ICICI Bank Q2 25/26 Earnings Call Transcript

Quartr
Provided by Quartr
October 18, 2025

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.
AI Generated. May Contain Errors.
Earnings Conference Call
ICICI Bank Q2 25/26
00:00 / 00:00

There are 10 speakers on the call.

Operator

Ladies and gentlemen, please stay connected. The call will begin in next two to three minutes. Thank you. Ladies and gentlemen, you're connected for the ICICI Bank earnings conference call. Please stay connected.

Operator

The call will begin in next few minutes. Thank you. Ladies and gentlemen, good day, and welcome to the Q2 FY twenty twenty six 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. Please note that this conference is being recorded.

Operator

I now hand the conference over to Mr. Sandeep Bakshi, Managing Director and Chief Executive Officer of ICICI Bank. Thank you, and over to you, sir.

Speaker 1

Thank you. Good evening to all of you, and welcome to the ICICI Bank earnings call to discuss the results of Q2 of financial year 2026. Joining us today on this call are Sandeep Batra Rakesh, Ajay, Anandiya and Abhinig. At ICICI Bank, our strategic focus continues to be on growing profit before tax excluding treasury through the three sixty 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.

Speaker 1

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 161,640,000,000.00 in this quarter. The core operating profit increased by 6.5% year on year to INR 170,780,000,000.00 in this quarter. The profit after tax grew by 5.2% year on year to INR123.59 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.

Speaker 1

Total deposits grew by 7.7% year on year and 0.3% sequentially at 09/30/2025. 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 09/30/2025 compared to 1.5% at 06/30/2025. The retail loan portfolio grew by 6.6 year on year and 2.6% sequentially.

Speaker 1

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. 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 09/30/2025.

Speaker 1

The overseas loan portfolio was 2.3% of the overall loan book at 09/30/2025. The net NPL ratio was 0.39% at 09/30/2025 compared to 0.41% at 06/30/2025 and zero point four two percent at 09/30/2024. During the quarter, there were net additions of INR 13,860,000,000.00 to gross NPAs excluding write offs and sales. The total provisions during the quarter were INR 9,140,000,000.00 or 5.4% of core operating profit and 0.26% of average advances. The provisioning coverage ratio on non performing loans was 75% at 09/30/2025.

Speaker 1

In addition, the bank continues to hold contingency provisions of 131,000,000,000 or about 0.9% of total advances at 09/30/2025. The capital position of the bank continued to be strong with the CET1 ratio of 16.35% and total capital adequacy ratio of 17% at September 2025, including profits for H1 twenty twenty six. 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 for our shareholders. I now hand the call over to Anandir.

Speaker 2

Thank you, Sandeep. I will talk about loan growth, credit quality, P and 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.

Speaker 2

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 794,330,000,000.00 at 09/30/2025 compared to INR 874,170,000,000.00 at 06/30/2025. The total outstanding loans to NBFCs and HFCs were about 4.4% of our advances at 09/30/2025.

Speaker 2

The builder portfolio, including construction finance, lease rental counting term loans and working capital was INR 635,830,000,000.00 at 09/30/2025 compared to INR 628,330,000,000.00 at 06/30/2025. 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 09/30/2025, was either rated BB and below internally or was classified as nonperforming. Moving on to credit quality.

Speaker 2

The gross NPA additions were INR50.34 billion in the current quarter compared to INR62.45 billion in the previous quarter and INR50.73 billion in Q2 of last year. Recoveries and upgrades from gross NPAs, including write off excluding write off and sale, were INR36.48 billion in the current quarter compared to INR32.11 billion in the previous quarter and INR 33,190,000,000.00 in Q2 of last year. The net additions to gross NPAs were INR 13,860,000,000.00 in the current quarter compared to INR 30,340,000,000.00 in the previous quarter and INR 17,540,000,000.00 in Q2 of last year. The gross NPE additions from the retail and rural portfolios were INR 40,490,000,000.00 in the current quarter compared to INR 51,930,000,000.00 in the previous quarter and INR 43,410,000,000.00 in Q2 of last year. We typically see higher NPA additions from the Kissan credit card portfolio in the first and third quarter of the fiscal year.

Speaker 2

Recoveries and upgrades from the retail and rural portfolios were INR 26,000,000,000 in the current quarter compared to INR25.25 billion in the previous quarter and INR25.92 billion in Q2 of last year. The net additions to gross NPAs in the retail and rural portfolios were INR 14,390,000,000.00 in the current quarter compared to INR 26,680,000,000.00 in the previous quarter and INR 17,490,000,000.00 in Q2 of last year. The gross NPA additions from the Corporate and Business Banking portfolios were INR 9,850,000,000.00 in the current quarter compared to INR 10,520,000,000.00 in the previous quarter and INR 7,320,000,000.00 in Q2 of last year. Recoveries and upgrades from the corporate and business banking portfolios were INR 10,380,000,000.00 in the current quarter compared to INR 6,860,000,000.00 in the previous quarter and INR 7,270,000,000.00 in Q2 of last year. There were thus net deletion of gross NPAs of INR 530,000,000.00 in the current quarter in the Corporate and Business Banking portfolio compared to net additions of INR 3,660,000,000.00 in the previous quarter and INR 50,000,000.00 in Q2 of last year.

Speaker 2

The gross NPAs written off during the quarter were INR 22,630,000,000.00. Further, there was sale of NPA of billion, mainly for cash in the current quarter. The non fund based outstanding to borrowers classified as nonperforming declined to 3,220,000,000.00 as of 09/30/2025, from INR 32,980,000,000.00 as of 06/30/2025, and INR 33,820,000,000.00 as of 09/30/2024. The loans and non fund based outstanding to performing corporate borrowers, rated BB and below, increased to INR36.61 billion at 09/30/2025, from billion at 06/30/2025 and INR33.86 billion at 09/30/2024. This portfolio was about 0.3% of our advances at 09/30/2025.

Speaker 2

The increase during the quarter was due to the upgrade of certain borrowers having non fund outstanding from nonperforming to performing status. The total fund based outstanding towards standard borrowers under resolution as per various guidelines declined to INR 16,240,000,000.00 or about 0.1% of the total loan portfolio at 09/30/2025, from INR17.88 billion at 06/30/2025 and INR25.46 billion at 09/30/2024. Of the total fund based outstanding under resolution at 09/30/2025, INR 14,840,000,000.00 was from the retail and rural portfolios and INR 1,400,000,000.0 was from the corporate and business banking portfolios. At the September, the total specific provisions on fund based outstanding to borrowers classified as nonperforming were INR 26,200,000,000.0 or 1.6% of loans. This includes the contingency provisions of INR 131,000,000,000 as well as general provision on standard assets, provisions held for non fund based outstanding to borrowers classified as nonperforming, fund and non fund based outstanding to standard borrowers under resolution and the BB and below portfolio.

Speaker 2

Moving on to the P and L details. Net interest income increased by 7.4% year on year to INR215.29 billion in this quarter. The net interest income was INR 216,350,000,000.00 in the previous quarter, which included interest on tax refund of INR 3,610,000,000.00. The net interest margin was 4.3% 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.

Speaker 2

The margins for the quarter reflect the benefit from reduction in deposit rates and cost of borrowing 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 4.4% 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 INR73.56 billion in 2026.

Speaker 2

Fee income increased by 10.1% year on year and 10% sequentially to INR 64,910,000,000.00 in this quarter. Fees from retail, rural and business banking customers constituted about 78% of the total fees in this quarter. Dividend income from subsidies was INR 8,100,000,000.0 in this quarter compared to INR 13,360,000,000.00 in the previous quarter and INR 5,410,000,000.00 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 our fiscal year. The year on year increase in dividend income was primarily due to the receipt of interim dividend from ICCI Securities and ICCI Ventures.

Speaker 2

On costs, the bank's operating expenses increased by 12.4% year on year and 3.6% sequentially in this quarter. Employee expenses increased by 5% year on year and declined by 8.5% sequentially in this quarter, mainly due to lower provisioning requirements for the title benefits. Nonemployee expenses increased by 17.3% year on year and 12.2% sequentially in this quarter. The year on year and sequential increase in nonemployee expenses reflects retail business related expenses and festive season related marketing spend. Our branch count has increased by two sixty three in H1 of the current year.

Speaker 2

We had 7,246 branches as of 09/30/2025. The technology expenses were about 11% of our operating expenses in H1 of the current year. The total provisions during the quarter were INR 9,140,000,000.00 or 5.4% of core operating profit and 0.26% of average advances compared to the provisions of INR 18,150,000,000.00 in 2026 and INR12.33 billion in Q2 of last year. The sequential decline in provisions reflects the impact of KCC seasonality and healthy asset quality across segments. The annualized credit cost was about 40 basis points in H1 of the current year, similar to that in H1 of last year.

Speaker 2

The profit before tax, excluding treasury, grew by 9.1% year on year and 3% sequentially to INR 161,640,000,000.00 in this quarter. Treasury income was INR 2,200,000,000.0 in Q2 of the current year as compared to INR 12,410,000,000.00 in Q1 and INR 6,800,000,000.0 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 40,250,000,000.00 in this quarter compared to INR 37,440,000,000.00 in the corresponding quarter last year. The profit after tax grew by 5.2% year on year to INR123.59 billion in this quarter.

Speaker 2

Moving on to the consolidated results. The consolidated profit after tax grew by 3.2% year on year to INR 133,570,000,000.00 in this quarter. The details of the financial performance of key subsidiaries are covered in Slides 33 to thirty four and fifty three to 58 in the investor presentation. The annualized premium equivalent of ICICI Life was INR 42,860,000,000.00 in H1 of this year compared to INR 44,700,000,000.0 in H1 of last year. The value of new business was INR 10,490,000,000.00 in H1 of this year compared to INR 10,580,000,000.00 in H1 of last year.

Speaker 2

The value of new business margin was 24.5% in H1 of this year compared to 22.8% in FY 2025 and twenty three point seven percent in H1 of last year. The profit after tax of ICICI Life was INR 6,010,000,000.00 in H1 of this year compared to INR 4,770,000,000.00 in H1 of last year and INR 2,990,000,000.00 in this quarter compared to INR 2,520,000,000.00 in Q2 of last year. Gross direct premium income of SACA General was INR 65,960,000,000.00 in this quarter compared to INR 67,210,000,000.00 in Q2 of last year. The combined ratio stood at 105.1% in the quarter compared to 104.5% in Q2 of last year. Excluding the impact of cat losses of INR 300,000,000.0 in this quarter and INR 940,000,000.00 INR 730,000,000.00, pardon me, in this quarter and INR0.94 billion in Q2 of last year.

Speaker 2

The combined ratio was 103.8102.6%, respectively. The profit after tax increased to INR8.2 billion in this quarter compared to 940,000,000.00 in Q2 of last year. With effect of 10/01/2024, long term products are accounted on one by end basis as mandated by IRDI, hence Q2 numbers are not fully comparable with prior periods. The profit after tax of ICICI AMC as per Ind AS was 8,350,000,000.00 in this quarter. The profit after tax of ICICI Securities as per Ind AS on a consolidated basis was INR 4,250,000,000.00 in this quarter compared to INR 5,290,000,000.00 in Q2 of last year.

Speaker 2

ICICI Bank Canada had a profit after tax of CAD 6,300,000.0 in this quarter compared to CAD 19,100,000.0 in Q2 of last year. ICICI Bank UK had a profit after tax of USD 6,400,000.0 in this quarter compared to USD 8,000,000 in Q2 of last year. As per India, SICSA Home Finance had a profit after tax of INR 2,030,000,000.00 in the current quarter compared to INR 1,830,000,000.00 in Q2 of last year. With this, we conclude our opening remarks, and we will now be happy to take your

Operator

Thank you very much. We will now begin the question and answer session. 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.

Operator

Take our first question from the line of Mahrukh Adajanya from Nuvaama. Congratulations.

Speaker 3

My first question was on growth. Do you already see green shoots on growth? Do you

Speaker 2

see

Speaker 3

growth accelerating after so many measures taken by the government? And 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.

Speaker 2

So I think whatever we have seen in the quarter, certainly, growth has picked up. So if you see the sequential growth in Q2 across all the retail portfolio 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.

Speaker 3

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

Speaker 2

I think corporate India is very well funded. They have very strong balance sheets, and they have access to many forms of funding. So banks are just one of the things that 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, the current accounts, etcetera, and not necessarily in terms of loan growth per se.

Speaker 3

Okay. Got it. And my next question is on margins that they've held up pretty well compared to expectations. So this is the bottom. Right?

Speaker 3

And from your own, do they stay stable without rate cuts, or they can actually improve?

Speaker 2

So I would say that you're right. I think margins have done better than expectations, both, of course, quarter on quarter, yes. But I think broadly, through the cycle of where we are now at the 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 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.

Speaker 3

Got it. But there would still be deposit repricing left. Right?

Speaker 2

If you might it will move from quarter to quarter. So if we look at q three, there will be, of course, some deposit repricing. There'll also be the full CRR reduction, which will take effect. At the same time, it will be a KCC quarter, as we call it. So the level of nonaccrual will also go up.

Speaker 2

And of course, there are continuing competitive dynamics in the market. So all taken together, as I would say that over the next couple of quarters, we see it being range bound.

Speaker 3

Okay. Thanks a lot. Thank you.

Operator

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

Speaker 4

Hi. Thanks for this kind of fantastic set of numbers. Congratulations. The question is on CASA. Your CASA market share has been improving, if I look at on the average balance basis.

Speaker 4

Could you talk a bit about how much of visibility do you have in this continued market share gains on CASA? And what are the two or three areas where you expect this relative advantage to sustain over, let's say, next twelve, eighteen months?

Speaker 2

So I think where the CASA growth has improved from over the last few years because these things really take over take good 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 to the bank.

Speaker 2

And 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, of course, if the loan growth is visible, the CASA growth also in 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. 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 actually both the deposit side and the loan side in the corporate ecosystem. And I'll be also the synergy with the ICICI Direct through the three in-one platform is another area where we could do a lot more.

Speaker 2

So these are some of the levers that we have, which we believe will sustain the CASA growth going forward. It would be our objective.

Speaker 4

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

Speaker 2

So 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, some of them are there, some may be a little higher actually. So 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.

Speaker 5

Thank you.

Operator

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

Speaker 6

Thank you. So have a couple of questions. Sandeep, first question to you. Are you in a position to kind of give us any color on your intention to continue for another term? I think investors kind of of have been looking for some clarity around that.

Speaker 6

Any color on that would be great. Number two, in terms of the trade off between growth and profitability, you know, we have now kind of, sustainably developed the thirty, forty bps ROA difference versus even the next best peer. Are we kind of giving up some growth as part of it? Is there a scenario where we could accept the ten, twenty bps lower ROAs and go for higher growth? And where are we in that thought process now?

Speaker 6

Any color would be great. Yes.

Speaker 2

So I'll take both the questions, Anand. As far as the position of CEO is concerned, we are aware that there is still a year to go, and the Board will take a take a view and decide, and disclosure will be made at the appropriate time. On the growth trade off point, you know, we don't really look at it as 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. And, you know, we have to have an appropriate framework for pricing.

Speaker 2

And then, of course, we can always tactically do trade offs keeping the overall, you know, opportunity in mind. But by and large, it's we don't think about it in terms of a trade off between growth and profitability. We think about it as in terms of sustainable sort of accretion to the PPOP over a period of time. And the ROA is more of an outcome. I we have never targeted that we will have a 2.3% ROA or something like that.

Speaker 2

It's basically been an outcome of the way the business has evolved.

Speaker 6

No, sure. Makes sense. I just wanted to in your kind of mind, you're not leaving any growth on the table to achieve these ROEs. That's the point you're making.

Speaker 2

I'm saying we I I don't think we are leading any long term PPOP growth on the table. We could always do a little bit more. Obviously, we I know we'd 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. But we would rather think of it in terms of the PPOP opportunity, risk adjusted rather than loan growth per

Speaker 6

Sure. Makes sense. Thanks a lot.

Operator

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

Speaker 5

So the is, say, on the growth side, but particularly looking at the various segments of retail, like, say, vehicle, obviously, the industry wide volumes were down, but with the GST cuts, we have seen the momentum. So should we expect any uptick out there on the vehicle loan? 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?

Speaker 5

It's been just flat on both year on year and a quarter on quarter basis. So that's even on the mortgages, obviously, it's competitive and not PPOP accretive to an extent. But how should we look at the overall mortgage growth going forward here?

Speaker 2

So as I said, overall, you see the loan growth has picked up from 1% sequentially in the previous quarter to 3% in this quarter, then 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. So 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 the growth in the balance sheet. And we do see, I think, healthy asset quality across all the segments. So as we have said in the past, we had taken a number of corrective actions on personal loans in 2020 to 2023 and the the cohorts of origination post that, we are quite happy with the performance.

Speaker 2

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

Speaker 5

Okay. And then on the deposit side, so like LDR have been expanding past couple of quarters, almost like 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 does help manage margins as well. How would we look at it from here on?

Speaker 5

Maybe the pressure on the repricing on the margins would be relatively low now at almost 87 plus LDR. How should we see this ratio settling? So maybe 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?

Speaker 2

No. So I don't think that it's really right to compare, you know, 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. The in 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. So I think LDRs have expanded across the system and at overall system level as well.

Speaker 2

In fact, I would think that as the CRR cuts take effect in Q3, LDRs 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. I think our retail deposit growth in term CASA current account growth is pretty good. We we are quite comfortable with the current levels, and we have ability to grow further. On the wholesale side, we do optimize between various types of funding, and, you know, that's the way we look at it.

Speaker 2

I think the current levels of LDR may be even slightly higher with a lower CRR requirement are quite sustainable.

Speaker 5

Okay. Okay. Lastly, in terms of the RVR directions, any initial commentary in terms of the impact which we could see on account of PCL or maybe the risk risk benefit which are which will come in, say, in the various rating of the corporates plus the home loans and the MSME?

Speaker 2

On the capital side, of course, these segments will give a benefit. There are other segments where risk weights are being in have been proposed to be increased where that would take away some of that benefit. But net net, I guess, for most banks, it would be positive. It's 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 submission submission they receive. Similar is the case with ECL.

Speaker 2

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 the what credit costs will look like under an ECL regime on an ongoing basis is something we have to still work out and and assess.

Speaker 5

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

Speaker 2

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 have all the provisions, other provisions as well, and there is the contingency provisions. So 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 the what the base ECL plus Prudential floor suggest under the draft guidelines, we don't expect any impact of that.

Speaker 5

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

Operator

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

Speaker 7

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?

Speaker 2

So I guess in that line item, we will see a decline. I'm not sure I want to say that there will be a decline in overall OpEx because we continue to invest, and we want to 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.

Speaker 7

Got it. Second is on retail asset quality. Until now, you've been saying that it has been stable for us. But if you look at the slippages in absolute terms, they are down almost seven percent Y o Y when your book rural plus retail book has grown 6%. So clearly, a huge delta.

Speaker 7

So 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?

Speaker 2

So I guess, the starting point is that we don't think it was particularly bad at any point of time. I mean, I think the the for the last several years, banks have been reporting banks have been reporting pretty good 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 PL and cards. And there, of course, the regulator took several actions, and I think individual banks like us would also have taken actions.

Speaker 2

And I think that the benefit of those actions is starting to show up, which is why we are now growing those portfolios again.

Speaker 7

Got it. And lastly, for one of the peer banks, we saw some BSL 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? And has there been any discussion around this on your portfolio as well with the regulator?

Speaker 2

As our processes for the PSL classification and will get reviewed, a regulator could always, of course, can always examine and have a view, but nothing specific to call out at this point in time.

Speaker 7

Got it. Perfect. Thanks, Anindya, and wishing you the and the broader team happy Diwaji.

Speaker 2

Thank you so much.

Operator

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

Speaker 8

Yeah. Hi. Congrats on a good set of numbers. I'm happy to. Firstly, just on NIMs, do you say they'll be largely range bound for the next two quarters?

Speaker 8

I understand next quarter, you're talking about the interest reversals, rupee, and credit card. But why should NIMs improve consistently for the next four to six quarters?

Speaker 2

I think that we have, you know, I would say, been navigated the cycle reasonably well and the NIMs have come at 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. So we will see it as it comes. We've not really taken a view on next year. What for the next couple of quarters, it should be range bound.

Speaker 8

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

Speaker 2

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

Speaker 8

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

Speaker 2

So I think if you look at it, I think every year, there is some decline from q one to q two because in q one, when the increments, etcetera, given the gratuity related provisions and so on, which are we drew them up. And we also have certain employees who are on pensions, who mainly the retired colleagues who were earlier working with some of the acquired entities. And there, they are entitled to DRS allowance, and this year, there's been no increase in the DNS allowance. So those would be the two main main factors.

Speaker 8

Okay. So then if I have to think of it think of modeling this going forward, clearly, two

Speaker 4

should not be the correct base to model growth of

Operator

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

Speaker 8

Okay. Am I audible now?

Speaker 2

I don't have a I I don't we have, of course, a sense of what kind of instruments, etcetera, will happen. I we don't we can't really model it for you. But 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. Got it.

Speaker 8

Fair enough. And just lastly, getting back to Rikin's question on slippages. Now slippages are down meaningfully even if you adjust for the SCC portfolio. Is all

Speaker 1

of that

Speaker 8

improvement attributable to PLCC? Or are we seeing improvement in other retail segments also?

Speaker 2

So we have given, first of all, the breakup between retail and rural and corporate and business banking. So there is actually a small net deletion in corporate and business banking. But I would say you're right across most of the other retail sector.

Speaker 8

Retail and rural in India. So it's about a 1,200 crore improvement. Yes?

Speaker 2

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

Speaker 8

Got it. Got it. Okay. That answers all of my questions. Thank you.

Speaker 8

Wish you a happy Diwali. And also just one request, and 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. And I understand you all want to keep, you know, your data, secret and no leakage and all of that.

Speaker 8

Maybe if you could release results on Friday night and then 9AM on Saturday, keep a con call. That just helps us a lot. But please just try to listen to it.

Operator

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

Speaker 9

Thank you. Can I come back on the capital points? You know, so if the risk credit risk reduction seems substantial, you highlighted it's a net positive. Your CET one ratios are also very high. I understand that's where the larger banks operate, but isn't there an opportunity to grow grow at the pace you want to grow or take take the opportunity that is on the table and yet improve payouts.

Speaker 9

Because from our vantage point, you know, the top three banks in the system are swimming in capital. Just want to get some thoughts on, you know, how this might play out as the as you look as these guidances and the draft reports become more concrete?

Speaker 2

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

Speaker 9

Yes. Fact, your capital is your retained 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. So I'm assuming that's no impact including the other provisions you have on the balance sheet.

Speaker 9

So you would assume that they will be utilized when you say no impact?

Speaker 2

I 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, and we don't expect that there should be any impact.

Speaker 9

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

Speaker 2

Yeah. We'll have to see. You know, it's very difficult to, you know, say it now. In any case, you need to do something again, which will really depend upon which will really depend upon the balance sheet at the point of transition.

Speaker 9

And then final point, you know, you are one, you know, one of the two large players in salaried accounts. How much of your salaried accounts come from the IT services area? You know, there's so much hype around AI. Just wondering if there are, you know, kind of unemployment in that section, how much would it impact you? How do you think about that?

Speaker 2

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

Speaker 6

Thank you.

Operator

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

Speaker 2

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 your lines.

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