Mumbai: Fitch Ratings today said that the provisioning requirement disclosed by ICICI Bank for its mark-to-market (MTM) loss on its overseas investment portfolio was unlikely to affect bank's credit ratings or impact its capital ratios.

ICICI Bank last week had said it along with its overseas subsidiary accounted for a US $ 189 million MTM loss till December 2007 and that the loss had widened by a further US $ 74 million as on January 31.

"The losses reflect the widening credit spreads in the international markets, with a greater impact on ICICI's US $ 2.2 billion credit derivatives portfolio compared to its fixed income portfolio," Fitch said here in a release.

While break-down of the underlying credits has not been disclosed, the bank has mentioned in discussions that over 60 per cent of exposure in the credit derivatives portfolio is to Indian corporates and that there is no material direct or indirect exposure to the US subprime credit, it said.

However, Fitch said the MTM losses of ICICI Bank could be higher than reported and may not fully reflect the extent of deterioration in a timely manner.

"Net income could therefore come under pressure," it said.

The additional MTM loss of US $ 74 million is equivalent to nearly 24 per cent of ICICI's net income in Q3 but it is equal to 0.6 per cent of ICICI's expanded equity.

"The underlying market risk on the investments has so far increased income volatility without compromising capital ratio in any significant manner," it said.
Source : PTI