SBI, ICICI Q3 net seen hit by bond moves

State Bank of India, the country's top lender, and rival ICICI Bank are likely to post lower quarterly net profit on sluggish credit demand and a fall in treasury incomes as bond yields rose.But increasing business and consumer confidence is reinvigorating corporate, housing, auto and retail demand in Asia's third-largest economy, with banks looking to improve their asset quality. Bank credit grew an annual 13.7 percent in early January, having fallen to 9.7 percent in October despite a reduction of 300-350 basis points in lending rates since the global crisis. "There are some signs of improvement in credit growth and it will gradually recover," said Srividhya Rajesh, fund manager at Sundaram BNP Paribas Asset Management, which holds shares of State Bank and ICICI. "As economic growth picks up, we could see a decline in bad debts as well." Indian banks were mostly insulated from the direct impact of the global credit crisis, but the world downturn hit the country harder than expected and led to a sharp slowdown in credit growth in the current financial year. While the Reserve Bank of India has projected 18 percent growth in loans for the year through March, banks say they may fall short and end the fiscal year at 15-16 percent credit growth -- still a far cry from growth rates of more than 30 percent over