICICI Limited, ICICI Personal Financial Services Limited and ICICI Capital Services Limited amalgamated with and into ICICI Bank Limited, effective March 30, 2002 for accounting purposes under generally accepted accounting principles in India ("Indian GAAP"). In this Semi-Annual Report, all references to "we", "our" and "us" are, unless the context otherwise requires, to ICICI Bank Limited on an unconsolidated basis subsequent to the amalgamation. References to specific data applicable to particular subsidiaries or other consolidated entities are made by reference to the name of that particular entity. References to "ICICI Bank" or "Company" are, as the context requires,
 

 
 
to ICICI Bank Limited on an unconsolidated basis subsequent to the amalgamation, to ICICI Bank Limited on an unconsolidated basis prior to the amalgamation, or to both.
 
2.
In this document, references to "US$" are to United States dollars, references to "Rs." are to Indian rupees, and references to "¥" or "JPY" are to Japanese yen. For convenience in reading this document, certain US dollar amounts have been translated into Japanese yen at the mean of the telegraphic transfer spot selling and buying rates vis-à-vis customers as at December 9, 2008 as quoted by The Bank of Tokyo-Mitsubishi UFJ, Ltd. in Tokyo (US$1 = ¥92.96), and certain rupee amounts have been translated into Japanese yen at the reference rate of Rs.1 = ¥2.06 based on the foreign exchange rate as announced by The Bank of Tokyo-Mitsubishi UFJ, Ltd. in Tokyo as at December 9, 2008.
 
3.
The fiscal year of the Company commences on April 1 and ends on March 31 of each year.  References to a particular "fiscal" year are to our fiscal year ended March 31 of such year.  For example, "fiscal 2008" refers to the year commenced on April 1, 2007 and ended on March 31, 2008.
 
4.
Figures in tables in this document have been rounded, subject to adjustment, if necessary, so that they may agree with the arithmetic sum of the figures.
 


 
TABLE OF CONTENTS (for reference purpose only)
 
COVER SHEET
 
PART I.
CORPORATE INFORMATION
1
 
I.
SUMMARY OF LEGAL AND OTHER SYSTEMS IN HOME COUNTRY
1
 
II.
OUTLINE OF COMPANY
2
 
 
1.
Trends in Major Business Indices, etc.
3
 
 
2.
Nature of Business
9
 
 
3.
State of Affiliated Companies
9
 
 
4.
State of Employees
15
 
III.
STATEMENT OF BUSINESS
16
 
 
1.
Outline of Results of Operations, etc.
16
 
 
2.
State of Production, Orders Accepted and Sales
24
 
 
3.
Problems to be Coped with
24
 
 
4.
Material Contracts relating to Management, etc.
24
 
 
5.
Research and Development Activities
24
 
IV.
STATEMENT OF FACILITIES
25
 
 
1.
State of Major Facilities
25
 
 
2.
Plan for Installation, Retirement, etc. of Facilities
25
 
V.
STATEMENT OF FILING COMPANY
26
 
 
1.
State of Shares, etc.
26
 
 
(1)
Total Number of Shares, etc.
26
 
 
(i)
Total Number of Shares
26
 
 
(ii)
Issued Shares
26
 
 
(2)
Total Number of Issued Shares and Capital Stock
 27
 
 
(3)
Major Shareholders
 28
 
 
2.
Trends in Stock Prices
29
 
 
3.
Statement of Directors and Officers
30
 

 
 
VI.
FINANCIAL CONDITION
31
 
 
1.
Financial Statements for the Relevant Six-month Period
32
 
 
2.
Other Matters
33
 
 
(1)
Legal and Regulatory Proceedings
 33
       
 
(2)
Subsequent Events
 36
 
 
3.
Major Differences between United States and Japanese Accounting Principles and Practices
37
 
 
4.
Major Differences between Indian and Japanese Accounting Principles and Practices
39
 
VII.
TRENDS IN FOREIGN EXCHANGE RATES
43
 
VIII.
REFERENCE INFORMATION OF FILING COMPANY
44
 
PART II.
INFORMATION ON COMPANIES OTHER THAN GUARANTY COMPANY, ETC.
 
I.
INFORMATION ON GUARANTY COMPANY
45
 
II.
INFORMATION ON COMPANIES OTHER THAN GUARANTY COMPANY
 
III.
INFORMATION ON BUSINESS INDICES, ETC.
45
 


 
CORPORATE INFORMATION
 
I.
SUMMARY OF LEGAL AND OTHER SYSTEMS IN HOME COUNTRY
 
There has been no material change since last ASR filed on September 30, 2008 for the fiscal 2008.
 
-1-

 
 
II.
OUTLINE OF COMPANY
 
 
1.
Trends in Major Business Indices, etc.
 
The following data is derived from the audited unconsolidated financial results of ICICI Bank Limited prepared in accordance with Indian GAAP.
 
-2-


 
Audited unconsolidated financial results
(Rs. in crore/JPY in ten-million)
         
Six months ended 
   
Year ended
 
 
Sr. No.
 
Particulars
 
September 30, 2008
   
September 30, 2008
   
September 30, 2007
   
September 30, 2006
   
March 31,
2008
   
March 31,
2008
   
March 31,
2007
 
         
(Audited)
         
(Audited)
   
(Audited)
   
(Audited)
         
(Audited)
 
  1.  
Interest earned (a)+(b)+(c)+(d)
 
Rs. 15,726.78
   
JPY 32,397.17
   
Rs. 14,847.30
   
Rs. 9,998.79
   
Rs. 30,788.34
   
JPY 63,423.98
   
Rs. 21,995.59
 
     
a) Interest/discount on advances/bills
    11,465.55       23,619.03       11,022.63       7,227.36       22,600.99       46,558.04       16,096.31  
     
b) Income on investments
    3,682.28       7,585.50       3,497.28       2,317.99       7,466.01       15,379.98       4,989.84  
     
c) Interest on balances with Reserve Bank of India and other inter-bank funds
    265.04       545.98       284.46       404.10       611.99       1,260.70       808.56  
     
d) Others
    313.91       646.65       42.93       49.34       109.35       225.26       100.88  
  2.  
Other income
    3,415.51       7,035.95       4,022.53       2,847.69       8,810.77       18,150.19       6,927.87  
  3.  
A) TOTAL INCOME (1) + (2)
    19,142.29       39,433.12       18,869.83       12,846.48       39,599.11       81,574.17       28,923.46  
  4.  
Interest expended
    11,489.41       23,668.18       11,582.35       7,455.79       23,484.24       48,377.53       16,358.50  
  5.  
Operating expenses (e) + (f) + (g)
    3,653.95       7,527.14       3,876.12       3,056.72       8,154.18       16,797.61       6,690.56  
     
e) Employee cost
    1,011.28       2,083.24       1,041.75       749.72       2,078.90       4,282.53       1,616.75  
     
f) Direct marketing expenses
    372.83       768.03       768.09       717.95       1,542.74       3,178.04       1,523.90  
     
g) Other operating expenses
    2,269.84       4,675.87       2,066.28       1,589.05       4,532.54       9,337.03       3,549.91  
  6.  
B) TOTAL EXPENDITURE (4) + (5)
   (excluding provisions and contingencies)
    15,143.36       31,195.32       15,458.47       10,512.51       31,638.42       65,175.15       23,049.06  
  7.  
OPERATING PROFIT (A-B)                        
(Profit before provisions and contingencies)
    3,998.93       8,237.80       3,411.36       2,333.97       7,960.69       16,399.02       5,874.40  
  8.  
Provisions (other than tax) and contingencies
    1,716.02       3,535.00       1,196.76       682.85       2,904.59       5,983.46       2,226.36  
  9.  
Exceptional items
    ..       ..       ..       ..       ..       ..       ..  
                                                               
 
-3-

 
 
  10.  
PROFIT / LOSS FROM ORDINARY ACTIVITIES BEFORE TAX (7)-(8)-(9)
    2,282.91       4,702.79       2,214.60       1,651.12       5,056.10       10,415.57       3,648.04  
  11.  
Tax expense (a) + (b)
    540.69       1,113.82       436.92       276.10       898.37       1,850.64       537.82  
     
a)  Current period tax
    944.27       1,945.20       745.33       347.03       1,611.73       3,320.16       984.25  
     
b)  Deferred tax adjustment
    (403.58 )     (831.37 )     (308.41 )     (70.93 )     (713.36 )     (1,469.52 )     (446.43 )
  12.  
NET PROFIT / LOSS FROM ORDINARY ACTIVITIES (10)-(11)
    1,742.22       3,588.97       1,777.68       1,375.02       4,157.73       8,564.92       3,110.22  
  13.  
Extraordinary items (net of tax expense)
    ..       ..       ..       ..       ..       ..       ..  
  14.  
NET PROFIT / LOSS FOR THE PERIOD (12)-(13)
    1,742.22       3,588.97       1,777.68       1,375.02       4,157.73       8,564.92       3,110.22  
  15.  
Paid-up equity share capital (face value Rs. 10/-)
    1,113.29       2,293.38       1,110.66       892.92       1,112.68       2,292.12       899.34  
  16.  
Reserves excluding revaluation reserves
    47,531.95       97,915.82       43,641.32       22,657.47       45,357.53       93,436.51       23,413.92  
  17.  
Analytical ratios
                                                       
     
(i) Percentage of shares held by Government of India
    ..       ..       ..       ..       ..       ..       ..  
     
(ii) Capital adequacy ratio
    14.01 %     ..       16.76 %     14.34 %     13.97 %     ..       11.69 %
     
(iii) Earnings per share (EPS) for the period
                                                       
     
Basic EPS before and after extraordinary items net of tax expenses (not annualised for quarter/period) (in Rs.)
    15.65       32.24       17.79       15.42       39.39       81.14       34.84  
     
Diluted EPS before and after extraordinary items net of tax expenses (not annualised for quarter/period) (in Rs.)
    15.60       32.14       17.68       15.30       39.15       80.65       34.64  
  18.  
NPA Ratio
                                                       
     
i)  Gross non-performing advances (net of technical write-off) 1
    9,501.48       19,573.05       5,931.53       2,969.86       7,579.54       15,613.85       4,126.06  
     
ii)  Net non-performing advances 1
    4,232.93       8,719.84       2,970.94       1,509.23       3,490.55       7,190.53       1,992.04  
     
iii) % of gross non-performing advances (net of technical write-off) to gross advances (net of write-off)
    4.18 %     ..       2.82 %     1.9 %     3.30 %     ..       2.1 %
     
iv) % of net non-performing advances to net advances 2
    1.91 %     ..       1.43 %     1.0 %     1.55 %     ..       1.0 %
                                                               
 
-4-

 
 
  19.  
Return on assets (annualised)
    0.89 %     ..       1.01 %     1.02 %     1.12 %     ..       1.09 %
  20.  
Aggregate of non-promoter shareholding
                                                       
     
1.  No. of shares
    1,113,249,042       ..       1,111,912,138       892,895,861       1,112,687,495       ..       899,266,672  
     
2.  Percentage of shareholding
    100       ..       100       100       100       ..       100  
  21.  
Deposits
    223,401.72       460,207.54       228,306.63       189,499.37       244,431.05       503,527.96       230,510.19  
  22.  
Advances
    221,984.67       457,288.42       207,121.07       155,403.49       225,616.08       464,769.12       195,865.60  
  23.  
Total assets
 
Rs. 384,970.39
   
JPY 793,039.00
   
Rs. 364,944.21
   
Rs. 282,372.54
   
Rs. 399,795.08
   
JPY 823,577.86
   
Rs. 344,658.11
 

1.
At June 30, 2008 the gross non performing advances (net of technical write-off) were Rs. 8,511.36 crore and the net non performing advances were Rs. 4,033.57 crore.
2.
The percentage of net non-performing customer assets to net customer assets (includes advances and credit substitutes) was 1.83% at September 30, 2008.
 
-5-

 
 
Segmental results of ICICI Bank Limited for the period ended September 30, 2008
(Rs. in crore/JPY in ten-million)
         
Six months ended
   
Year ended
 
   
Sr.
No.
 
Particulars
 
September 30, 2008
   
September 30, 2008
   
March 31, 2008
   
March 31, 2008
 
         
(Audited)
         
(Audited)
       
 
1.
 
Segment Revenue
                       
 
a
 
Retail Banking
 
Rs. 12,155.85
   
JPY25,041.05
   
Rs. 24,418.54
   
JPY 50,302.19
 
 
b
 
Wholesale Banking
    13,103.41       26,993.02       24,949.35       51,395.66  
 
c
 
Treasury
    13,798.18       28,424.25       29,098.26       59,942.42  
 
d
 
Other Banking
    278.02       572.72       274.92       566.34  
     
Total revenue
    39,335.46       81,031.05       78,741.07       162,206.60  
     
Less: Inter Segment Revenue
    20,193.17       41,597.93       39,141.96       80,632.44  
     
Income from Operations
    19,142.29       39,433.12       39,599.11       81,574.17  
 
2.
 
Segmental Results (i.e. Profit before tax)
                               
 
a
 
Retail Banking
    405.39       835.10       947.24       1,951.31  
 
b
 
Wholesale Banking
    2,296.78       4,731.37       3,574.68       7,363.84  
 
c
 
Treasury
    (540.91 )     (1,114.27 )     513.49       1,057.79  
 
d
 
Other Banking
    121.65       250.60       20.69       42.62  
     
Total segment results
    2,282.91       4,702.79       5,056.10       10,415.57  
     
Unallocated expenses
    --       --       --       --  
     
Profit before tax
    2,282.91       4,702.79       5,056.10       10,415.57  
 
3.
 
Capital Employed (i.e. Segment Assets Segment Liabilities)
                               
 
a
 
Retail Banking
    (8,860.48 )     (18,252.59 )     (4,045.54 )     (8,333.81 )
 
b
 
Wholesale Banking
    15,708.43       32,359.37       (11,423.26 )     (23,531.92 )
 
c
 
Treasury
    36,626.76       75,451.13       56,694.99       116,791.68  
 
d
 
Other Banking
    1,032.38       2,126.70       669.30       1,378.76  
 
e
 
Unallocated
    4,488.15       9,245.59       4,924.72       10,144.92  
     
Total
 
Rs. 48,995.24
   
JPY 100,930.19
   
Rs. 46,820.21
   
JPY 96,449.63
 

-6-

 
 
Segmental results of ICICI Bank Limited for the period ended September 30, 2007
(Rs. in crore)
         
Six months ended
   
Year ended
 
 
Sr. No.
 
Particulars
 
September 30, 2007
   
September 30, 2006
   
March 31, 2007
 
         
(Audited)
   
(Audited)
   
(Audited)
 
 
1.
 
Segment Revenue
                 
 
a
 
Consumer and Commercial Banking
 
Rs. 14,930.36
   
Rs. 10,697.75
   
Rs. 23,479.37
 
 
b
 
Investment Banking
    4,712.76       2,982.26       7,066.20  
     
Total revenue
    19,643.12       13,680.01       30,545.57  
     
Less: Inter Segment Revenue
    773.29       833.53       1,622.11  
     
Income from Operations
    18,869.83       12,846.48       28,923.46  
 
2.
 
Segmental Results (i.e. Profit before tax)
                       
 
a
 
Consumer and Commercial Banking
    1,092.32       1,207.69       2,338.39  
 
b
 
Investment Banking
    1,141.48       462.63       1,348.05  
     
Total segment results
    2,233.80       1,670.32       3,686.44  
     
Unallocated expenses
    19.20       19.20       38.40  
     
Profit before tax
    2,214.60       1,375.02       3,110.22  
 
3.
 
Capital Employed (i.e. Segment Assets Segment Liabilities)
                       
 
a
 
Consumer and Commercial Banking
    (28,165.49 )     (45,179.23 )     (47,842.84 )
 
b
 
Investment Banking
    68,470.67       65,489.89       68,079.85  
     
Total capital employed
 
Rs. 40,305.18
   
Rs. 20,310.66
   
Rs. 20,237.01
 
 
-7-


 
Notes on segmental results

1.
The disclosure on segmental reporting has been modified pursuant to Reserve Bank of India (RBI) circular no. DBOD.No.BP.BC.81/21.04.018/2006-07 dated April 18, 2007 on guidelines on enhanced disclosure on ”Segmental Reporting” which is effective from the reporting period ended March 31, 2008. The segmental results for three months ended September 30, 2007 and for the half year ended September 30, 2007 as per the revised guidelines have not been prepared and hence are not comparable.
2.
“Retail Banking” includes exposures which satisfy the four criteria of orientation, product, granularity and low value of individual exposures for retail exposures laid down in Basel Committee on Banking Supervision document “International Convergence of Capital Measurement and Capital Standards: A Revised Framework”.
3.
“Wholesale Banking” includes all advances to trusts, partnership firms, companies and statutory bodies, which are not included under Retail Banking.
4.
“Treasury” includes the entire investment portfolio of the Bank.
5.
“Other Banking” includes hire purchase and leasing operations and also includes gain/loss on sale of banking & non- banking assets and other items not attributable to any particular business segment.

Notes

1.
The financials have been prepared in accordance with Accounting Standard (“AS”) 25 on “Interim Financial Reporting”.
2.
During the three months ended September 30, 2008, the Bank allotted 156,781 equity shares of Rs. 10.00 each pursuant to exercise of employee stock options.
3.
Status of equity investors’ complaints / grievances for the three months ended September 30, 2008:

Opening
balance
Additions
Disposals
Closing balance
5
447
448
4

4.
Provision for current period tax includes Rs. 9.28 crore towards provision for fringe benefit tax for the three months ended September 30, 2008 (Rs. 21.77 crore for the half-year ended September 30, 2008).
5.
RBI vide its circular DBOD.No.BP.BC.90/20.06.001/2006-07 dated April 27, 2007 had advised banks having operational presence outside India to compute capital adequacy ratio (CAR) as per the revised capital adequacy framework (Basel II) effective March 31, 2008. Accordingly, the CAR for September 30, 2008 and March 31, 2008 is as per Basel II framework and for September 30, 2007, is as per the earlier framework.
6.
Pursuant to the RBI clarification, USD 750 million of foreign currency bonds raised in January 2007 for Upper Tier II capital have been included in CAR computation as at September 30, 2008.
7.
Previous period / year figures have been regrouped / reclassified where necessary to conform to current period classification.
8.
The above financial results have been approved by the Board of Directors at its meeting held on October 27, 2008.
9.
The above financial results are audited by the statutory auditors, B S R & Co., Chartered Accountants.
10.
Rs. 1 crore = Rs. 10 million.

-8-


 
2.
Nature of Business
 
           There has been no material change since last ASR filed on September 30, 2008 for the fiscal 2008.


 
3.
State of Affiliated Companies
 
The following table sets forth certain information relating to our subsidiaries and joint ventures for the half year ended September 30, 2008.
 
-9-

 

 
 
 
Name
 
Year of Formation
 
Activity
 
Equity Share Capital
 
Preference Share Capital
 
Total Share Capital
 
Ownership Interest
 
Total
Income(1)
 
Net
Worth(2)
 
Total
Assets(3)
   
(in millions, except percentages)
ICICI Securities Primary Dealership Limited (4)
(ICICI Centre, H.T. Parekh Marg, Churchgate, Mumbai 400 020)
 
February 1993
 
Securities
investment, trading
and underwriting
 
Rs. 1,563.4
     
Rs. 1,563.4
 
100.00%
 
Rs. 1,526.7
 
Rs. 4,248.5
 
18,863.1
                                     
ICICI Securities Limited (4)
(ICICI Centre, H.T. Parekh Marg, Churchgate,Mumbai 400 020)
 
March 1995
 
Securities broking & merchant banking
 
Rs. 610.7
     
Rs. 610.7
 
100.00%
 
2,830.67
 
1,641.1
 
10,109.2
                                     
ICICI Securities Holdings Inc(4)
(1013 Centre Road, City of Wilmington,
Country of New Castle, Delaware 19805,USA)
 
June 2000
 
Holding company
 
US$ 14.2
     
US$ 14.2
 
100.00%
 
10.7
 
585.5
 
603.9
                                     
ICICI Securities Inc(4)
(1013 Centre Road, City of Wilmington, Country of New Castle, Delaware 19805, USA)
 
June 2000
 
Securities broking
 
US$ 11.1
     
US$ 11.1
 
100.00%
 
9.2
 
135.1
 
171.4
                                     
ICICI Prudential Life Insurance Company Limited(5)(9)
(ICICI PruLife Towers, 1089, Appasaheb Marathe Marg, Prabhadevi, Mumbai 400 025)
 
July 2000
 
Life Insurance
 
Rs. 14,221.7
     
Rs. 14,221.7
 
73.93%
 
40,420.7
 
9,646.2
 
314,712.7
                                     
ICICI Lombard General Insurance Company Limited(5)(10)
(ICICI Bank Towers, Bandra-Kurla Complex, Mumbai 400 051)
 
October 2000
 
General Insurance
 
Rs. 4,029.7
     
Rs. 4,029.7
 
73.84%
 
10,607.8
 
14,882.7
 
49,145.0
                                     
ICICI Prudential Asset Management Company Limited 5)
(12th Floor, Narain Manzil, 23, Barakhamba Road, New Delhi 110 001)
 
June 1993
 
Asset management company for ICICI Prudential Mutual Fund
 
Rs. 176.5
     
Rs. 176.5
 
50.99%
 
2,038.6
 
1,140.1
 
1,964.2
                                     
ICICI Prudential Trust Limited (5)
(12th Floor, Narain Manzil, 23, Barakhamba Road, New Delhi – 110 001)
 
June 1993
 
Trustee company for ICICI Prudential Mutual Fund
 
Rs. 1.0
     
Rs. 1.0
 
50.80%
 
2.7
 
9.0
 
14.2
 
-10-

 
 
Name
 
Year of Formation
 
Activity
 
Equity Share Capital
 
Preference Share Capital
 
Total Share Capital
 
Ownership Interest
 
Total
Income(1)
 
Net
Worth(2)
 
Total
Assets(3)
   
(in millions, except percentages)
ICICI Venture Funds Management Company Limited
(Stranrose House, Ground Floor, Appasaheb Marathe Marg, Prabhadevi, Mumbai 400 025)
 
January 1988
 
Asset management
 
Rs. 10.0
     
Rs. 10.0
 
100.00%
 
2,514.1
 
724.1
 
4,052.2
                                     
ICICI Home Finance Company Limited
(ICICI Bank Towers, Bandra-Kurla Complex, Mumbai 400 051)
 
May 1999
 
Housing finance
 
Rs. 10,337.5
 
Rs. 150.0
 
Rs. 10,487.5
 
100.00%
 
6,488.0
 
11,503.9
 
125,448.1
                                     
ICICI Trusteeship Services Limited
(ICICI Bank Towers, Bandra-Kurla Complex, Mumbai 400 051)
 
April 1999
 
Trusteeship services
 
Rs. 0.5
     
Rs. 0.5
 
100.00%
 
0.3
 
2.3
 
2.5
                                     
ICICI Investment Management Company Limited
(ICICI Bank Towers, Bandra-Kurla Complex, Mumbai 400 051)
 
March 2000
 
Asset management
 
Rs. 100.0
     
Rs. 100.0
 
100.00%
 
5.3
 
137.3
 
138.1
                                     
ICICI International Limited
(IFS Court, Twenty Eight, Cybercity, Ebene, Mauritius)
 
January 1996
 
Asset management
 
US$ 0.9
     
US$ 0.9
 
100.00%
 
32.2
 
42.4
 
213.8
                                     
ICICI Bank UK PLC. (8)
(21 Knightsbridge, London SW1X7LY, United Kingdom)
 
February 2003
 
Banking
 
US$ 545.1 and GBP 0.05
 
US$ 50.0
 
US$ 595.1
and GBP 0.05
 
100.00%
 
10,428.6
 
22,814.6
 
420,432.4
                                     
ICICI Bank Canada(7)
(Don Valley Business Park, 150 Ferrand Drive, Suite 1200, Toronto, ON, M3C 3E5, Canada)
 
September 2003
 
Banking
 
CAD 372.0
 
CAD 92.7
 
CAD 464.7
 
100.00%
 
6,067.0
 
20,673.5
 
250,414.3
                                     
ICICI Wealth Management Inc.
((Don Valley Business Park, 150 Ferrand Drive, Suite 1200, Toronto, ON, M3C 3E5, Canada)
 
July 2006
 
Wealth Management
 
CAD 2.0
     
CAD 2.0
 
100.00%
 
0.3
 
30.1
 
46.1
                                     
ICICI Bank Eurasia LLC
(3, 50 Let Oktyabrya Square, City of Balabanovo, Borovsk District, Kaluga Region 249000, Russia)
 
May 1998
 
Banking
 
RUB 1,594.1
     
RUB 1,594.1
 
100.00%
 
815.9
 
3,273.6
 
28,351.5
 
-11-

 
 
Name
 
Year of Formation
 
Activity
 
Equity Share Capital
 
Preference Share Capital
 
Total Share Capital
 
Ownership Interest
 
Total
Income(1)
 
Net
Worth(2)
 
Total
Assets(3)
   
(in millions, except percentages)
TCW/ICICI Investment Partners LLC(6)
(C/o International Financial Services Limited, IFS Court, Twenty Eight, Cybercity, Ebene, Mauritius)
 
April 1995
 
Asset management
 
US$ 0.6
     
US$ 0.6
 
50.00%
 
0.2
 
24.1
 
24.5
                                     

 

(1) 
Total income represents gross income from operations and other income.
 
(2) 
Net worth represents share capital/unit capital and reserves and surplus.
 
(3) 
Total assets represent fixed assets, advances, investments and gross current assets (including cash and bank balances).
 
(4)
Includes direct and indirect holdings. During fiscal 2008, ICICI Securities Primary Dealership Limited has become a wholly-owned subsidiary of ICICI Bank and ICICI Securities Limited, which was earlier a subsidiary of ICICI Securities Primary Dealership Limited, has become a direct wholly-owned subsidiary of ICICI Bank. ICICI Securities Holdings Inc. which was a wholly-owned subsidiary of ICICI Securities Primary Dealership Limited has become a wholly-owned subsidiary of ICICI Securities Limited. ICICI Securities Inc. is a wholly-owned subsidiary of ICICI Securities Holdings Inc. ICICI Webtrade Limited merged with ICICI Securities Limited effective October 2, 2006.
 
(5)
The financial statements of these jointly controlled entities have been consolidated as per AS 21 on “Consolidated Financial Statements” consequent to the limited revision to AS 27 on “Financial Reporting of Interests in Joint Ventures”.
 
(6) 
These entities have been consolidated as per the proportionate consolidation method as prescribed by AS 27 on “Financial Reporting of Interests in Joint ventures.
 
(7)
ICICI Bank Canada’s profit after tax for the six months ended September 30, 2008 (H1-2009) was CAD 22 million. ICICI Bank Canada’s capital position continued to be strong with a capital adequacy ratio of 15.4% at September 30, 2008.
 
(8)
ICICI Bank UK PLC’s profit before mark to market impact and provision on investments was US$ 43 million for H1-2009. After the required provisioning charge in respect of its investment portfolio (including the mark-to-market impact of credit spread widening during the period), ICICI Bank UK PLC reported a net loss of US$ 35 million. ICICI Bank UK PLC’s capital position continued to be strong with a capital adequacy ratio of 18.4% at September 30, 2008.
 
(9)
ICICI Prudential Life Insurance Company Limited (ICICI Life) increased its overall market share in retail new business weighted received premiums from 12.7% in the year ended March 31, 2008 (FY2008) to 13.7% during April- August 2008. New business weighted received premium increased by 22% in H1-2009 to Rs. 2,650 crore. While ICICI Life’s results reduced the consolidated profit after tax of ICICI Bank by Rs. 466 crore in H1-2009.
 
(10)
ICICI Lombard General Insurance Company Limited (ICICI General) increased its overall market share from 11.9% in FY2008 to 12.5% during April-August 2008. ICICI General’s premiums increased 12.2% on a year-on-year basis to Rs. 1,925 crore in H1-2009.
 
-12-



The following table sets forth certain additional information on other significant affiliates consolidated in our financial statements under Indian GAAP as at September 30, 2008.
 
-13-

 
 
Name
 
Year of formation
 
Activity
 
Ownership interest
 
Total income(1)
 
Net worth(2)
 
Total Assets(3)
               
(in millions, except percentages)
ICICI Eco-net Internet & Technology Fund
(Stanrose House, Ground Floor, Appasaheb Marathe Marg, Prabhadevi, Mumbai-400025)
 
October 2000
 
Venture capital fund
 
92.01%
 
Rs 70.1
 
Rs. 462.1
 
462.1
                         
ICICI Equity Fund
(Stanrose House, Ground Floor, Appasaheb Marathe Marg, Prabhadevi, Mumbai-400025)
 
March 2000
 
Unregistered venture capital fund
 
100.00%
 
305.9
 
2,385.2
 
2,532.8
                         
ICICI Emerging Sectors Fund
(Stanrose House, Ground Floor, Appasaheb Marathe Marg, Prabhadevi, Mumbai-400025)
 
March 2002
 
Venture capital fund
 
99.29%
 
49.9
 
4,323.6
 
4,326.3
                         
ICICI Strategic Investments Fund
(Stanrose House, Ground Floor, Appasaheb Marathe Marg, Prabhadevi, Mumbai-400025)
 
February 2003
 
Unregistered venture capital fund
 
100.00%
 
87.8
 
3,624.0
 
3,624.2
                         
ICICI Kinfra Limited
(TC11/984 (1), Rohini M26, Devaswom Lane, Keshavdaspuram, Pattom PO, Thiruvananthapuram 695 004, Kerala)
 
January 1996
 
Infrastructure development consultancy
 
76.02%
 
2.2
 
16.0
 
21.3
                         
ICICI West Bengal Infrastructure Development Corporation Limited
(2-B, Gorky Terrace,
Kolkata - 700 017)
 
December 1995
 
Infrastructure development consultancy
 
75.97%
 
21.6
 
34.2
 
54.6
                         
Financial Information Network and Operations Limited
 (C-401, Business Square, Chakala, Andheri - Kurla Road, Andheri - East, Mumbai 400093)
 
June 2006
 
Service provider
 
28.29%
 
173.2
 
518.7
 
693.4
                         
I-Process Services (India) Private Limited
(Acme Plaza, 7th floor, Unit# 707-708, Andheri (East) Mumbai 400059)
 
April 2005
 
Service provider
 
19.00%
 
518.3
 
(19.3)
 
280.9
                         
I-Solutions Providers (India) Private Limited
(3-EF, Rushabh Chembers, off Makwana Road, Marol, Andheri - East, Mumbai 400059)
 
April 2005
 
Service provider
 
19.00%
 
236.1
 
1.8
 
231.9
 
-14-

 
 
Name
 
Year of formation
 
Activity
 
Ownership interest
 
Total income(1)
 
Net worth(2)
 
Total Assets(3)
               
(in millions, except percentages)
NIIT Institute of Finance, Banking and Insurance Training Limited 
(8, Balaji Estate, Sudharshan Munjal Marg, Kalkaji, New Delhi 110019)
 
June 2006
 
Education and training in banking and finance
 
19.00%
 
161.5
 
38.9
 
127.8
                         
ICICI Venture Value Fund
(10th floor, Prestige Obelisk, Kasturba Road, Bangalore - 560001, India)
 
June 2005
 
Unregistered venture capital fund
 
48.01%
 
4.4
 
50.4
 
50.6
                         
Loyalty Solutions & Research Limited
(Florence Building, CTS 841 to 846, Ground Floor, J.L. Nehru Road, Santacruz (E), Mumbai-400055)
 
February 2006
 
Customer relationship management, data mining and analytics and marketing services
 
89.75%
 
320.3
 
272.4
 
876.8
                         
Contests2win.com India Private Limited
(42, Film Centre, 68 Tardeo, Mumbai 400034)
 
June 1999
 
Internet portal
 
24.12%
 
14.3
 
71.6
 
101.9
                         
Crossdomain Solutions Private Limited
(34/1, Andree Road, Shanthinagar, Bangalore 560 027)
 
February 2000
 
BPO services
 
30.24%
 
167.2
 
208.8
 
234.2
                         
Transafe Services Limited
(Balmer Lawrie House, 6th floor, 21 N.S. Road, Kolkata 700001)
 
October 1990
 
Logistic products - manufacturer
 
47.27%
 
511.9
 
423.0
 
2,248.3

 

(1)
Total income represents gross income from operations and other income.
 
(2)
Net worth represents share capital/unit capital (in case of venture capital funds) and reserves and surplus.
 
(3)
Total assets represent fixed assets, advances, investments and gross current assets (including cash and bank balances).
 
 
Pursuant to the sale of share of TSI Ventures (India) Private Limited by ICICI Venture Funds Management Company Limited, TSI Ventures (India) Private Limited is no longer included in our subsidiaries or joint ventures on September 30, 2008.


 
4.
State of Employees
 
As of September 30, 2008, the Bank had 36,186 permanent (including employees on probation) employees which exclude interns.

The Bank has also used the services of certain employees on contract basis. The contract is generally for a period of about one year. The average number of such employees during the six months ended September 30, 2008 was about 14,500.
 
-15-

 
 
III.
STATEMENT OF BUSINESS
 
 
1.
Outline of Results of Operations, etc.
 
The following discussion is based on the audited unconsolidated financial results of ICICI Bank Limited (“the Bank”) for the six months ended September 30, 2008.

Profit before provisions and tax increased by 17.2% to Rs. 39.99 billion in the six months ended September 30, 2008 from Rs. 34.11 billion in the six months ended September 30, 2007, primarily due to a 29.8% increase in net interest income and decrease in non-interest expense by 5.7%, offset, in part by a 15.1% decrease in non-interest income. Provisions and contingencies (excluding provision for tax) increased to Rs. 17.16 billion in the six months ended September 30, 2008 from Rs. 11.97 billion in the six months ended September 30, 2007, primarily due to a higher level of specific provisioning on loans, offset, in part, by a lower provision on standard advances due to change in composition thereof. Profit after tax decreased by 2.0% to Rs. 17.42 billion in the six months ended September 30, 2008 from Rs. 17.78 billion in the six months ended September 30, 2007.

·  
Net interest income (net of amortization of premium on government securities) increased by 29.8% to Rs. 42.38 billion in the six months ended September 30, 2008 from Rs. 32.65 billion in the six months ended September 30, 2007, primarily reflecting an increase of 11.9% in the average volume of interest-earning assets and increase of 33 basis points in net interest margin to 2.4% in the six months ended September 30, 2008 from 2.1% in the six months ended September 30, 2007.

·  
Non-interest income decreased by 15.1% to Rs. 34.16 billion in the six months ended September 30, 2008 from Rs. 40.23 billion in the six months ended September 30, 2007, primarily due to loss from treasury-related activities of Rs. 7.46 billion in the six months ended September 30, 2008 as against income of Rs. 3.70 billion in the six months ended September 30, 2007 and decrease in other income by 66.7% to Rs. 2.11 billion in the six months ended September 30, 2008 from Rs. 6.32 billion in the six months ended September 30, 2007, offset, in part, by 31.6% increase in fee income. Fee income includes commission, exchange, merchant foreign exchange income and margin on customer derivative transactions. Treasury-related activities primarily include dealing in various types of securities and derivatives. Other income primarily includes dividend income from subsidiaries and lease rentals.

·  
Non-interest expenses decreased by 5.7% to Rs. 36.54 billion in the six months ended September 30, 2008 from Rs. 38.76 billion in the six months ended September 30, 2007, primarily due to a 2.9% decrease in employee expenses and a 51.5% decrease in direct marketing agency expenses.

·  
Provisions and contingencies (excluding provision for tax) increased to Rs. 17.16 billion in the six months ended September 30, 2008 from Rs. 11.97 billion in the six months ended September 30, 2007, primarily due to a higher level of specific provisioning on loans, offset, in part, by a lower provision on standard advances due to change in composition thereof. Net provision on non-performing loans increased to Rs. 17.55 billion in the six months ended September 30, 2008 as
 
-16-

 
 
  
compared to Rs. 10.45 billion in the six months ended September 30, 2007, primarily due to increase in provisioning on retail loans. The increase in provisioning on retail loans, primarily reflects the seasoning of the loan portfolio and a change in the portfolio mix towards non-collateralized retail loans resulting in higher yields and higher credit losses on such loans.
 
Total assets increased by 5.5% to Rs. 3,849.70 billion at September 30, 2008 from Rs. 3,649.44 billion at September 30, 2007, primarily due to a 7.2% increase in advances. Total assets of overseas branches (gross) increased to Rs. 877.68 billion at September 30, 2008 from Rs. 608.08 billion at September 30, 2007, including the impact of Indian rupee depreciation.

Net Interest Income

Net interest income (net of amortization of premium on government securities) increased by 29.8% to Rs. 42.38 billion in the six months ended September 30, 2008 from Rs. 32.65 billion in the six months ended September 30, 2007 reflecting:

·  
an increase of Rs. 374.53 billion or 11.9% in the average volume of interest-earning assets; and

·  
an increase of 33 basis points in net interest margin to 2.4% for the six months ended September 30, 2008 from 2.1% for the six months ended September 30, 2007.

The average volume of interest-earning assets increased by Rs. 374.53 billion or 11.9% in the six months ended September 30, 2008, primarily due to an increase in average advances by Rs. 219.65 billion and the increase in average investments by Rs. 97.69 billion. The increase in average investments was, primarily due to increase in non-SLR investments by Rs. 71.18 billion. Net advances of foreign branches increased by 56.1% to Rs. 577.42 billion at September 30, 2008 from Rs. 369.94 billion at September 30, 2007. Net retail advances were Rs. 1,224.69 billion at September 30, 2008 as compared to Rs. 1,310.14 billion at September 30, 2007.

Interest income (net of amortization of premium on government securities) increased by 5.9% to Rs. 157.27 billion in the six months ended September 30, 2008 from Rs. 148.47 billion in the six months ended September 30, 2007, primarily due to an increase of 11.9% in the average interest-earning assets to Rs. 3,511.06 billion in the six months ended September 30, 2008 from Rs. 3,136.53 billion in the six months ended September 30, 2007, offset, in part, by a decrease of 54 basis points in yield of average interest-earning assets. Yield on average interest-earning assets decreased to 8.9% in the six months ended September 30, 2008 from 9.5% in the six months ended September 30, 2007, primarily due to a decrease in the yield on advances by 75 basis points to 10.5% in the six months ended September 30, 2008 from 11.2% in the six months ended September 30, 2007 and increase in cash reserve ratio (CRR) requirement by RBI from 7.0% in the six months ended September 30, 2007 to 9.0% in the six months ended September 30, 2008, which does not earn any interest income, resulting in an adverse impact on yield on interest-earning assets.

Total interest expense decreased by 0.8% to Rs. 114.89 billion in the six months
 
-17-

 
 
ended September 30, 2008 from Rs. 115.82 billion in the six months ended September 30, 2007, primarily due to decrease in cost of funds by 85 basis points to 6.9% in the six months ended September 30, 2008 from 7.7% in the six months ended September 30, 2007, offset, in part, by an increase of 11.2% in average interest-bearing liabilities to Rs. 3,332.62 billion in the six months ended September 30, 2008 from Rs. 2,997.98 billion in the six months ended September 30, 2007. Total deposits at September 30, 2008 constituted 70.2% of the Bank’s funding (comprising deposits, borrowings and subordinated debts) compared to 75.6% at September 30, 2007. Total deposits were Rs. 2,234.02 billion at September 30, 2008 compared to Rs. 2,283.07 billion at September 30, 2007. The cost of deposits of the Bank has decreased by 67 basis points to 7.1% in the six months ended September 30, 2008 from 7.8% in the six months ended September 30, 2007. The cost of borrowings has decreased by 124 basis points at 6.4% in the six months ended September 30, 2008 compared to 7.7% in the six months ended September 30, 2007.

In the past, the Bank has had a relatively high share of whole-sale term deposits in its total deposits. As part of the Bank’s risk-containment strategy,the Bank has adopted a conscious strategy of focusing on current and saving account deposits and reducing its wholesale term deposit base. Current and saving account (CASA) deposit constituted 30% of total deposits at September 30, 2008 compared to 25% at September 30, 2007. Total deposits declined on a year-on-year basis due to the reduction in term deposits pursuant to the strategy adopted by the Bank.

The Bank’s net interest margin has increased by 33 basis points to 2.4% in the six months ended September 30, 2008 from 2.1% in the six months ended September 30, 2007. The Bank’s net interest margin is expected to continue to be lower than other banks in India until the bank increase the proportion of retail deposits in its total funding. The net interest margin is also impacted by the relatively lower net interest margin earned by its overseas branches.

Non-Interest Income

The following table sets forth the principal components of non-interest income for the periods presented.

   
Six months ended September 30,
 
   
2007
   
2008
   
2008
   
2008/2007
% change
 
   
(in millions, except percentages)
 
Fee income (1)
 
Rs. 29,135.0
   
Rs. 38,338.1
   
JPY. 78,976.5
      31.6 %
Income from treasury-related activities (2)
    3,696.8       (7,464.8 )     (15,377.5 )     -  
Lease income
    1,075.6       1,175.2       2,420.9       9.3  
Other income (3)
    6,317.9       2,106.6       4,339.6       (66.7 )
Total non-interest income
 
Rs. 40,225.3
   
Rs. 34,155.1
   
JPY 70,359.5
      (15.1 )%
 
 
_________
1.  
(1)           Includes merchant forex income and margin on customer derivative transactions.
2.  
(2)           Includes profit/loss on sale of investments and revaluation of investments and foreign exchange gain/loss.
3.  
(3)           Includes dividend from subsidiaries of Rs. 1,690.0 million (2007: Rs. 5,947.0 million).

Non-interest income decreased by 15.1% to Rs. 34.16 billion in the six months
 
-18-

 
 
ended September 30, 2008 from Rs. 40.23 billion in the six months ended September 30, 2007, primarily due to loss from treasury-related activities of Rs. 7.46 billion in the six months ended September 30, 2008 as against income of Rs. 3.70 billion in the six months ended September 30, 2007 and decrease in other income by 66.7% to Rs. 2.11 billion in the six months ended September 30, 2008 from Rs. 6.32 billion in the six months ended September 30, 2007, offset, in part, by 31.6% increase in fee income.

Fee income increased by 31.6% to Rs. 38.34 billion in the six months September 30, 2008 from Rs. 29.14 billion in the six months ended September 30, 2007, primarily due to growth in fee income from structuring and advisory fees, loan processing fees and forex fee income. Fees include merchant foreign exchange income and margin on customer derivative transactions.

During the six months ended September 30, 2008, repo rates increased by 125 basis points. Yields on government securities and corporate bonds increased during the period. Bombay Stock Exchange index closed at a lower level of 12,860 points at September 30, 2008 compared to 15,644 at March 31, 2008. Rupee slipped from Rs. 40.12 per dollar at March 31, 2008 to Rs. 46.97 per dollar at September 30, 2008. As a result of these adverse market conditions, the Bank incurred a net loss from treasury-related activities of Rs. 7.46 billion during six month ended September 30, 2008 as compared to treasury income of Rs. 3.70 billion in the six months ended September 30, 2007.

The Bank has a trading portfolio in credit derivatives instruments including credit default swaps (CDSs), credit linked notes (CLNs) and collateralized debt obligations (CDOs). At September 30, 2008, the above portfolio was Rs. 53.63 billion which included funded portion of Rs. 15.73 billion. During the six months ended September 30, 2008, the Bank fully sold its non-India linked credit derivative portfolio amounting to about Rs. 20.53 billion at no incremental loss over and above the provisions already held.

Gross lease income was Rs. 1.18 billion in the six months ended September 30, 2008 compared to Rs. 1.08 billion in the six months ended September 30, 2007. The Bank’s total leased assets were Rs. 6.82 billion at September 30, 2008 compared to Rs. 8.91 billion at September 30, 2007.

Other income decreased to Rs. 2.11 billion in the six months ended September 30, 2008 compared to Rs. 6.32 billion in the six months ended September 30, 2007. Other income includes dividend income from subsidiaries and joint ventures including investment made in the funds of ICICI Venture Funds Management Company and profit on sale of fixed assets and also includes rent and other charges and miscellaneous receipts.
 
-19-

 
 
Non-Interest Expense

The following table sets forth the principal components of non-interest expense for the periods presented.

   
Six months ended September 30,
 
   
2007
   
2008
   
2008
      2008/2007  
 
% change
 
   
(in millions, except percentages)
 
Employee expenses
 
Rs. 10,417.5
   
Rs. 10,112.8
   
JPY 20,832.4
      (2.9 )%
Depreciation on own property (including non-banking assets)
    1,888.5       2,234.2       4,602.5       18.3  
Auditors' fees and expenses
    11.8       11.3       23.3       (4.2 )
Other administrative expenses
    17,879.0       19,413.4       39,991.6       8.6  
Total non-interest expense (excluding lease depreciation and direct marketing agency expenses)
    30,196.8       31,771.7       65,449.7       5.2  
Depreciation (net of lease equalization) on leased assets
    883.5       1,039.5       2,141.4       17.7  
Direct marketing agency expenses
    7,680.9       3,728.3       7,680.3       (51.5 )
Total non-interest expenses
 
Rs. 38,761.2
   
Rs. 36,539.5
   
JPY 75,271.4
      (5.7 )%

Non-interest expense (including direct marketing agency expense and lease depreciation) decreased by 5.7% in the six months ended September 30, 2008 to Rs. 36.54 billion from Rs. 38.76 billion in the six months ended September 30, 2007, primarily due to a 2.9% decrease in employee expenses and a 51.5% decrease in direct marketing agency expenses, offset, in part, by an increase in other administrative expenses by 8.6%.

Employee expenses decreased by 2.9% to Rs. 10.11 billion in the six months ended September 30, 2008 from Rs. 10.42 billion in the six months ended September 30, 2007 reflecting a 1.6% decrease in the number of permanent employees to 36,186 at September 30, 2008 from 36,789 at September 30, 2007.

Other administrative expenses increased by 8.6% to Rs. 19.41 billion in the six months ended September 30, 2008 from Rs. 17.88 billion in the six months ended September 30, 2007, primarily due to increase in number of branches, ATMs and offices network, increase in retail banking expenses, collection expenses and other expenses. The number of branches (excluding foreign branches and OBUs) and extension counters increased to 1,399 at September 30, 2008 from 950 at September 30, 2007. The number of ATMs increased to 4,485 at September 30, 2008 from 3,596 at September 30, 2007.

The Bank uses marketing agents, called direct marketing agents or associates, for sourcing retail assets. The Bank includes commissions paid to these direct marketing agents in operating expenses. These commissions are expensed upfront and not amortized over the life of the loan. The Bank incurred direct marketing agency expenses of Rs. 3.73 billion on the retail assets portfolio in the six months ended September 30, 2008 compared to Rs. 7.68 billion in the six months ended September 30, 2007 reflecting lower incremental disbursement volumes in retail business.

Provisions and Contingencies

The following table sets forth the components of provisions and contingencies for
 
-20-

 
 
 
the periods presented.
   
Six months ended September 30,
 
   
2007
   
2008
   
2008
      2008/2007  
 
% change
 
   
(in millions, except percentages)
 
Provision for investments (including credit substitutes) (net) (1)
 
Rs. 101.3
   
Rs. (109.3)
   
JPY (225.2)
      -  
Provision for non-performing assets (2)
    10,450.4       17,552.5       36,158.2       68.0 %
Provision for standard assets
    890.0       (190.0 )     (391.4 )     (121.3 )
Others
    525.9       (93.0 )     (191.6 )     (117.7 )
Total provisions and contingencies (excluding tax)
 
Rs. 11,967.6
   
Rs. 17,160.2
   
JPY 35,350.0
      43.4 %
 
 

(1)
Excludes amortization of premium on government securities.
(2)
The Bank does not distinguish between provisions and write-offs while assessing the adequacy of its loan loss coverage, as both provisions and write-offs represent a reduction of the principal amount of a non-performing asset. In compliance with regulations governing the presentation of financial information by banks, gross non-performing assets are reported gross of provisions net of cumulative write-offs in its financial results.

The Bank classifies its loans in accordance with RBI guidelines. Provisions and contingencies (excluding provisions for tax) increased to Rs. 17.16 billion in the six months ended September 30, 2008 from Rs. 11.97 billion in the six months ended September 30, 2007, primarily due to a higher level of specific provisioning on loans, offset, in part, by a lower provision on standard advances due to change in composition thereof. Net provision on non-performing loans increased to Rs. 17.55 billion in the six months ended September 30, 2008 as compared to Rs. 10.45 billion in the six months ended September 30, 2007, primarily due to increase in provisioning on retail loans.

The increase in provisioning on retail loans, primarily reflects the seasoning of the loan portfolio and the change in the portfolio mix towards non-collateralized retail loans. The Bank’s non-collateralized retail loans (personal loans and credit cards) increased to Rs. 206.82 billion at September 30, 2008 from Rs. 197.94 billion at September 30, 2007. The Bank’s non-collateralized retail loans constituted 16.9% of total retail advances at September 30, 2008 as compared to 15.1% at September 30, 2007. The Bank’s gross non-performing advances were Rs. 95.01 billion at September 30, 2008 as compared to Rs. 59.32 billion at September 30, 2007 and its net non-performing advances were Rs. 42.33 billion at September 30, 2008 compared to Rs. 29.71 billion at September 30, 2007.

The Bank offers various derivative products to its clients for their risk management purposes including options and swaps. The Bank does not carry market risk on these client derivative positions as the bank cover itself in the inter-bank market. Profits or losses on account of currency movements on these transactions are on the account of corporates. In some of the cases, clients have filed suits against the bank disputing the transaction and the amounts to be paid. There have been some delays in payments to the bank in respect of few companies. The Bank has made appropriate provisions in accordance with RBI guidelines vide circular DBOD.No.BP.BC.57/21.04/157/2008-09 dated October 13, 2008, in respect of such overdue receivable amounts.

The Ministry of Finance, Government of India has issued guidelines for the implementation of the agriculture debt waiver and relief scheme for farmers on May 23, 2008. The Bank has implemented the scheme as per guidelines issued by RBI vide circular
 
-21-

 
 
no. RPCD.CO.RF.BC.No.17/07.38.03/2008-09 dated July 30, 2008 on “Agricultural Debt Waiver and Debt Relief Scheme, 2008 - Prudential norms on income recognition, asset classification and provisioning and Capital Adequacy”.

The Bank makes provision on standard assets as per RBI guidelines. Provision requirement on standard assets reduced by Rs. 190.0 million in the six months ended September 30, 2008 as against an incremental provision of Rs. 890.0 million in the six months ended September 30, 2007. The decrease is on account of decrease in personal and commercial real estate portfolio at September 30, 2008 as compared to September 30, 2007, which requires a higher level of 2.0% general provision and increase in advances to small and medium enterprises and agricultural sector during the same period, which requires 0.25% general provision.
 
Tax Expense
 
Income tax expenses increased to Rs. 5.41 billion in the six months ended September 30, 2008 from Rs. 4.37 billion in the six months ended September 30, 2007. The effective tax rate for the six months ended September 30, 2008 was 23.7% compared to 19.7% for six months ended September 30, 2007. The effective tax rate continued to be lower than the statutory rates in the six months ended September 30, 2008, primarily due to concessional rate of tax on capital gains, exemption of dividend income, deduction toward special reserve and deduction of income of Offshore Banking Unit. The tax provision for the six months ended September 30, 2008 and six months ended September 30, 2007 was based on the estimated tax liability for the full fiscal year in line with applicable guidelines under Indian GAAP.

 
Financial Condition
 
The Bank’s total assets increased by 5.5% to Rs. 3,849.70 billion at September 30, 2008 from Rs. 3,649.44 billion at September 30, 2007, primarily due to an increase in advances, fixed & other assets and cash and balances with RBI, offset, in part, by decrease in SLR investments. Net advances increased 7.2% to Rs. 2,219.85 billion at September 30, 2008 from Rs. 2,071.21 billion at September 30, 2007, primarily due to increase in loans in overseas branches, offset, in part, by reduction in retail advances by 6.5% from Rs. 1,224.69 billion at September 30, 2008 as compared to Rs. 1,310.14 billion at September 30, 2007. Total cash and balances with RBI increased by 18.9% to Rs. 245.64 billion at September 30, 2008 as compared to Rs. 206.58 billion at September 30, 2007, primarily due to increase in cash reserve ratio by RBI from 7.0% at September 30, 2007 to 9.0% at September 30, 2008. Fixed assets and other assets increased to Rs. 302.25 billion at September 30, 2008 from Rs. 215.09 billion at September 30, 2007. Total assets of overseas branches increased to Rs. 877.68 billion at September 30, 2008 compared to Rs. 608.08 billion at September 30, 2007.

The Bank’s networth (including equity share capital, preference share capital and reserves) at September 30, 2008 was Rs. 489.95 billion as compared to Rs. 451.02 billion at September 30, 2007, primarily due to increase in the reserves by Rs. 38.91 billion mainly on account of increase in retained earnings. Total deposits decreased by 2.2% to Rs. 2,234.02 billion at September 30, 2008 from Rs. 2,283.07 billion at September 30, 2007. The Bank’s savings deposits increased by 23.9% to Rs. 431.74 billion at September
 
-22-

 
 
30, 2008 from Rs. 348.29 billion at September 30, 2007. Current deposits increased by 3.2% to Rs. 237.40 billion at September 30, 2008 from Rs. 229.99 billion at September 30, 2007. Term deposits decreased by 8.2% to Rs. 1,564.87 billion at September 30, 2008 from Rs. 1,704.80 billion at September 30, 2007. This is in line with Bank’s risk-containment strategy, aimed at reducing the dependence on high-cost deposits, and focusing on low-cost savings and current deposits. CASA ratio increased from 25.3% at September 30, 2007 to 30.0% at September 30, 2008. Total deposits at September 30, 2008 constituted 70.2% of its funding (comprising deposits, borrowings and subordinated debts) compared to 75.6% at September 30, 2007. Borrowings (including subordinated debt) increased to Rs. 948.49 billion at September 30, 2008 from Rs. 735.85 billion at September 30, 2007.

Recent Developments
 
Economic developments

Since August 2007, the global financial system has experienced difficult credit and liquidity conditions and disruptions leading to less liquidity, greater volatility, general widening of spreads and, in some cases, lack of price transparency on inter-bank lending rates. In September 2008, global financial markets deteriorated sharply following the bankruptcy filing by Lehman Brothers Holdings Inc. In the days that followed, it became apparent that a number of other major financial institutions, including some of the largest global commercial banks, investment banks, mortgage lenders, mortgage guarantors and insurance companies, were experiencing significant difficulties. In an attempt to prevent the failure of the financial system, the United States and European governments have intervened on an unprecedented scale. Despite the extent of such interventions, global investor confidence remains low. In addition, the world’s largest developed economies are widely considered to be in the midst of, or about to enter, economic recessions.

The Bank and its consolidated subsidiaries have an investment of approximately  € 57 million in senior bonds of Lehman Brothers. Its aggregate portfolio of investments in international corporate and financial sector debt and mortgage-and asset-backed securities was Rs. 193.7 billion at year-end fiscal 2008. The realized and mark-to-market losses on these investments would adversely impact its net income in fiscal 2009.

The Indian economy has also been impacted by the deterioration in the global markets. As per data released by the Central Statistical Organization, India’s GDP growth was 7.8% during the six months ended September 30, 2008 substantially lower than the 9.3% growth during the six months ended September 30, 2007. Industrial growth during the six months ended September 30, 2008 was 5.0% compared to 9.1% during the six months ended September 30, 2007. Reflecting a further deterioration in the economic condition, the Index of Industrial Production recorded a decline of 0.4% in October 2008 compared to a growth of 12.2% in October 2007. The external sector has also been facing a slowdown with exports recording a decline of 12.1% in October 2008. Following the significant decline in global commodity prices, inflationary pressures in India have eased considerably with inflation as measured by the Wholesale Price Index declining from a peak of 12.9% in August 2008 to 8.0% in November 2008. The Reserve Bank of India in its mid term review of the annual policy statement for fiscal 2009 estimated growth for the Indian economy to remain within the 7.5% to 8.0% range, while projecting inflation at 7.0% by end March 2009. However, the economic environment has changed significantly
 
-23-

 
 
since then.

Banking sector developments

The increased risk perception in global markets led to a significant withdrawal of foreign investment flows from India, resulting in a sharp depreciation of the Rupee against the US dollar and leading to liquidity pressures in the system. In light of the deteriorating economic conditions, liquidity concerns in the banking system and easing inflationary pressures, the Reserve Bank of India has announced significant reductions in key policy rates. The cash reserve ratio has been reduced by 350 basis points from 9.0% at September 30, 2008 to 5.5% currently. The repo rate has been reduced by 250 basis points from 9.0% at September 30, 2008 to 6.5% currently while the reverse repo rate has been reduced by 100 basis points from 6.0% at September 30, 2008 to 5.0% currently. The statutory liquidity ratio to be maintained by banks has also been reduced by 100 basis points to 24.0%. The Reserve Bank of India has instituted special facilities for banks enabling them to borrow through the liquidity adjustment facility window for on-lending to mutual funds, non-banking financial companies and housing finance companies. The Reserve Bank of India has also extended concessional treatment under asset classification norms to restructuring of commercial real estate loans and to second restructuring of exposures other than commercial real estate, capital market exposures and consumer loans.

The Reserve Bank of India has maintained that it will continue to monitor developments in the global and domestic financial markets and endeavour to ensure an orderly adjustment of the economy.


 
2.
State of Production, Orders Accepted and Sales
 
Please refer to " - II. - 2. Nature of Business" and " - III. - 1. Outline of Results of Operations".


 
3.
Problems to be Coped with
 
There has been no material change since last ASR filed on September 30, 2008 for the fiscal 2008.


 
4.
Material Contracts relating to Management, etc.
 
There has been no material change since last ASR filed on September 30, 2008 for the fiscal 2008.


 
5.
Research and Development Activities
 
There has been no material change since last ASR filed on September 30, 2008 for the fiscal 2008.
 
-24-

 
 
IV.
STATEMENT OF FACILITIES
 
 
1.
State of Major Facilities
 
There has been no material change since last ASR filed on September 30, 2008 for the fiscal 2008.


 
2.
Plan for Installation, Retirement, etc. of Facilities
 
There has been no material change since last ASR filed on September 30, 2008 for the fiscal 2008.
 
 
-25-

 
V.
STATEMENT OF FILING COMPANY
 
 
1.
State of Shares, etc.
 
 
(1)
Total Number of Shares, etc.
 
 
(i)
Total Number of Shares
 
(As of September 30, 2008)
Number of Shares Authorised to be Issued
Number of Issued Shares
Number of
Unissued Shares
 
1,275,000,000 equity shares of Rs. 10/- each
1,113,249,042 shares(1)
161,750,958  shares
 
15,000,000 shares of Rs. 100/- each(2)
 
Nil
15,000,000 shares
 
350 preference shares of Rs. 10,000,000 each
350 shares
Nil
 
  (1) Excludes 111,603 shares forfeited.
 
(2)
Above shares will be of such class and with rights, privileges, conditions or restrictions as may be determined by the Company in accordance with the Articles of Association of the Company and subject to the legislative provisions.
 
 
(ii)
Issued Shares
 
(As of September 30, 2008)
 
Bearer or Registered; Par Value or Non-Par Value
Kind
Number of Issued Shares
Names of Listed Stock Exchanges or Registered Securities Dealers' Association
Registered shares, with
par value of Rs.10 each
Ordinary shares
1,113,249,042 shares(1)
Underlying equity shares on:
Bombay Stock Exchange;
and
National Stock Exchange of India Limited
ADSs on:
New York Stock Exchange
Registered shares, with
par value of
Rs. 10,000,000 each
Preference shares
350 shares
Not applicable.
Total
-
1,113,249,392 shares
-
  (1)
Excludes 111,603 shares forfeited.
 
-26-

 
 
(2)
Total Number of Issued Shares and Capital Stock
 

 
Date
Number of
Shares on Issue
Share Capital
(in Rs.)
Remarks
Number of Shares Increased/
Decreased
Number of Outstanding Shares After Increase/
Decrease
Amount of Share Capital Increased/
Decreased
Amount After Share Capital Increase/
Decrease
Total shares outstanding as on April 1, 2008
 
1,112,687,845(1)
 
14,626,786,543(2)
 
During fiscal year 2009 (Up to September 30, 2008)
561,547 shares increased
1,113,249,392(1)
6,086,051
14,632,872,594(2)
Allotment of  561,547 shares issued on exercise of options, under the Employee Stock Option Scheme 2000
(1) Excludes 111,603 shares forfeited.
 
(2)
Excludes calls unpaid and includes shares forfeited.
 
-27-

 
 
(3)
Major Shareholders
 

Shareholding more than 1% of the Total Number of Shares
 
(As of September 30, 2008)
 
Shareholder
Address
Shares
(million)
% Holding
Deutsche Bank Trust Company Americas
(Depositary for ADS holders)
C/o. ICICI Bank, Sms Empire House, 1st Floor 414, Senapati Bapat Marg Lower Parel, Mumbai 400013
316.82
28.5
Life Insurance Corporation of India
Investment Department 6th Floor, West Wing, Central Office, Yogakshema, Jeevan Bima Marg, Mumbai 400021
94.02
8.5
Allamanda Investments Pvt. Limited
Citibank NA, Custody Services, 77, Ramnord House, Dr. A.B. Road, Worli, Mumbai 400018
84.75
7.6
Bajaj Auto Limited
Bajaj Auto Ltd Complex, Mumbai-Pune Road, Akurdi, Pune 411035
37.96
3.4
Crown Capital Limited
Deutsche Bank AG, DB House, Hazarimal, Somani Marg, Next to Sterling Theatre, Fort, P.O. Box No. 1142, Mumbai 400001
26.38
2.4
Merrill Lynch Capital Markets ESPANA S.A. S.V.
Citibank N.A, Custody Services, 77, Ramnord House, Dr. A.B. Road, Worli, Mumbai 400018
21.42
1.9
Government of Singapore
C/o Deutsche Bank AG Securities And Custody Services DB House, Hazarimal, Somani Marg P.O. Box No. 1142, Fort, Mumbai 400001
18.66
1.7
Dodge & Cox International Stock Fund
Dodge & Cox Funds, C/o Boston Financial Data Services, P.O. Box 8422, Boston, MA 02266-8422
15.20
1.4
 
-28-

 
 
Fid Funds Mauritius Ltd
Citibank N.A, Custody Services, 77, Ramnord House, Dr. A.B. Road, Worli, Mumbai 400018
14.37
1.3
New India Assurance Company Ltd
New India Assurance Building 87, M.G. Road Fort, Mumbai 400001
13.18
1.2
Direct Investment Ltd
DB House, Hazarimal Somani Marg Fort,
Post Box – 1142
Mumbai – 400001
13.14
1.2
Total
-
655.91
58.9

 
 
2.
Trends in Stock Prices
 
Monthly High and Low Stock Prices of Shares for each of the Last Six Months ended September 30, 2008
 
National Stock Exchange (NSE)
(in Rs.)
Month
April
2008
May
2008
June
2008
July
2008
August
2008
September
2008
High
(yen)
960.00
(1,977.60)
971.00
(2,000.26)
835.00
(1,720.10)
764.90
(1,575.69)
789.00
(1,625.34)
750.00
(1,545.00)
Low
(yen)
726.55
(1,496.69)
778.20
(1,603.09)
611.35
(1,259.38)
514.00
(1,058.84)
610.00
(1,256.60)
460.05
(947.70)
 
 
Bombay Stock Exchange (BSE)
(in Rs.)
Month
April
2008
May
2008
June
2008
July
2008
August
2008
September
2008
High
(yen)
947.00
(1,950.82)
960.90
(1,979.45)
826.00
(1,701.56)
779.70
(1,606.18)
779.70
(1,606.18)
739.00
(1,522.34)
Low
(yen)
732.00
(1,507.92)
778.10
(1,602.89)
611.50
(1,259.69)
515.10
(1,061.11)
610.00
(1,256.60)
458.00
(943.48)

-29-

 
New York Stock Exchange
(ADS)
(in US$)
Month
April
2008
May
2008
June
2008
July
2008
August
2008
September
2008
High
(yen)
47.30
(4,397.01)
47.50
(4,415.60)
38.88
(3,614.28)
36.99
(3,438.59)
36.41
(3,384.67)
33.83
(3,144.84)
Low
(yen)
37.50
(3,486.00)
37.22
(3,459.97)
28.39
(2,639.13)
22.89
(2,127.85)
28.82
(2,679.11)
21.00
(1,952.16)
 
 
3.
Statement of Directors and Officers
 
There has been no material change, except as reported under VI 2.(2) Subsequent Events, since last ASR filed on September 30, 2008 for the fiscal 2008.
 
-30-

 
VI.
FINANCIAL CONDITION
 

The original English financial statements of ICICI Bank Limited (the Bank) for the six-month period ended September 30, 2008 presented in this document are the same ones included in the Form 6-K filed with the U.S. Securities and Exchange Commission on October 27, 2008, and are prepared in accordance with accounting principles generally accepted in India (Indian GAAP).

This document includes the Japanese translation of the aforementioned English interim financial statements pursuant to the provision under item 2 of Article 74 of the Regulations Regarding Terminology, Format and Method of Preparation of Interim Financial Statements, etc. (Ministry of Finance Ordinance No. 38 of 1977).

Pursuant to the interim financial statements requirements under the Cabinet Office Ordinance Regarding Disclosures of Corporate Information, etc. (Ministry of Finance Ordinance No. 5 of 1973), the accompanying interim financial statements include the following financial statements which is not included in the Banks Interim Report on Form 6-K for the six-month period ended September 30, 2008:
Summary Profit and Loss Statement for the six months ended September 30, 2007

These financial statements of the Bank were summary financial statements and extracted from the complete set of interim financial statements.  The complete set of interim financial statements for the three-month period ended June 30, 2008 and September 30, 2008 as well as six-month period ended September 30, 2007 were audited by B.S.R. & Co,. Chartered Accountants.  Since the complete set of the audited financial statements and independent auditor's report were not filed with the U.S. Securities and Exchange Commission, the same have not been included in this document.  Summary profit and loss statement for the six-month period ended September 30, 2008, consisting of accounts for Q1-2009 and Q2-2009, is not included in the Banks Interim Report on Form 6-K.

The financial statements of the Bank are presented in Indian rupees. In preparation of Japanese translation, only key amounts were translated into Japanese yen solely for the convenience of the reader at the rate of Rs.1=¥2.06 which was the telegraphic transfer customer selling exchange rate of The Bank of Tokyo Mitsubishi UFJ, Ltd. as of December 9, 2008.

Major differences between United States and Japanese Accounting Principles and Practices and Major differences between Indian and Japanese Accounting Principles and Practices” are included at the end of this section.
 
-31-

 
 
1.
Financial Statements for the Relevant Six-month Period
 
Summary Profit and Loss Statement (as per unconsolidated Indian GAAP accounts)

 
   
Six months ended September 30, 2007
   
Three months ended June 30, 2008
   
Three months ended September 30, 2008
   
Six months ended September 30, 2008
   
Year ended
March 31, 2008
 
   
Rs. crore
   
JPY mm
   
Rs. crore
   
JPY mm
   
Rs. crore
   
JPY mm
   
Rs. crore
   
JPY mm
   
Rs. crore
   
JPY mm
 
Net interest income1
    3,265       673       2,090       431       2,148       442       4,238       873       7,304       1,505  
Non-interest income
(excluding treasury)
    3,653       753       2,132       439       2,030       418       4,162       857       7,997       1,647  
-Fee income
    2,914       600       1,958       403       1,876       386       3,834       790       6,627       1,365  
-Lease and other income
    739       152       174       36       154       32       328       68       1,369       282  
Less:
                                                                               
Operating expense
    3,020       622       1,634       337       1,543       318       3,177       654       6,429       1,324  
Expenses on direct market agents (DMAs) 2
    768       158       228       47       145       30       373       77       1,543       318  
Lease depreciation
    88       18       51       11       53       11       104       21       182       37  
Core operating profit
    3,042       627       2,308       475       2,437       502       4,745       977       7,147       1,472  
Treasury income
    369       76       (594 )     (122 )     (153 )     (32 )     (747 )     (154 )     815       168  
Operating profit
    3,411       703       1,714       353       2,285       471       3,999       824       7,961       1,640  
Less: Provisions
    1,197       247       792 3     163       924 4     190       1,716       353       2,905       598  
Profit before tax
    2,215       456       922       190       1,361       280       2,283       470       5,056       1,042  
Less: Tax
    437       90       194       40       347       71       541       111       898       185  
Profit after tax
    1,778       366       728       150       1,014       209       1,742       359       4,158       857  


1.
Net of premium amortisation on government securities of Rs. 175 crore in Q2-2009 and Rs. 898 crore in FY2008.
2.
Represents commissions paid to direct marketing agents (DMAs) for origination of retail loans. These commissions are expensed upfront.
3.
Includes specific provision of Rs. 878 crore (with the total provisions being lower due to general provision write-back and farm loan waiver-related write-back of Rs. 85 crore).
4.
Includes specific provision for non-performing assets (excluding the impact of farm loan waiver) of Rs. 868 crore.
5.
Prior period figures have been regrouped/re-arranged where necessary.
 
-32-

 
Summary Balance Sheet
 

   
September 30, 2007
   
September 30, 2008
   
March 31, 2008
 
   
Rs. Crore
   
JPY mm
   
Rs. Crore
   
JPY mm
   
Rs. crore
   
JPY mm
 
Assets
                                   
Cash & bank balances
    34,025       7,009       35,613       7,336       38,041       7,836  
Advances1
    207,121       42,667       221,985       45,729       225,616       46,477  
Investments
    102,288       21,071       97,148       20,012       111,454       22,960  
Fixed & other assets
    21,510       4,431       30,225       6,226       24,684       5,085  
Total
    364,944       75,178       384,970       79,304       399,795       82,358  
Liabilities
                                               
Networth
    44,752       9,219       48,645       10,021       46,470       9,573  
-Equity capital
    1,111       229       1,113       229       1,113       229  
-Reserves
    43,641       8,990       47,532       9,792       45,358       9,344  
Preference capital
    350       72       350       72       350       72  
Deposits
    228,307       47,031       223,402       46,021       244,431       50,353  
CASA ratio
    25 %             30 %             26 %        
Borrowings
    73,585       15,159       94,849       19,539       86,399       17,798  
Other liabilities
    17,950       3,698       17,724       3,651       22,145       4,562  
Total
    364,944       75,178       384,970       79,304       399,795       82,358  
 
1.
Consolidated advances of the Bank and its overseas banking subsidiaries and ICICI Home Finance Company increased 16.3% to Rs. 264,665 crore at September 30, 2008 from Rs. 227,583 crore at September 30, 2007.

 
 
2.
Other Matters
 
 
(1)
Legal and Regulatory Proceedings
 
We are involved in various litigations and are subject to a wide variety of banking and financial services laws and regulations in each of the jurisdictions in which we operate. We are also subject to a large number of regulatory and enforcement authorities in each of these jurisdictions. We are involved in a number of legal proceedings and regulatory relationships in the ordinary course of our business. However, excluding the legal proceedings discussed below, we are not a party to any proceedings and no proceedings are known by us to be contemplated by governmental authorities or third parties, which, if adversely determined, may have a material adverse effect on our financial condition or results of operations.

As of September 30, 2008, we had been assessed an aggregate of Rs. 34.11 billion in excess of the provision made in our accounts mainly pertaining to income tax and sales tax by the government of India’s tax authorities for past years. We have appealed each of these tax demands. Based on consultation with counsel and favorable decisions in our own or other cases as set out below, management believes that the tax authorities are not likely to be able to substantiate their tax assessment and accordingly we have not provided for these tax demands at period ended September, 2008.
 
 
·
We have received favorable decisions from the appellate authorities with respect to Rs. 621.1 million of the assessment. The tax authorities have appealed these decisions to higher appellate authorities and the appeals are pending adjudication.
 
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·
In our appeal of the assessment of sales tax aggregating to Rs. 568.1 million, we are relying on a favorable decision of the Supreme Court of India in respect of a writ petition filed by us and facts of the case.
 
 
·
In our appeal of the assessments of income tax, interest tax and wealth tax aggregating to Rs. 32.92 billion, we are relying on favorable precedent decisions of the appellate court and expert opinions.
 
Of the Rs. 32.92 billion, Rs. 14.17 billion relates to bad debts written off. Bad debts written off as irrecoverable by the bank have been disallowed by the tax authorities on the ground that we have not established that the debts written off during the year are irrecoverable. In recent judgments in the bank’s own case for some years, the appellate authorities have allowed the claim of bad debts on the ground that after the amendment to Section 36(1) (vii) of the Income Tax Act, 1961 with effect from April 1, 1989, it is not obligatory on the part of the assessee to prove that the debts written-off are bad and it shall suffice if the assessee writes off its bad debts as irrecoverable in the accounts during the said year.

Rs. 5.53 billion relates to the disallowance of depreciation claim on leased assets, Rs. 2.40 billion relates to special reserve, Rs. 4.02 billion relates to expenditures disallowed in respect of dividend income and Rs. 4.37 billion relates to penalty orders.

Disallowance of depreciation claim on leased assets is an industry wide issue involving multiple litigations across the country. In respect of depreciation claimed by us for fiscal 1993 on two sale and lease back transactions, the Income Tax Appellate Tribunal, Mumbai held in August 2003 that these transactions were tax planning tools and no depreciation was allowable. As the Income Tax Appellate Tribunal’s decision is based on the facts of two specific transactions, we believe that the Income Tax Appellate Tribunal’s decision will not have an adverse tax impact on other sale and lease back transactions entered into by us. In subsequent judgments in the bank’s own case, the appellate authorities have held that the lease transactions are genuine and have allowed depreciation on finance leases including sale and lease back transactions. Moreover, the lease agreements provide for variation in the lease rental to offset any loss of depreciation benefit to us.

Accordingly, we have not provided for this tax demand but have disclosed it as a contingent liability in the financial statements.

At September 30, 2008, there were 37 litigations (each involving a claim of Rs. 10 million and more) against us, in the aggregate amount of approximately Rs. 91.21 billion (to the extent quantifiable and including amounts claimed jointly and severally from ICICI Bank and other parties). At September 30, 2008, thirty one litigations were pending against our directors in an aggregate amount of approximately Rs. 43.2 million (to the extent quantifiable). There were four litigations where amounts claimed from us are Rs. 1.00 billion or higher:
 
 
·
We filed a recovery application against Mardia Chemicals Limited and its guarantors before the Debt Recovery Tribunal, Mumbai for recovery of Rs. 1.4 billion. In response, Mardia Chemicals Limited filed a counterclaim of Rs. 56.30 billion against us. We have filed an affidavit in this matter for rejection of the counterclaim. Meanwhile, Mardia Chemicals Limited was ordered to be liquidated.
 
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We have filed a motion for dismissal of the counterclaim pursuant to an order of the City Civil Court, Ahmedabad rejecting a suit filed by Mardia Chemicals against the directors of ICICI Bank arising out of the same cause of action. This motion is now fixed for hearing on January 12, 2009.
 
 
·
The promoters of Mardia Chemicals Limited, in their capacity as guarantors, filed a suit against us before the City Civil Court at Ahmedabad, for damages amounting to Rs. 20.80 billion. We filed applications for dismissal of the suit and have submitted that the suit should be tried before the Debt Recovery Tribunal. The Court by its order dated January 10, 2008, directed the guarantors of Mardia Chemicals Limited to approach the Debt Recovery Tribunal, Mumbai following which the promoters of Mardia Chemicals Limited have filed an appeal before the High Court of Gujarat at Ahmedabad which will come up for hearing on admission shortly.
 
 
·
In 2002, we filed a suit before the Debt Recovery Tribunal, Ahmedabad against Gujarat Telephone Cables Limited for recovery of term loans, debentures and working capital finance provided by us. We sold our exposure to Asset Reconstruction Company (India) Limited in 2004. The borrower has filed a suit in the Civil Court claiming damages of Rs. 10.00 billion jointly and severally from State Bank of India, Bank of Baroda, United Western Bank, Axis Bank, Bank of India, Asset Reconstruction Company (India) Limited and us. We have filed an application for rejection of the plaint, to which Gujarat Telephone Cables Limited had filed its reply. ICICI Bank has filed its rejoinder. In the meanwhile the borrower went into liquidation in March, 2008 and notice has been issued to the Official Liquidator to appear in the matter which is now coming up for hearing shortly.
 
 
·
In 1999, ICICI filed a suit in the Debt Recovery Tribunal, Delhi against Esslon Synthetics Limited and its Managing Director (in his capacity as guarantor) for recovery of amounts totaling Rs. 169.0 million due from Esslon Synthetics. In May 2001, the guarantor filed a counter-claim for an amount of Rs. 1.00 billion against ICICI and other lenders who had extended financial assistance to Esslon Synthetics on the grounds that he had been coerced by officers of the lenders into signing an agreement between LML Limited, Esslon Synthetics and the lenders on account of which he suffered, among other things, loss of business. Esslon Synthetics Limited has filed an application to amend the counterclaim in January 2004. ICICI Bank has filed its reply to the application for amendment. To delay proceedings, the guarantor has also filed an interim application on the ground that certain documents have not been exhibited to which ICICI has filed its reply clearly stating that the required documents are neither relevant nor necessary for adjudicating the dispute between the parties. There are interim applications filed by Esslon to which we are filing reply. The matter is to come up for hearing on January 14, 2009.
 
Management believes, based on consultation with counsel, that the legal proceedings instituted by each of Mardia Chemicals Limited, Guarantors of Mardia Chemicals, Gujarat Telephone Cables Limited and Esslon Synthetics Limited against us are frivolous and untenable and their ultimate resolution will not have a material adverse effect on our results of operations, financial condition or liquidity. Based on a review of other litigations with the legal counsel, management also believes that the outcome of
 
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such other matters will also not have a material adverse effect on our financial position, results of operations and cash flows.

The Securities and Futures Commission of Hong Kong had filed charges against us for carrying on the business of dealing in securities in Hong Kong between June 15, 2004 and March 8, 2006, without having a license to do so. We accepted the charges without contesting and had submitted our mitigation statement to the Court. The Eastern Magistrate's Court, Hong Kong, consequently fined ICICI Bank a sum of HKD 40,000 and ordered ICICI Bank to further reimburse prosecution costs of HKD 54,860 to the Securities and Futures Commission of Hong Kong. The contravention was limited to a small segment of the branch's business in Hong Kong and has not resulted in any loss either to ICICI Bank's customers or to ICICI Bank. ICICI Bank has, based on the findings of an internal review conducted upon the discovery of this incident in April 2006, taken appropriate staff accountability actions against the relevant staff whose conduct resulted in the contravention. ICICI Bank has since implemented significant measures to strengthen the compliance, monitoring and control functions at the Hong Kong Branch which included bringing in a new management team.

In addition, we have experienced rapid international expansion into banking in multiple jurisdictions which exposes us to a new variety of regulatory and business challenges and risks, including cross-cultural risk, and which increased the complexity of our risks in a number of areas including currency risks, interest rate risks, compliance risk, regulatory risk, reputational risk and operational risk. As a result of this rapid growth and increased complexity, we or our employees may be subject to regulatory investigations or enforcement proceedings in multiple jurisdictions in a variety of contexts. Despite our best efforts at regulatory compliance and internal controls, we, or our employees, may from time to time, and as is common in the financial services industry, be the subject of confidential examinations or investigations that might, or might not, lead to proceedings against us or our employees. In any such situation, it would be our policy to conduct an internal investigation, cooperate with the regulatory authorities and, where appropriate suspend or discipline employees including termination of their services.

We cannot predict the timing or form of any future regulatory or law enforcement initiatives, which we note are increasingly common for international banks, but we would expect to cooperate with any such regulatory investigation or proceeding.


 
(2)
Subsequent Events
 
During September-October 2008, following the disclosure of our exposure to Lehman Brothers and other U.S. and European financial institutions, rumours were circulated about our financial position which resulted in concerns being expressed by depositors and higher than normal transaction levels. We successfully controlled the situation in this instance but any failure to control such situations in the future could result in high volumes of deposit withdrawals which would adversely impact our liquidity position.
 
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Mr. N. Vaghul, non-executive Chairman of the Board of Directors of ICICI Bank Limited would retire from the Board on completion of his current term on April 30, 2009. The Board has, subject to the approval of Reserve Bank of India (RBI) and the shareholders, decided to appoint Mr. K. V. Kamath, presently Managing Director & CEO, as non-executive Chairman of the Board for a period of five years effective May 1, 2009. Mr. Kamath’s current term as Managing Director & CEO would end on April 30, 2009 and he has expressed his desire to lay down his executive responsibilities from that date.
 
The Board of Directors has, subject to the approval of RBI and the shareholders, decided to appoint Ms. Chanda D. Kochhar, presently Joint Managing Director & Chief Financial Officer, as Managing Director & CEO of ICICI Bank from May 1, 2009 to March 31, 2014. Ms. Chanda Kochhar joined erstwhile ICICI Limited (ICICI) in 1984 and was elevated to the Board of Directors of ICICI Bank in 2001. During her career prior to becoming a member of the Board, she worked and held leadership positions across all key businesses, including corporate banking, project finance and retail banking. She was instrumental in establishing ICICI Bank during the 1990s, and subsequently headed the infrastructure finance and major clients groups in ICICI. In 2000, she took on the challenge of building the nascent retail business, with strong focus on technology, innovation, process reengineering and expansion of distribution and scale. The Bank achieved a leadership position in this business. She successfully managed the integration of the retail franchises of ICICI and ICICI Bank, as well as of other acquisitions. During 2006-2007, she successfully led the Bank’s wholesale and international banking businesses during a period of heightened activity and global expansion by Indian companies. Since 2007, she has been heading the Corporate Centre, responsible for ensuring strategic consistency across the Group.
 
 
 
 
3.
Major Differences between United States and Japanese Accounting Principles and Practices
 
The financial statements of the Bank for the year ended March 31, 2008 include notes describing the differences between accounting principles generally accepted in India and those in the Untied States of America (US GAAP) and disclose net income and stockholders equity under US GAAP. Summarized hereunder are significant differences between the accounting policies under US GAAP adopted in preparation of these figures and Japanese accounting principles.
 
 
(1)  Principles of consolidation
 
The Bank consolidates subsidiaries in which it holds, directly or indirectly, more than 50% of the voting rights or where it exercises control.  The Bank also consolidates entities deemed to be variable interest entities where the Bank is determined to be the primary beneficiary under FASB Interpretation No. 46R, “Consolidation of Variable Interest Entities”.
 
In Japan, a concept of variable interest entities is not used to determine the scope of consolidation.
 
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(2)   Venture capital investments
 
The Bank’s venture capital funds carry their investments at fair value, with changes in fair value recognized in gain/loss in the profit and loss account on venture capital investments.  Quoted investments are generally valued at the closing market price at year-end.  Quoted investments that are not traded on the valuation date but are traded during the two months prior to the valuation date are valued at the latest known closing price.  Quoted investments not traded during the two months prior to the valuation date are treated as unquoted. Unquoted investments are valued at their estimated fair values by applying appropriate valuation methods.
 
In Japan, there is no specific accounting standard for venture capital investments, and accounting for such investments should follow general accounting standards for investments in securities.
 
 
(3)   Goodwill
 
The Bank does not amortize goodwill but instead tests goodwill for impairment at least annually.
 
In Japan, goodwill arising from purchasing a business was amortized within five years and goodwill arising from purchasing a company that was subsequently consolidated was amortized within twenty years under the Commercial Code Enforcement Regulation of Japan.  However, as a result of the adoption of Accounting Standards for Business Combinations, effective for the fiscal year beginning on and after April 1, 2006, goodwill arising from business combinations is now required to be amortized over a period not exceeding 20 years.
 
 
(4)   Share-based compensation
 
The Bank adopted the modified prospective method in which compensation costs is recognized from the year ended March 31, 2007 based on the requirements of Statement 123R, for all the share-based payments granted after April 1, 2006 and based on the requirements of Statement 123 for all awards granted to employees prior to April 1, 2006 that remain unvested.  Previously, the Bank was using the intrinsic value method to account for its employee stock-based compensation plans. 123R requires all share-based payments to employees, including grants of employee stock options to be recognized in the income statement based on their fair values.
 
In Japan, "Accounting Standard for Stock Options" was issued in December 2005 for the accounting for stock-based compensation.  This accounting standard applies to share options granted to employees, other share options and shares within the scope of the standard on and after the date on which the Corporation Law takes effect (May 1, 2006).  Under the standard, the intrinsic value based method is not used and the compensation expenses are accounted for based on the fair value at the grant date.
 
 
(5)   Loan origination fees
 
Loan origination fees (net of costs) are amortized over the period of the loans as an adjustment to the yield on the loan.
 
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In Japan, there is no specific accounting standard for amotization of loan origination fees.
 
 
(6)   Hedge accounting
 
The Bank has designated certain derivatives as fair value hedges.  Under fair value hedge accounting, changes in fair value of derivatives are recognized in the profit and loss account along with the changes in fair value of hedged items.
 
In Japan, hedge accounting was generally achieved by deferring gains and losses arising from changes in fair value of hedging instruments as an asset or liability until when the gain or loss on the hedged item is recognized in the statement of income.  However, as a result of the adoption of Accounting Standards for Presentation of Net Asset in the Balance Sheet, effective for the fiscal year ending on and after May 1, 2006, deferred gains and losses arising from changes in fair value of hedging instruments are directly recognized in equity, net of tax effect.
 
 
 
 
4.
Major Differences between Indian and Japanese Accounting Principles and Practices
 
The financial statements of the Bank are prepared in accordance with generally accepted accounting principles in India.  Summarized hereunder are significant differences between the accounting policies adopted by the Bank and Japanese accounting principles.
 
 
(1)   Principles of consolidation
 
The Bank consolidates subsidiaries in which it holds, directly or indirectly, more than 50% of the voting rights or where it exercises control. Assets, liabilities, income and expenditure of the jointly controlled entities are consolidated using the proportionate consolidation method. Under the proportionate consolidation method the Banks share of each of the assets, liabilities, income and expenses is reported as separate line items in the consolidated financial statements.
 
In Japan, there is no concept of proportionate consolidation method.
 
 
(2)   Stock issue costs
 
The expenses of the issue have been charged to the share premium account.
 
In Japan, stock issue costs are either charged to expense as incurred or deferred to be amortized over three years.
 
 
(3)   Sale of loans
 
The Bank transfers commercial and consumer loans through securitization transactions.  The transferred loans are de-recognized and gains / losses are recorded net of allowance for credit losses only if the Bank surrenders the rights to benefits specified in the loan contract.  Net income arising from sale of loan assets through direct assignment
 
-39-

 
without recourse obligation, is recognized at the time of sale.  With effect from February 1, 2006, in accordance with new guidelines issued by RBI, net income arising from securitization of loan assets is amortized over the life of securities issued or to be issued by the special purpose vehicle/special purpose entity to which the assets are sold.
 
In Japan, the transfer of loans are recognized as sales and the resulting gains are recognized if derecognition requirements for financial assets under the financial component approach are met.
 
 
(4)   Share-based compensation
 
The Bank uses the intrinsic value based method as prescribed by the guidance note on Accounting for Stock Options” issued by ICAI to account for its stock-based employees compensation plans. Compensation cost is measured by the excess, if any, of the fair market price of the underlying stock over the exercise price.
 
In Japan, "Accounting Standard for Stock Options" was issued in December 2005 for the accounting for stock-based compensation.  This accounting standard applies to share options granted to employees, other share options and shares within the scope of the standard on and after the date on which the Corporation Law takes effect (May 1, 2006).  Under the standard, the intrinsic value based method is not used and the compensation expenses are accounted for based on the fair value at the grant date.
 
 
(5)   Retirement benefit
 
In respect of gratuity benefit and other benefit schemes, where the Bank makes payments for retirement benefits out of its own funds, provisions are made in the profit and loss account based on actuarial valuation. As per the transition provision of AS 15 (Revised) on “Accounting for retirement benefits in financial statements of employer”, the difference in the liability on account of gratuity benefits created by the Bank at March 31, 2007 due to revised standard have been included in Schedule 2 (“Reserves and Surplus”).
 
In Japan, defined benefit plan is accounted for based on the actuarial calculations, with actuarial gains or losses being amortized over a certain period of years within the average remaining service period.
 
 
(6)   Mark-to-market of securities
 
Net unrealized gains on investments by category are ignored, except for the venture capital investments wherein the unrealized gains and losses are transferred to Reserves and Surplus.
 
In Japan, unrealized gains and losses on trading securities are recognized in the profit and loss account and those on other securities are recorded in equity.
 
 
(7)   Acquisition costs of securities
 
Costs including brokerage and commission pertaining to investments, paid at the time of acquisition, are charged to the profit and loss account.
 
In Japan, such costs are included in acquisition costs of securities.
 
-40-

 
 
 
(8)   Profit on sale of held-to-maturities securities
 
Profit on sale of investments in the Held to Maturity category is credited to the profit and loss account and is thereafter appropriated (net of applicable taxes and statutory reserve requirements) to capital reserve.
 
In Japan, such profit is recognized in the profit and loss account upon sale.  There is no specific standard concerning transfer of such profit to reserve.
 
 
 
(9)   Venture capital investments
 
The Banks venture capital funds carry their investments at fair value, with changes in fair value recognized in gain/loss on venture capital investments under reserves.  Quoted investments are generally valued at the closing market price at year-end.  Quoted investments that are not traded on the valuation date but are traded during the two months prior to the valuation date are valued at the latest known closing price.  Quoted investments not traded during the two months prior to the valuation date are treated as unquoted. Unquoted investments are valued at their estimated fair values by applying appropriate valuation methods.
 
In Japan, there is no specific accounting standard for venture capital investments, and accounting for such investments should follow general accounting standards for investments in securities.
 
 
(10)   Provisions for loan losses
 
In case of corporate loans, provisions are made for sub-standard and doubtful assets at rates prescribed by RBI.  Subject to the minimum provisioning levels prescribed by RBI, provision on homogeneous retail loans/receivables is assessed at a portfolio level, on the basis of days past due.  For restructured/rescheduled assets, provision is made by the Bank in accordance with the guidelines issued by RBI, which requires a provision equal to the present value of the interest sacrifice to be made at the time of restructuring.
 
In Japan, provision for loan losses in banks is established based on the self-assessment and the historical loss ratio and outstanding balance of each asset category.  Alternatively, it is also permitted to calculate based on the difference between the discounted future cash flows using the original effective interest rate and the outstanding balance.  The regulatory agency does not prescribe certain rate to be used for calculation of provisions in banks.
 
 
(11)   Hedge accounting
 
Under Indian GAAP, the swap contracts entered to hedge on-balance sheet assets and liabilities are structured in such a way that they bear an opposite and offsetting impact with the underlying on-balance sheet items. The impact of such derivative instruments is correlated with the movement of underlying assets and accounted pursuant to the principles of hedge accounting.  Hedged swaps/options are accounted for on an accrual basis.
 
In Japan, all derivatives are marked to market with unrealized gains and losses being deferred to the extent that the requirements for hedge accounting are met.
 
-41-

 
 
(12)   Impairment of fixed assets
 
Fixed assets and certain intangible assets are reviewed for impairment whenever events or changes in circumstances indicated that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net discounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognised by debiting the profit and loss account and is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.
 
In Japan, undiscounted cash flows are used for assessment of impairment.
 
 
(13)   Deferred tax
 
The Bank does not recognize deferred taxes on undistributed earnings of subsidiaries and affiliates.
 
In Japan, deferred tax is recognized based on the schedule for reversal of temporary difference as a whole.  Deferred tax liabilities are recognized on part of undistributed profits of subsidiaries that are expected to be taxed upon payment as dividends.
 
 
(14)   Dividends
 
Dividends on common stock and the related dividend tax are recognized in the year to which it relates to.
 
In Japan, dividends are recognized upon approval in the annual general meeting.
 
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VII.
TRENDS IN FOREIGN EXCHANGE RATES
 
The information required under this subsection is omitted because the foreign exchange rates between Indian rupee, which is the currency in which the financial statements of the Bank are presented, and Japanese yen, has been published in two or more daily newspapers reporting general affairs in Japan for the referenced periods.
 
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VIII.
REFERENCE INFORMATION OF FILING COMPANY
 
The documents filed during the period from the commencement date of the relevant business year through the filing date of this Semi-Annual Report, and the filing dates thereof, are as follows:
 
 
1.
Second Amendment to the Extraordinary Report
 
filed on July 2, 2007 pursuant to
 
paragraph 4 of Article 24-5 of the
 
Financial Instruments and Exchange Law,
 
and Paragraph 1 of Article 19, and
 
Sub-Paragraph 1 of Paragraph 2 of
 
Article 19 of the Ordinance of Cabinet
 
Office relating to Disclosure of
Corporations and the attachments thereto
filed on August 29, 2008
 
2.
Annual Securities Report
and the attachments thereto
filed on September 30, 2008
 
-44-

 
PART II.
INFORMATION ON COMPANIES OTHER THAN GUARANTY COMPANY, ETC.
 
I.
INFORMATION ON GUARANTY COMPANY
 
Not applicable.
 

 
II.
INFORMATION ON COMPANIES OTHER THAN GUARANTY COMPANY
 
Not applicable.
 

 
III.
INFORMATION ON BUSINESS INDICES, ETC.
 
Not applicable.
 
 
  45