ICICI Bank Q2 25/26 Earnings Report

ICICI Bank EPS Results

• Actual EPS: $0.39
• Consensus EPS: $0.37
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: N/A

ICICI Bank Revenue Results

• Actual Revenue: $3.31 billion
• Expected Revenue: $3.37 billion
• Beat/Miss: Missed by -$66.01 million
• YoY Revenue Growth: N/A

ICICI Bank Announcement Details

• Quarter: Q2 25/26
• Date: 10/18/2025
• Time: Before Market Opens
• Conference Call Date: Saturday, October 18, 2025
• Conference Call Time: 7:30AM ET

ICICI Bank (NYSE:IBN) is a leading private sector bank in India, offering a diverse range of banking and financial services to individual and corporate clients. Established in 1994 as the banking arm of the Industrial Credit and Investment Corporation of India (founded in 1955), the company transitioned to its current form following the liberalization of India’s banking sector. Headquartered in Mumbai, ICICI Bank leverages India’s burgeoning economy to deliver comprehensive financial solutions across its extensive network.

The bank’s core business activities encompass retail banking, corporate and institutional banking, treasury operations and financial market services. Retail offerings include savings and current accounts, fixed deposits, consumer and mortgage loans, credit cards, and wealth management advisory. On the wholesale side, ICICI Bank provides working capital finance, term loans, trade services, cash management and structured finance solutions to large corporations, small and medium enterprises (SMEs), and public sector entities.

Beyond traditional banking, ICICI Bank has built a substantial presence in non-banking financial services through subsidiaries and joint ventures in asset management, life and general insurance, venture capital, private equity and investment banking. The bank has also pioneered digital banking initiatives, rolling out mobile and internet banking platforms, digital wallets and blockchain pilots to enhance customer convenience and operational efficiency.

Operating in India and across 15 countries—including the United States, United Kingdom, Canada, Singapore, China, and the Gulf Cooperation Council region—ICICI Bank serves a broad international clientele, particularly non-resident Indians. The bank is led by Managing Director and Chief Executive Officer Sandeep Bakhshi, who has overseen its expansion in digital delivery channels and global footprint. The board of directors comprises experienced banking professionals and industry experts, ensuring strong governance and strategic oversight.

ICICI Bank Q2 25/26 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Profitability strengthened — profit before tax excluding treasury rose 9.1% YoY to INR 161.64bn and profit after tax was INR 123.59bn, up 5.2% YoY, with core operating profit up 6.5% YoY.
• Positive Sentiment: Healthy balance-sheet growth — domestic loans grew ~10.6% YoY (overall loans ~10% YoY) while average deposits rose ~9.1% YoY and the quarter-average LCR was ~127%, supporting funding and liquidity.
• Positive Sentiment: Asset quality and buffers remain strong — net NPA improved to 0.39%, gross NPA additions eased QoQ, PCR was ~75% and the bank holds INR 131bn of contingency provisions (~0.9% of advances).
• Neutral Sentiment: Margins likely range‑bound — NIM was 4.30% this quarter and management expects margins to be largely range‑bound over the next few quarters amid deposit repricing, competitive dynamics and KCC seasonality.
• Negative Sentiment: Cost and non-core income pressures — operating expenses rose 12.4% YoY (retail and festive spends), treasury income fell sharply to INR 2.2bn this quarter versus INR 12.4bn prior quarter, and dividend income was lumpy, creating near‑term profit volatility.

Presentation

[Operator]

Ladies and gentlemen, please stay connected. The call will begin in the next two to three minutes. Thank you. Ladies and gentlemen, you're connected for the ICICI Bank earnings conference call. Please stay connected. The call will begin in the next few minutes. Thank you. Ladies and gentlemen, good day and welcome to the Q2 FY 2026 earnings conference call of ICICI Bank. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that the conference is being recorded. I now hand the conference over to Mr. Sandeep Bakhshi, Managing Director and Chief Executive Officer of ICICI Bank. Thank you and over to you, sir.

[Sandeep Bakhshi, CEO at ICICI Bank]

Thank you. Good evening to all of you and welcome to the ICICI Bank earnings call to discuss the results for Q2 of financial year 2026. Joining us today on this call are Sandeep, Rakesh, Ajay, Anindya, and Abhishek. At ICICI Bank, our strategic focus continues to be on growing profit before tax, excluding treasury, through the 360-degree customer-centric approach and by serving opportunities across ecosystems and micro markets. We continue to operate within the framework of our values to strengthen our franchise. Maintaining high standards of governance, deepening coverage, and enhancing the delivery capabilities with a focus on simplicity and operational resilience are key drivers for our risk-calibrated profitable growth. The profit before tax, excluding treasury, grew by 9.1% year-on-year to INR 161.64 billion in this quarter. The core operating profit increased by 6.5% year-on-year to INR 170.78 billion in this quarter.

[Sandeep Bakhshi, CEO at ICICI Bank]

The profit after tax grew by 5.2% year-on-year to INR 123.59 billion in this quarter. Average deposits grew by 9.1% year-on-year and 1.6% sequentially, and average current and savings account deposits grew by 9.7% year-on-year and 2.7% sequentially in this quarter. Total deposits grew by 7.7% year-on-year and 0.3% sequentially at September 30, 2025. The bank's average liquidity coverage ratio for the quarter was about 127%. The domestic loan portfolio grew by 10.6% year-on-year. The quarter-on-quarter growth in domestic loan portfolio was 3.3% at September 30, 2025, compared to 1.5% at June 30, 2025. The retail loan portfolio grew by 6.6% year-on-year and 2.6% sequentially. Including non-fund-based outstanding, the retail portfolio was 42.9% of the total portfolio. The rural portfolio declined by 1% year-on-year and grew by 0.8% sequentially. The business banking portfolio grew by 24.8% year-on-year and 6.5% sequentially.

[Sandeep Bakhshi, CEO at ICICI Bank]

The domestic corporate portfolio grew by 3.5% year-on-year and 1% sequentially. The overall loan portfolio, including the international branches' portfolio, grew by 10% year-on-year and 3.2% sequentially at September 30, 2025. The overseas loan portfolio was 2.3% of the overall loan book at September 30, 2025. The net NPA ratio was 0.39% at September 30, 2025, compared to 0.41% at June 30, 2025, and 0.42% at September 30, 2024. During the quarter, there were net additions of INR 13.86 billion to gross NPAs, excluding write-offs and sales. The total provisions during the quarter were INR 9.14 billion, or 5.4% of core operating profit and 0.26% of average advances. The provisioning coverage ratio on non-performing loans was 75% at September 30, 2025. In addition, the bank continues to hold contingency provisions of INR 131 billion, or about 0.9% of total advances at September 30, 2025.

[Sandeep Bakhshi, CEO at ICICI Bank]

The capital position of the bank continued to be strong with a CET1 ratio of 16.35% and a total capital adequacy ratio of 17% at September 30, 2025, including profits for H1 2026. Looking ahead, we see many opportunities to drive risk-calibrated portfolio growth and grow market share across key segments. We remain focused on maintaining a strong balance sheet, prudent provisioning, and healthy levels of capital while delivering sustainable and predictable returns to our shareholders. I now hand the call over to Anindya.

[Anindya Banerjee, CFO at ICICI Bank]

Thank you, Sandeep. I will talk about loan growth, credit quality, P&L details, and the performance of subsidiaries. On loan growth, Sandeep covered the loan growth across various segments. Coming to the growth across retail products, the mortgage portfolio grew by 9.9% year-on-year and 2.8% sequentially. Auto loans grew by 1.4% year-on-year and were flat sequentially. The commercial vehicles and equipment portfolio grew by 6.4% year-on-year and 0.5% sequentially. Personal loans declined by 0.7% year-on-year and grew by 1.4% sequentially. The credit card portfolio grew by 6.4% year-on-year and 8.4% sequentially. Within the corporate portfolio, the total outstanding to NBFCs and HFCs was INR 794.33 billion at September 30, 2025, compared to INR 874.17 billion at June 30, 2025. The total outstanding loans to NBFCs and HFCs were about 4.4% of our advances at September 30, 2025.

[Anindya Banerjee, CFO at ICICI Bank]

The builder portfolio, including construction finance, lease rental discounting, term loans, and working capital, was INR 635.83 billion at September 30, 2025, compared to INR 628.33 billion at June 30, 2025. The builder loan portfolio was 4.1% of our total loan portfolio. Our portfolio largely comprises well-established builders, and this is also reflected in the sequential increase in the portfolio. About 1.3% of the builder portfolio at September 30, 2025 was either rated BB and below internally or was classified as non-performing. Moving on to credit quality, the gross NPA additions were INR 50.34 billion in the current quarter compared to INR 62.45 billion in the previous quarter and INR 50.73 billion in Q2 of last year.

[Anindya Banerjee, CFO at ICICI Bank]

Recoveries and upgrades from gross NPAs, excluding write-off and sale, were INR 36.48 billion in the current quarter compared to INR 32.11 billion in the previous quarter and INR 33.19 billion in Q2 of last year. The net additions to gross NPAs were INR 13.86 billion in the current quarter compared to INR 30.34 billion in the previous quarter and INR 17.54 billion in Q2 of last year. The gross NPA additions from the retail and rural portfolios were INR 40.49 billion in the current quarter compared to INR 51.93 billion in the previous quarter and INR 43.41 billion in Q2 of last year. We typically see higher NPA additions from the Kisan credit card portfolio in the first and third quarter of a fiscal year.

[Anindya Banerjee, CFO at ICICI Bank]

Recoveries and upgrades from the retail and rural portfolios were INR 26.1 billion in the current quarter compared to INR 25.25 billion in the previous quarter and INR 25.92 billion in Q2 of last year. The net additions to gross NPAs in the retail and rural portfolios were INR 14.39 billion in the current quarter compared to INR 26.68 billion in the previous quarter and INR 17.49 billion in Q2 of last year. The gross NPA additions from the corporate and business banking portfolios were INR 9.85 billion in the current quarter compared to INR 10.52 billion in the previous quarter and INR 7.32 billion in Q2 of last year. Recoveries and upgrades from the corporate and business banking portfolios were INR 10.38 billion in the current quarter compared to INR 6.86 billion in the previous quarter and INR 7.27 billion in Q2 of last year.

[Anindya Banerjee, CFO at ICICI Bank]

There were net deletions of gross NPAs of INR 0.53 billion in the current quarter in the corporate and business banking portfolio compared to net additions of INR 3.66 billion in the previous quarter and INR 0.05 billion in Q2 of last year. The gross NPAs written off during the quarter were INR 22.63 billion. Further, there was sale of NPA of INR 0.06 billion, mainly for cash in the current quarter. The non-fund-based outstanding to borrowers classified as non-performing declined to INR 23.22 billion as of September 30, 2025, from INR 32.98 billion as of June 30, 2025, and INR 33.82 billion as of September 30, 2024. The loans and non-fund-based outstanding to performing corporate borrowers rated BB and below increased to INR 36.61 billion at September 30, 2025, from INR 29.95 billion at June 30, 2025, and INR 33.86 billion at September 30, 2024.

[Anindya Banerjee, CFO at ICICI Bank]

This portfolio was about 0.3% of our advances at September 30, 2025. The increase during the quarter was due to the upgrade of certain borrowers having non-fund outstanding from non-performing to performing status. The total fund-based outstanding towards standard borrowers under resolution as per various guidelines declined to INR 16.24 billion, or about 0.1% of the total loan portfolio at September 30, 2025, from INR 17.88 billion at June 30, 2025, and INR 25.46 billion at September 30, 2024. Of the total fund-based outstanding under resolution at September 30, 2025, INR 14.84 billion was from the retail and rural portfolios, and INR 1.4 billion was from the corporate and business banking portfolios. At the end of September, the total provisions, other than specific provisions on fund-based outstanding to borrowers classified as non-performing, were INR 26.2 billion, or 1.6% of loans.

[Anindya Banerjee, CFO at ICICI Bank]

This includes the contingency provisions of INR 131 billion, as well as general provision on standard assets, provisions held for non-fund-based outstanding to borrowers classified as non-performing, fund and non-fund-based outstanding to standard borrowers under resolution, and the BB and below portfolio. Moving on to the P&L details, net interest income increased by 7.4% year-on-year to INR 215.29 billion in this quarter. The net interest income was INR 216.35 billion in the previous quarter, which included interest on tax refund of INR 3.61 billion. The net interest margin was 4.30% in this quarter compared to 4.34% in the previous quarter and 4.27% in Q2 of last year. The benefit of interest on tax refund was nil in the current quarter compared to seven basis points in the previous quarter and nil in Q2 of last year.

[Anindya Banerjee, CFO at ICICI Bank]

The margins for the quarter reflect the benefit from the reduction in deposit rates and cost of borrowings, as well as the impact of repricing of external benchmark-linked loans and investments. Of the total domestic loans, interest rates on about 55% of the loans are linked to the repo rate and other external benchmarks, 14% to MCLR and other older benchmarks, and the remaining 31% of loans have fixed interest rates. The domestic NIM was 4.37% in this quarter compared to 4.40% in the previous quarter and 4.34% in Q2 of last year. The cost of deposits was 4.64% in this quarter compared to 4.85% in the previous quarter and 4.88% in Q2 of last year. Non-interest income, excluding treasury, grew by 13.2% year-on-year and 1.3% sequentially to INR 73.56 billion in Q2 of FY 2026.

[Anindya Banerjee, CFO at ICICI Bank]

Free income increased by 10.1% year-on-year and 10% sequentially to INR 64.91 billion in this quarter. Fees from retail, rural, and business banking customers constituted about 78% of the total fees in this quarter. Dividend income from subsidiaries was INR 8.1 billion in this quarter compared to INR 13.36 billion in the previous quarter and INR 5.41 billion in Q2 of last year. The timing of receipt of final dividend depends on the annual general meetings of the respective subsidiaries, which are generally held in the first quarter of a fiscal year. The year-on-year increase in dividend income was primarily due to the receipt of interim dividends from ICICI Securities and ICICI Ventures. On costs, the bank's operating expenses increased by 12.4% year-on-year and 3.6% sequentially in this quarter.

[Anindya Banerjee, CFO at ICICI Bank]

Employee expenses increased by 5% year-on-year and declined by 8.5% sequentially in this quarter, mainly due to lower provisioning requirements for retirement benefits. Non-employee expenses increased by 17.3% year-on-year and 12.2% sequentially in this quarter. The year-on-year and sequential increase in non-employee expenses reflects retail business-related expenses and festive season-related marketing spends. Our branch count has increased by 263 in H1 of the current year. We had 7,246 branches as of September 30, 2025. The technology expenses were about 11% of our operating expenses in H1 of the current year. The total provisions during the quarter were INR 9.14 billion, or 5.4% of core operating profit and 0.26% of average advances, compared to the provisions of INR 18.15 billion in Q1 of 2026 and INR 12.33 billion in Q2 of last year. The sequential decline in provisions reflects the impact of KCC seasonality and healthy asset quality across segments.

[Anindya Banerjee, CFO at ICICI Bank]

The annualized credit cost was about 40 bps in H1 of the current year, similar to that in H1 of last year. The profit before tax, excluding treasury, grew by 9.1% year-on-year and 3% sequentially to INR 161.64 billion in this quarter. Treasury income was INR 2.20 billion in Q2 of the current year as compared to INR 12.41 billion in Q1 and INR 6.80 billion in Q2 of the previous year. The lower treasury income during this quarter primarily reflects the increase in yield on fixed income securities. The tax expense was INR 40.25 billion in this quarter compared to INR 37.44 billion in the corresponding quarter last year. The profit after tax grew by 5.2% year-on-year to INR 123.59 billion in this quarter. Moving on to the consolidated results, the consolidated profit after tax grew by 3.2% year-on-year to INR 133.57 billion in this quarter.

[Anindya Banerjee, CFO at ICICI Bank]

The details of the financial performance of key subsidiaries are covered in slides 33 to 34 and 53 to 58 in the investor presentation. The annualized premium equivalent of ICICI Prudential Life Insurance was INR 42.86 billion in H1 of this year compared to INR 44.67 billion in H1 of last year. The value of new business was INR 10.49 billion in H1 of this year compared to INR 10.58 billion in H1 of last year. The value of new business margin was 24.5% in H1 of this year compared to 22.8% in FY 2025 and 23.7% in H1 of last year. The profit after tax of ICICI Prudential Life Insurance was INR 6.01 billion in H1 of this year compared to INR 4.77 billion in H1 of last year and INR 2.99 billion in this quarter compared to INR 2.52 billion in Q2 of last year.

[Anindya Banerjee, CFO at ICICI Bank]

Gross direct premium income of ICICI Lombard General Insurance was INR 65.96 billion in this quarter compared to INR 67.21 billion in Q2 of last year. The combined ratios to that are 105.1% in this quarter compared to 104.5% in Q2 of last year. Excluding the impact of cash losses of INR 0.93 billion in this quarter and INR 0.94 billion in Q2 of last year, the combined ratio was 103.8% and 102.6% respectively. The profit after tax increased to INR 8.2 billion in this quarter compared to INR 6.94 billion in Q2 of last year. With effect on October 1, 2024, long-term products are accounted on one-by-end basis as mandated by IRDA, hence Q2 numbers are not fully comparable with prior periods. The profit after tax of ICICI AMC as per NBS was INR 8.35 billion in this quarter.

[Anindya Banerjee, CFO at ICICI Bank]

The profit after tax of ICICI Securities as per NBS on a consolidated basis was INR 4.25 billion in this quarter compared to INR 5.29 billion in Q2 of last year. ICICI Bank Canada had a profit after tax of CAD 6.3 million in this quarter compared to CAD 19.1 million in Q2 of last year. ICICI Bank UK had a profit after tax of USD 6.4 million in this quarter compared to USD 8 million in Q2 of last year. As per NBS, ICICI Home Finance had a profit after tax of INR 2.03 billion in the current quarter compared to INR 1.83 billion in Q2 of last year. With this, we conclude our opening remarks, and we will now be happy to take your questions.

[Operator]

Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. In order to ensure that management is able to answer queries from all participants, kindly restrict your questions to two at a time. You may join back the queue for follow-up questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Mahrukh Adajania from Nuvama Wealth Management Limited. Please go ahead.

[Mahrukh Adajania, Senior Equity Research Analyst at Nuvama Wealth Management Ltd]

Hi, congratulations. My first question was on growth. Do you already see green shoots on growth? Do you see growth accelerating after so many measures taken by the government? Will we reach like close to mid-teens by the end of the year? Is that an assessment we can make right now? That's my first question.

[Anindya Banerjee, CFO at ICICI Bank]

I think whatever we have seen in the quarter, certainly growth has picked up. If you see the sequential growth in Q2 across all the retail portfolios, it certainly has picked up. Business banking growth continues to be strong, and we hope that these trends will sustain. We are positive on the growth outlook. We would not really be giving a specific year-end loan growth number, but certainly both in terms of what is happening in the market and our own continuing investment in distribution and allocating capacity to the higher growth opportunities, that continues, and we continue to focus on that.

[Mahrukh Adajania, Senior Equity Research Analyst at Nuvama Wealth Management Ltd]

Would you see corporate picking up? Any comments on the corporate loan growth environment?

[Anindya Banerjee, CFO at ICICI Bank]

I think corporate India is very well funded. They have very strong balance sheets, and they have access to many forms of funding. Banks are just one of the areas that they look at, and we will take it as it comes. I think we are focused on overall the risk-calibrated PPOP journey, and that is how we will look at it. We are very active in the corporate space, but that may reflect more in our transaction banking income or the flows through us, current accounts, etc., and not necessarily in terms of loan growth per se.

[Mahrukh Adajania, Analyst at Nuvama Wealth Management Limited]

Okay, got it. My next question is on margins that they've held up pretty well compared to expectations. This is the bottom, right? From here on, do they stay stable without rate cuts, or can they actually improve?

[Anindya Banerjee, CFO at ICICI Bank]

I would say that you're right. I think margins have done better than expectations, both, you know, of course, quarter on quarter, yes, but I think broadly, you know, through the cycle or where we are now at the, you know, after the large part of the rate cuts have played out, they have done well, which has been aided by the systemic liquidity and the continued, you know, healthy funding profile, as well as I would say the discipline on pricing that we have had consistently over several years. From here on, our expectation is that margins should be more or less range-bound. We don't expect any major movements either way.

[Mahrukh Adajania, Analyst at Nuvama Wealth Management Limited]

Got it. There would still be deposit repricing left, right?

[Anindya Banerjee, CFO at ICICI Bank]

It will move from quarter to quarter. If we look at Q3, there will be, of course, some deposit repricing. There'll also be the full CIR reduction, which will take effect. At the same time, it will be a KCC quarter, as we call it. The level of non-accrual will also go up. There are continuing competitive dynamics in the market. All taken together, I would say that over the next couple of quarters, we see it being rangebound.

[Mahrukh Adajania, Analyst at Nuvama Wealth Management Limited]

Okay, thanks a lot. Thank you.

[Operator]

Thank you. Next question is from the line of Harsh Modi from JPMorgan. Please go ahead.

[Harsh Modi, Analyst at JPMorgan]

Hi. Thanks for this and a fantastic set of numbers. Congratulations. The question is on Kasa. Your Kasa market share has been improving if I look at on the average balance basis. Could you talk a bit about how much visibility do you have in this continued market share gains on Kasa, and what are the two or three areas where you expect this relative advantage to sustain over, let's say, the next 12-18 months? Thank you.

[Anindya Banerjee, CFO at ICICI Bank]

I think the way the Kasa growth has improved over the last few years is because these things really take root over a period of time. I would say three things. One, of course, is the steady expansion in distribution over a period of time. I think our digital platforms do help. Certainly, they are something that attracts customers to the bank and offers convenience to the customers and encourages flows through the bank. Third, I think there are specific segments that we have been focusing on over a period of time. I think business banking is a great example where, while the loan growth is visible, the Kasa growth also in the business banking has been a contributor. Going forward, I think we certainly see the whole transaction banking space as something where we can do more given our distribution and our platforms.

[Anindya Banerjee, CFO at ICICI Bank]

In the corporate space where we have corporate relationships, we can further deepen the synergy of what we are doing on the retail side across both the deposit side and the loan side in the corporate ecosystem. We also, the synergy with the ICICI Direct, through the three-in-one platform, is another area where we could do a lot more. These are some of the levers that we have, which we believe will sustain the Kasa growth going forward. It would be our objective.

[Harsh Modi, Analyst at JPMorgan]

Yeah, makes sense, especially the SME liability. The second bit is on your capital adequacy, 16.1% CET1, if we include the profits. How do we think about the payout ratios with such a solid stock and flow of CET1? Thank you.

[Anindya Banerjee, CFO at ICICI Bank]

Including profits at September, it was 16.35, actually. I think this is kind of currently the level at which most of the large private sector banks, you know, some of them are there, some may be a little higher, actually. No specific plan on payouts. I think our view would be to maintain a strong balance sheet at all times and to leverage the capital for growth. That is what we will try to do.

[Harsh Modi, Analyst at JPMorgan]

Thank you.

[Operator]

Thank you. Next question is from the line of Anand Swaminathan from Bank of America. Please go ahead.

[Anand Swaminathan, Equity Research Analyst at Bank of America]

Thank you. I have a couple of questions. Sandeep, first question to you. Are you in a position to give us any color on your intention to continue for another term? I think investors have been looking for some clarity around that. Any color on that would be great. Number two, in terms of the trade-off between growth and profitability, we have now sustainably developed the 30-40 bps ROA difference versus even the next best peer. Are we giving up some growth as part of it? Is there a scenario where we could accept the 10-20 bps lower ROAs and go for higher growth? Where are we in that thought process now? Any color would be great. Thank you.

[Anindya Banerjee, CFO at ICICI Bank]

Yeah, so I'll take both the questions, Anand. As far as the position of CEO is concerned, you are aware that there is still a year to go, and the board will take a view and decide, and disclosure will be made at the appropriate time. On this trade-off point, we don't really look at it as a trade-off between growth and profitability. Our aim is, and what we operate to is the risk-adjusted PPOP, and that has to be done in a framework which is sustainable. We have to have an appropriate framework for pricing. Of course, we can always tactically do trade-offs, keeping the overall opportunity in mind. By and large, we don't think about it in terms of a trade-off between growth and profitability. We think about it in terms of a sustainable sort of accretion to the PPOP over a period of time.

[Anindya Banerjee, CFO at ICICI Bank]

The ROA is more of an outcome. We have never targeted that we will have a 2.3% ROA or something like that. It's basically been an outcome of the way the business has evolved.

[Anand Swaminathan, Equity Research Analyst at Bank of America]

Yeah, sure. Makes sense. I just wanted to, in your kind of mind, you're not leaving any growth on the table to achieve these ROAs. That's the point you're making.

[Anindya Banerjee, CFO at ICICI Bank]

I'm saying I don't think we are leaving any long-term PPOP growth on the table. We could always do a little bit more. Obviously, we certainly believe that we are not doing that as much as the franchise can deliver, and it should deliver more over a period of time. We would rather think of it in terms of the PPOP opportunity, risk-adjusted, rather than loan growth per se.

[Harsh Modi, Analyst at JPMorgan]

Sure. Makes sense. Thanks, sir. Thanks a lot.

[Operator]

Thank you. We'll take our next question from the line of Kunal Shah from Citigroup. Please go ahead.

[Kunal Shah, Director at Citigroup]

Yeah. Hi. The question is, on the growth side, particularly looking at the various segments of retail, like vehicle. Obviously, the industry-wide volumes were down, but with the GST cuts, we have seen the momentum. Should we expect any uptake out there on the vehicle loans? How has been the initial, maybe 15, 20 days of feedback? Plus, personal loans, are we comfortable on the overall trade cost? When should we start to see the growth out there? It's been just flat on both year-on-year and a quarter-on-quarter basis. Even on the mortgages, obviously, it's competitive and not PPOP accretive to an extent. How should we look at the overall mortgage growth going forward? Yeah.

[Anindya Banerjee, CFO at ICICI Bank]

As I said, overall, if you see, the loan growth has picked up from 1% sequentially in the previous quarter to 3% in this quarter. We are positive on growth, both in terms of the market opportunity and the way we are continuing to gear up our distribution and allocate resources to growth segments and growth markets. We would hope to see growth in these segments. As far as the question on personal loans is concerned, if you look at the overall retail NPL, the additions have declined both year-on-year and sequentially, despite the growth in the balance sheet. We do see healthy asset quality across all the segments. As we have said in the past, we had taken a number of corrective actions on personal loans in 2022-2023, and the cohorts of origination post that, we are quite happy with the performance. We are increasing our disbursements there.

[Anindya Banerjee, CFO at ICICI Bank]

It may take a little while to show up in book growth because, obviously, there's a runoff as well. In terms of doing more, we are quite happy to do, and we are moving on that front.

[Kunal Shah, Director at Citigroup]

Okay. On the deposit side, LDRs have been expanding the past couple of quarters, almost 400-odd basis points, kind of an expansion in the LDR. The pace on loan growth still seems to be higher than the deposit growth. It has helped manage margins as well. How would we look at it from here on? Maybe the pressure on the repricing on the margins would be relatively low now at almost 87%+ LDR. How should we see this ratio settling? On the term deposit side, would we garner more of the term deposits just to make sure that it is in line with the loan growth from here on?

[Anindya Banerjee, CFO at ICICI Bank]

I don't think that it's really right to compare the September LDR with the June LDR. First of all, LDR is just a quarter-end measure, whereas what happens on the balance sheet depends on what happens on an average basis. I think for most of the large banks, to the extent I've seen, LDRs would have gone up in Q2 because most of the large banks would have seen relatively lower growth and good deposit inflows and been carrying higher liquidity at the end of Q1. I think LDRs have expanded across the system and at overall system level as well. In fact, I would think that as the CRR cuts take effect in Q3, the natural corollary would be that LDRs will go up further because that is what would happen when liquidity gets released. From our perspective, we are quite comfortable with where we are.

[Anindya Banerjee, CFO at ICICI Bank]

I think our retail deposit growth, interim CASA, current account growth is pretty good. We are quite comfortable with the current levels, and we have the ability to grow further. On the wholesale side, we do optimize between various types of funding, and that's the way we look at it. I think the current levels of LDR, maybe even slightly higher with a lower CRR requirement, are quite sustainable.

[Kunal Shah, Director at Citigroup]

Okay. Lastly, in terms of the RBI directions, any initial commentary in terms of the impact which we could see on account of ECL or maybe the risk-wise benefit which would come in, say, in the various rating of the corporates plus the home loans and the MSME?

[Anindya Banerjee, CFO at ICICI Bank]

On the capital side, of course, these segments will give a benefit. There are other segments where risk weights are being proposed to be increased, where that would take away some of that benefit. Net-net, I guess, for most banks, it would be a positive. The guideline is still open for comments, so we'll have to wait to see what is the final guideline that RBI issues after whatever submissions they receive. Similar is the case with ECL. It's again open for comment, and we'll have to see what the final guidelines come out. On ECL, as far as the transition point is concerned, I think given the level of provisioning that we hold on the balance sheet, we should be okay. On what credit costs will look like under an ECL regime on an ongoing basis is something we have to still work out and assess.

[Kunal Shah, Director at Citigroup]

Got it. Contingency would be utilized at that point in time?

[Anindya Banerjee, CFO at ICICI Bank]

I think we have to just say that given the overall, because we also provide, for example, on a pretty accelerated basis against NPLs, we hold, you know, provisions, other provisions as well, and there is the contingency provision. All of it, we'll have to reassess at that point in time. Given the totality of the provisioning on the balance sheet and what would be, you know, what the base ECL plus prudential floors suggest, you know, under the draft guidelines, we don't expect any impact as such.

[Kunal Shah, Director at Citigroup]

Sure. Got it. Thanks and all the best here.

[Operator]

Thank you. Next question is from the line of Rikin Shah from IIFL Capital. Please go ahead.

[Rikin Shah, Equity Analyst at IIFL Capital]

Thanks for the opportunity. Few one. The first on OpEx, with festive-related non-salary expenses coming in 2Q this year. Should one expect a sequential decline in OpEx in the third quarter, given that these expenses could have been front-ended?

[Anindya Banerjee, CFO at ICICI Bank]

In that line item, we'll see a decline. I'm not sure I want to say that there'll be a decline in overall OpEx because we continue to invest and we want to, you know, we are quite focused on the growth of the business. I don't expect sequential increases of the kind that we have seen in this quarter.

[Rikin Shah, Equity Analyst at IIFL Capital]

Got it. Second is on retail asset quality. Until now, we've been saying that it has been stable for us, but if we look at the slippages in absolute terms, they are down almost 7% year-over-year when your rural plus retail book has grown 6%. Clearly a huge delta. Are we in a position to now say that the retail slippage or the slippages or the overall asset quality environment has started to improve and not only just stabilize?

[Anindya Banerjee, CFO at ICICI Bank]

I guess the starting point is that we don't think it was particularly bad at any point of time. I mean, I think for the last couple of years, banks have been reporting pretty good, you know, asset quality. If I look at the secured retail, I think it has been pretty stable, maybe getting marginally better for the last, I would say, eight or nine quarters. We did have some spike in the unsecured in the PLN cards. You know, there, of course, the regulator took several actions, and I think individual banks like us would also have taken actions. I think that the benefit of those actions is starting to show up, which is why we are now growing those portfolios again.

[Rikin Shah, Equity Analyst at IIFL Capital]

Got it. Lastly, for one of the peer banks, we saw a PSL classification problem on the crop loans. Just wanted to understand, how do you track the end-use of the crop loans that you give out? Has there been any discussion around this on your portfolio as well with the regulator?

[Anindya Banerjee, CFO at ICICI Bank]

We have our processes for PSL classification, and those get reviewed. A regulator can always examine and have a view, but nothing specific to call out at this point in time.

[Rikin Shah, Equity Analyst at IIFL Capital]

Got it. Perfect. Thanks, Anindya, and wishing you and the broader team Happy Diwali.

[Anindya Banerjee, CFO at ICICI Bank]

Thank you so much.

[Operator]

Thank you. Next question is from the line of Piran Engineer from CLSA Limited. Please go ahead.

[Piran Engineer, Research Analyst at CLSA Ltd]

Yeah. Hi, congrats on a good set of numbers and Happy Diwali. Firstly, just on NIMs, why do you say they'll be largely rangebound for the next two quarters? I understand next quarter you're talking about the interest reversals and credit cards. Why shouldn't NIMs improve instantly for the next four to six quarters?

[Anindya Banerjee, CFO at ICICI Bank]

I think that we are, I would say we've been navigating the cycle reasonably well, and the NIMs have come in at this level. Over the next few quarters, we will see there are too many moving parts in terms of monetary policy, the competitive dynamic, loan mix, and so on. We will see it as it comes. We've not really taken a view on next year. For the next couple of quarters, it should be rangebound.

[Piran Engineer, Research Analyst at CLSA Ltd]

Okay. Let me harp on this in another way. Out of your INR 9.5 lakh growth term deposit growth, how much was acquired in the last six months?

[Anindya Banerjee, CFO at ICICI Bank]

We don't really give data of that kind. I think on the NIM question, we have given our perspective.

[Piran Engineer, Research Analyst at CLSA Ltd]

Okay. Fair enough. Okay. Secondly, just moving on to this more provision for retirement benefits. This was because of higher GSEC yields or what caused this sudden growth?

[Anindya Banerjee, CFO at ICICI Bank]

If you look at it, I think every year there is some decline from Q1 to Q2 because in Q1, when the increments, etc., given the gratuity-related provisions and so on, we threw them up. We also have certain employees who are on pensions, who are mainly the retired colleagues who were earlier working with some of the acquired entities. They are entitled to DNS allowance. This year, there's been no increase in the DNS allowance. Those would be the two main factors.

[Piran Engineer, Research Analyst at CLSA Ltd]

Okay. If I have to think of it, think of modeling this going forward, clearly, two should not be the correct base to model growth of.

[Operator]

Piran, I'm sorry. Your voice was breaking.

[Piran Engineer, Research Analyst at CLSA Ltd]

Okay, am I audible now?

[Anindya Banerjee, CFO at ICICI Bank]

I don't have a sense of what kind of increments, etc., will happen. We can't really model it for you. As I said, over the next couple of quarters, I don't expect overall OpEx to increase at the pace at which it has in the current quarter.

[Piran Engineer, Research Analyst at CLSA Ltd]

Got it. Fair enough. Just lastly, getting back to Rikin's question on slippages. Now, slippages are down meaningfully even if you adjust for the SEC portfolio. Is all of that improvement attributable to PLCC, or are we seeing improvement in other retail segments also?

[Anindya Banerjee, CFO at ICICI Bank]

We have given, first of all, the breakup between retail and rural and corporate and business banking. There is actually a small net deletion in corporate and business banking. I would say you're right. Across most of the other retail.

[Piran Engineer, Research Analyst at CLSA Ltd]

I'm referring to retail and rural, Anindya. It's more of an INR 1.2 billion improvement.

[Anindya Banerjee, CFO at ICICI Bank]

In most of the other retail portfolios also, there has been some improvement sequentially.

[Piran Engineer, Research Analyst at CLSA Ltd]

Got it. Okay. That answers all my questions. Thank you. Wish you a Happy Diwali. Also, just one request. I've made this in the past. If you could please, you know, do something about the Saturday results thing. It just gets too much for all of us. I understand you all want to keep, you know, your data secret and no leakage and all of that. Maybe if you could release results on Friday night and then 9:00 A.M. on Saturday, keep a con call. That just helps us a lot. Please just try to look into it.

[Operator]

Thank you. Next question is from the line of Chintan Joshi in Autonomous. Please go ahead.

[Chintan Joshi, Analyst at Autonomous Research]

Thank you. Can I come back on the capital points? The credit risk reduction seems substantial. You highlighted it's a net positive. Your CET1 ratios are also very high. I understand that's where the larger banks operate. Isn't there an opportunity here to grow at the pace you want to grow, take the opportunity there is on the table, and yet improve payouts? From our vantage point, the top three banks in the system are swimming in capital. Just want to get some thoughts on how this might play out as you look, as these guidances and the draft reports become more concrete.

[Anindya Banerjee, CFO at ICICI Bank]

We will take a view at that point in time. If this is any way going to kick in a year and a half from now, a lot of it depends on what is the position of the balance sheet at that point in time and which are the segments where we have seen growth. Overall, capital is not constraining us from growing. We are continuing to focus on the kind of growth that we want.

[Chintan Joshi, Analyst at Autonomous Research]

In fact, your capital is, you know, your retail earnings is enough to grow already. On ECL, could you give us some color from your last submission? You said there is no impact for you. I'm assuming that's no impact, including the provisions you have on the balance sheet. You would assume that they will be utilized when you say no impact.

[Anindya Banerjee, CFO at ICICI Bank]

I guess it depends on what form the final guidelines take, but we have to look at the total provisions on the balance sheet in totality, including NPL and other provisions. We don't expect that there should be any impact.

[Chintan Joshi, Analyst at Autonomous Research]

It could even be positive because from what I can see, you have more than enough provisions on your balance sheet. They come back into your CET1 if they are excessive. Shouldn't this become almost CET1 accretive at some point?

[Anindya Banerjee, CFO at ICICI Bank]

Yeah, it's very difficult to say it now. In any case, this is something which will really depend upon the balance sheet at the point of transition.

[Chintan Joshi, Analyst at Autonomous Research]

The final point, you are one of the two large players in salaried accounts. How much of your salaried accounts come from the IT services area? There is so much hype around here. I'm just wondering if there are unemployment issues in that section. How much would it impact you? How do you think about that?

[Anindya Banerjee, CFO at ICICI Bank]

For any bank with salaried accounts, the IT services sector and similar sectors would account for a good share of the salary accounts because they are a good share of that employment in the country, salaried employment in the country. So far, we have not seen any impact.

[Chintan Joshi, Analyst at Autonomous Research]

Thank you.

[Operator]

Thank you. Ladies and gentlemen, we'll take that as the last question for today. I now hand the conference over to Management for closing comments. Over to you, sir.

[Anindya Banerjee, CFO at ICICI Bank]

Thank you very much, and wish you all a very, very Happy Diwali. Thank you.

[Operator]

Thank you. On behalf of ICICI Bank, that concludes this conference. Thank you for joining us, and you may now disconnect.

Participants

Executives

• Anindya Banerjee, CFO
• Sandeep Bakhshi, CEO

Analysts

• Piran Engineer, Research Analyst at CLSA Ltd
• Mahrukh Adajania, Analyst at Nuvama Wealth Management Limited
• Mahrukh Adajania, Senior Equity Research Analyst at Nuvama Wealth Management Ltd
• Anand Swaminathan, Equity Research Analyst at Bank of America
• Chintan Joshi, Analyst at Autonomous Research
• Rikin Shah, Equity Analyst at IIFL Capital
• Kunal Shah, Director at Citigroup
• Harsh Modi, Analyst at JPMorgan