ICICI Bank Q4 2025 Earnings Report

ICICI Bank EPS Results

• Actual EPS: $0.41
• Consensus EPS: $0.37
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: N/A

ICICI Bank Revenue Results

• Actual Revenue: $3.33 billion
• Expected Revenue: $280.01 billion
• Beat/Miss: Missed by -$276.67 billion
• YoY Revenue Growth: N/A

ICICI Bank Announcement Details

• Quarter: Q4 2025
• Date: 4/19/2025
• Time: Before Market Opens
• Conference Call Date: Saturday, April 19, 2025
• Conference Call Time: 7:30AM ET

ICICI Bank (NYSE:IBN) is a leading private-sector bank in India. The bank was founded in 1955 under the guidance of The World Bank, the government of India, and India’s leading businessmen. The purpose of the bank was to provide financing for industrial projects and it held to that mission until the 1990s. Reforms of India’s financial sector allowed the bank to pursue other avenues including but not limited to consumer banking and loans.

Since then, the maturing of India’s market has allowed the company to expand even further. The company was incorporated as ICICI Bank as part of ICICI Group in 1994 and went on to become the first Asian bank outside of Japan to be listed on the NYSE. Over the years, the bank has merged with several subsidiaries of ICICI Group and with ICICI Group itself as it consolidated its position as a leading bank in India.

Today, ICICI Bank provides a broad array of banking products and financial services in India and internationally including personal and business banking as well as NRI, insurance products, and corporate services. The firm is headquartered in Mumbai and is the 5th largest bank in India with operations in 17 countries including the US, UK, Singapore, and Bahrain.

The company operates its Retail Banking, Wholesale Banking, Treasury, Other Banking, Life Insurance, General Insurance, and Other segments through a network of branches, ATMs, and websites. The company listed 5,418 branches in 2022 and more than 13,340 ATMs as well. The company’s services can all be accessed by phone or through the network of nine websites as well as on mobile devices.

The company offers consumer products ranging from savings to checking as well as retirement and insurance products. The company’s loan products run from home, car, personal, and commercial business loans to loans for gold, loans against securities, collateral-free loans, and financing for importers/exporters, start-up businesses, and education. The bank is particularly strong with its Agri and rural business, farmer finance, and tractor loans.

Among the Other services the company provides are portfolio management, brokerage, foreign exchange, NRI banking (non-resident of India), and family wealth accounts. Business services include commercial and investment banking, access to capital markets, and an array of business finance products. In regard to the bank's health, its senior secured notes carry investment grade ratings from both major rating agencies.

ICICI Bank is committed to aiding India’s economic growth and development. The company operates the ICICI Foundation which works hard at improving financial literacy in an all-inclusive manner.

ICICI Bank Q4 2025 Earnings Call Transcript

Presentation

[Operator]

Sandeep Bakshi, Managing Director and Chief Executive Officer of ICICI Bank. Thank you, and over to you, sir.

[Sandeep Bakhshi, Managing Director & CEO at ICICI Bank]

Thank you. Good evening to all of you, and welcome to the ICICF Bank earnings call to discuss the results for Q4 of FY twenty twenty five. Joining us today on this call are Sandeep Batra, Rakesh, Ajay, Anandiam and Abhinik. 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 a strategic framework to strengthen our franchise.

[Sandeep Bakhshi, Managing Director & CEO at ICICI Bank]

Maintaining high standards of governance, deepening coverage and enhancing delivery capabilities are focus areas for our risk calibrated profitable growth. The profit before tax excluding treasury grew by 13.2% year on year to INR165.34 billion in this quarter and by 11.4% year on year to INR677.13 billion in financial year twenty twenty five. The core operating profit increased by 13.7 year on year to INR174.25 billion in this quarter and by 12.5% year on year to INR653.96 billion in financial year 2025. The profit after tax grew by 18% year on year to INR126.30 billion in this quarter. For the fiscal year twenty twenty five, the profit after tax grew by 15.5% year on year to INR472.27 billion.

[Sandeep Bakhshi, Managing Director & CEO at ICICI Bank]

The consolidated profit after tax grew by 15.7% year on year to INR135.02 billion in this quarter and by 15.3% year on year to INR510.29 billion in financial year 2025. The Board has recommended a dividend of INR11 per share for financial year 2025, subject to requisite approvals. Total deposits grew by 14% year on year and 5.9% sequentially at 03/31/2025. During the quarter, average deposits grew by 11.4% year on year and 1.9% sequentially, and average current and savings accounts deposits grew by 10% year on year and 0.5% sequentially. The Bank's average liquidity coverage ratio for the quarter was about 126.

[Sandeep Bakhshi, Managing Director & CEO at ICICI Bank]

The domestic loan portfolio grew by 13.9% year on year and 2.2% sequentially at 03/31/2025. The retail loan portfolio grew by 8.9% year on year and 2% sequentially. Including non fund based outstanding, the retail portfolio was 43.8% of the total portfolio. The rural portfolio grew by 5.1% year on year and declined by 1.5% sequentially. The business banking portfolio grew by 33.7% year on year and 6.2% sequentially.

[Sandeep Bakhshi, Managing Director & CEO at ICICI Bank]

The domestic corporate portfolio grew by 11.9% year on year and declined by 0.4% sequentially. The overall loan portfolio, including the international branches portfolio grew by 13.3% year on year and 2.1% sequentially at 03/31/2025. The net NPA ratio was 0.39% at 03/31/2025 compared to 0.42% at 12/31/2024 and zero point four two percent at 03/31/2024. The total provisions during the quarter were INR8.91 billion or 5.1% of core operating profit and 0.27% of average advances. The provisioning coverage ratio on non performing loans was 76.2% at 03/31/2025.

[Sandeep Bakhshi, Managing Director & CEO at ICICI Bank]

In addition, the Bank continues to hold contingency provision of INR131 billion or about 1% of total advances at 03/31/2025. The capital position of the Bank continued to be strong with a CET1 ratio of 15.94% and total capital adequacy ratio of 16.55% at 03/31/2025, after reckoning the impact of proposed dividends. Looking ahead, we see many opportunities to drive risk calibrated profitable growth. We believe our focus on Customer three sixty degree extensive franchise and collaboration within the organization, backed by our focus on enhancing delivery systems and simplifying processes, will enable us to deliver holistic solutions to customers in a seamless manner and grow market share across key segments. We will continue to make investments in technology, deeper distribution and building our brand.

[Sandeep Bakhshi, Managing Director & CEO at ICICI Bank]

We are laying strong emphasis on strengthening our operational resilience for seamless delivery of services to customers. We remain focused on maintaining a strong balance sheet with prudent provisioning and healthy levels of capital. The principles of return of capital, fair to customer, fair to bank and One Bank, One Team will continue to guide our operations. We remain focused on delivering consistent and predictable returns to our shareholders. I now hand the call over to Anandiya.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Thank you, Sabeeb. I will talk about loan growth, credit quality, P and L details, technology initiatives, portfolio trends and the performance of subsidiaries. Saveed covered the loan growth across various segments coming to the growth across retail products. The mortgage portfolio grew by 11% year on year and 2.8% sequentially. Auto loans grew by 4.6% year on year and 0.4% sequentially.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

The commercial vehicles and equipment portfolio grew by 7% year on year and 2.9% sequentially. Personal loans grew by 4.2% year on year and 0.6% sequentially. The credit card portfolio grew by 11.7% year on year and 0.9% sequentially. The personal loans and credit card portfolio were 9.14.3% of the overall loan book, respectively, at 03/31/2025. The overseas loan portfolio in U.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

S. Dollar terms declined 10.2% year on year at 03/31/2025. The overseas loan portfolio was about 2.3% of the overall loan book at 03/31/2025. Of the overseas corporate portfolio, about 91% comprises Indian corporates. On credit quality, the gross NPA additions were INR51.42 billion in the current quarter compared to INR60.85 billion in the previous quarter.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Recoveries and upgrades from gross NPAs, excluding write offs and sale, were INR38.17 billion in the current quarter compared to INR33.92 billion in the previous quarter. The net additions to gross NPAs were INR13.25 billion in the current quarter compared to INR26.93 billion in the previous quarter. The gross A and P additions from the retail and rural portfolios were INR43.39 billion in the current quarter compared to INR53.04 billion in the previous quarter. Recoveries and upgrades from the retail and rural portfolios were INR30.39 billion compared to INR27.86 billion in the previous quarter. The net additions to gross NPAs in the retail and rural portfolios were INR 13,000,000,000 compared to INR 25,180,000,000.00 in the previous quarter.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

The gross NPA additions from the corporate and business banking portfolios were INR 8,030,000,000.00 in the current quarter compared to INR 7,810,000,000.00 in the previous quarter. Recoveries and upgrades from the Corporate and Business Banking portfolios were INR 7,780,000,000.00 compared to INR 6,060,000,000.00 in the previous quarter. There were net additions to gross NPAs of INR 250,000,000.00 in the Corporate and Business Banking portfolios compared to net additions of INR 1,750,000,000.00 in the previous quarter. The gross NPAs written off during the quarter were INR 21,180,000,000.00. Further, there was sale of NPAs of INR 27,000,000,000 in the current quarter compared to INR0.58 billion in the previous quarter.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

These were fully provided NPAs. And in lieu of sale, the Bank received INR16.05 billion of security receipts and INR3.14 billion in cash, with the balance INR8.67 billion being written off, which is in addition to the write offs mentioned earlier. The bank continues to hold 100% provision against these security receipts. The non fund based outstanding to borrowers classified as nonperforming was INR30.75 billion as of 03/31/2025 compared to INR31.60 billion as of 12/31/2024. The provisions on this non fine based outstanding were INR16.6 billion at 03/31/2025 compared to INR17.12 billion at 12/31/2024.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

The total fund based outstanding to all standard borrowers under resolution as per various guidelines declined to INR19.56 billion or about 0.1% of the total loan portfolio at 03/31/2025 from INR21.07 billion at 12/31/2024. Of the total fund base outstanding under resolution at 03/31/2025, INR17.55 billion was from the retail and rural portfolios and INR2.01 billion was from the corporate and business banking portfolios. The bank holds provisions of INR6.43 billion against these borrowers, which is higher than the requirement as per RBI guidelines. Moving on to the P and L details. The net interest income increased by 11% year on year to INR211.93 billion in this quarter.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

The net interest margin was 4.41% in this quarter compared to 4.25% in the previous quarter and 4.4% in Q4 of last year. The impact of interest on tax refund was about two basis points in the current quarter compared to about one basis point in the previous quarter and nil in Q4 of last year. The net interest margin for the full year FY 2025 was 4.32%. The domestic NIM was 4.48% in this quarter compared to 4.32% in the previous quarter and 4.49% in Q4 of last year. The cost of deposits was 5% in this quarter compared to 4.91% in the previous quarter.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Of the total domestic loans, interest rates on about 53% of the loans are linked to the repo rate, 15% to MCLR and other older benchmarks and 1% to other external benchmarks. The balance 31% of loans have fixed interest rates. Non interest income excluding treasury grew by 18.4% year on year to INR70.21 billion in Q4 of twenty twenty five. Fee income increased by 16% year on year to INR63.06 billion in this quarter. Fees from retail, rural and business banking customers constituted about 80% of the total fees in this quarter.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Dividend income from subsidiaries was INR6.75 billion in this quarter compared to INR4.84 billion in Q4 of last year. Dividend income from subsidiaries was INR26.19 billion in FY 2025 compared to INR20.73 billion in FY 2024. The year on year increase in dividend income was primarily due to higher dividend from ICSIA Bank Canada, ICSIA Prudential Asset Management Company and ICSIA Securities primary dealership. On costs, the bank's operating expenses increased by 11.2% year on year in this quarter and 8.3% year on year in FY 2025. Employee expenses increased by 10.3% year on year and non employee expenses increased by 11.7% year on year in this quarter.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Our branch count has increased by two forty one in Q4 and four sixty in FY twenty twenty five. We had 6,983 branches as of 03/31/2025. Technology expenses were about 10.7% of our operating expenses in FY 2025. The total provisions during the quarter were INR8.91 billion or 5.1 percent of core operating profit and 0.27% of average advances compared to the provisions of INR12.27 billion in the previous quarter. The total provisions during FY 2025 increased by 28.5% year on year to INR46.83 billion.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

The bank, on a prudent basis, continues to hold provision against security receipts guaranteed by the government, which will be reversed on actual receipt of recoveries or approval of claims, if any. The provisioning coverage on nonperforming loans was 76.2% as of 03/31/2025. In addition, we hold INR 6,430,000,000.00 of provisions on borrowers under resolution. Further, the bank continues to hold contingency provision of INR 131,000,000,000 as of 03/31/2025. At the March, the total provisions other than specific provisions of fund based outstanding to borrowers classified as nonperforming were INR 226,510,000,000.00 or 1.7% of loans.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

The profit before tax excluding treasury grew by 13.2% year on year to INR165.34 billion in Q4 of this year and by 11.4% year on year to INR 607,130,000,000.00 in FY 2025. Treasury gains were INR 2,390,000,000.00 in Q4 as compared to a treasury loss of INR2.81 billion in Q4 of the previous year. The treasury loss in Q4 of the previous year includes the transfer of negative balance of INR3.4 billion in foreign currency translation reserve related to the bank's offshore banking unit in Mumbai to the profit and loss account in view of the proposed closure of the unit. The tax expense was INR41.43 billion in this quarter compared to billion in the corresponding quarter last year. The profit after tax grew by 18% year on year to INR126.3 billion in this quarter.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

The profit after tax grew by 15.5% year on year to INR472.27 billion in FY 2025. On technology, we continue to enhance the use of technology in our operations to provide simplified solutions to customers and make investments in our digital channels. We continue to further strengthen system resilience and simplify our process. We have provided details on our retail, rural and business banking portfolios on Slides 25 to 28 of the investor presentation. The loans and non fund based outstanding to performing corporate borrowers rated BB and below were INR28.54 billion at 03/31/2025 compared to INR21.93 billion at 12/31/2024.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

This portfolio was about 0.2% of our advances at 03/31/2025. Other than two accounts, the maximum single borrower outstanding in the BB and below portfolio was less than INR5 billion at 03/31/2025. The bank holds provision of INR4.38 billion against this portfolio at 03/31/2025. The total outstanding for NBFCs and HFCs was INR918.38 billion at 03/31/2025, compared to INR893.6 billion at 12/31/2024. The total outstanding to NDFCs and HFCs were about 6.8 of our advances at 03/31/2025.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

The builder portfolio, including construction finance, lease rental discounting, term loans and working capital, was INR 606,240,000,000.00 at 03/31/2025 compared to INR 5 and 86,360,000,000.00 at 12/31/2024. The builder portfolio was about 4.6% 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 1.7% of the builder portfolio at 03/31/2025, was either rated BB and below internally or was classified as nonperforming compared to 1.7% at 12/31/2024. Moving on to the consolidated results.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

The consolidated profit after tax grew by 15.7 year on year to INR135.02 billion in this quarter. The consolidated profit after tax grew by 15.3% year on year to INR510.29 billion in FY 2025. The details of the financial performance of key subsidiaries are covered in Slides 36 to thirty eight and fifty seven to 62 in the investor presentation. The annualized premium equivalent of ICICI Life was INR104.07 billion in FY 2025 compared to INR90.46 billion in FY 2024. The value of new business was INR23.7 billion in FY 2025 compared to INR22.27 billion in FY 2024.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

The value of new business margin was 22.8% in FY 2025 compared to 24.6% in FY 2024. The profit after tax of ICICI Life was INR11.89 billion in FY 2025 compared to INR8.52 billion in FY 2024 and was INR3.86 billion in the current quarter compared to INR1.74 billion in Q4 of last year. The gross direct premium income of ICCI General was INR247.76 billion in FY 2024 compared to INR268.33 billion in FY 2025. The combined ratio stood at 102.8% in FY 2025 compared to 103.3% in FY 2024. Excluding the impact of cash losses of INR0.94 billion in FY 2025 and INR1.37 billion in FY 2024, The combined ratio was 102.4102.5%, respectively.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

The profit after tax was INR25.08 billion in FY 2025 compared to INR19.19 billion in FY 2024. The profit after tax was INR5.1 billion in this quarter compared to INR5.19 billion in Q4 of last year. The profit after tax of ICHA AMC as per Ind AS was INR6.92 billion in this quarter compared to INR5.29 billion in Q4 of last year. The profit after tax of ICICI Securities as per Ind AS on a consolidated basis was INR3.85 billion in this quarter compared to INR5.37 billion in Q4 of last year. Pursuant to the scheme of arrangement among ICCI Bank Limited and ICCI Securities Limited and their respective shareholders, ICCI Securities Limited has been delisted from stock exchanges on 03/24/2025, and become a wholly owned subsidiary of the bank.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

ICICI Bank Canada had a profit after tax of CAD12.5 million in this quarter compared to CAD19.9 million in Q4 of last year. Icacia Bank UK had a profit after tax of US6 million dollars in this quarter compared to US9.5 million dollars in Q4 of last year. As per India, Icacia Home Finance had profit after tax of INR2.41 billion in the current quarter compared to INR1.69 billion in Q4 of last year. With this, we conclude our opening remarks, and we will now be happy to take your

[Operator]

The first question is from the line of Maharukh Najanya from NOVAMMA Wealth Management. Please go ahead.

[Mahrukh Adajania, Senior Equity Research Analyst at Nuvama]

First of all, congratulations on a very strong set. I just had a few questions. Firstly, on loan growth. So have you tightened or have you been cautious on some segments, especially CLCC, overall retail, corporate growth? Because while the loan growth is good, it's a tad lower than your last few quarters.

[Mahrukh Adajania, Senior Equity Research Analyst at Nuvama]

So is there any cautious approach? And if there is, why? Or is this the general demand that the bank is presented with? So that's my first question. And then I have another question on deposits.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So as far as the loan growth is concerned, I don't think anything specific incrementally in terms of caution on the credit side. I think we are pretty comfortable with what we are underwriting. Of course, on personal loans and cards, as you know, we had tightened a few quarters ago, and that is showing up in the volumes over the last couple of quarters and the loan growth. But other than that, no specific caution on the credit side. I would say it's largely a function of what is happening in the system.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

And also, I guess, on the pricing side, some consciousness given that during this quarter, we were at the sort of cusp of the downward movement in benchmark rates. So we had to be, I think, a little more, I would say, disciplined in terms of the spreads, etcetera, that we were charging over the benchmark. But other than that, no specific caution on the credit side.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Yes.

[Mahrukh Adajania, Senior Equity Research Analyst at Nuvama]

Okay. And on deposit growth, my question was that, obviously, banks are cutting deposit rates to transmit policy rates. But there has been a lot of tightness in deposits, not recently, but over the last one and a half years. So with the liquidity situation improving, is there confidence that a sustained deposit growth will now flow through?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

I guess that's reflected in what is happening. We have seen liquidity improve substantially over the last couple of months with all the measures that the Central Bank has taken. And deposit growth for us has continued to be quite strong. You would have seen the numbers for the fourth quarter have also been pretty strong for us. So and as the rate now, of course, if you look at it, repo rate has fallen by 50 bps.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So that we'll start to see a transition into deposit rates, which is what has started. So I think that's in the natural course of things.

[Operator]

The next question is from the line of Kunal Shah from Citigroup.

[Kunal Shah, Director - India Banks & Financials at Citigroup]

So

[Kunal Shah, Director - India Banks & Financials at Citigroup]

the question was on margin. When we look at it in terms of the fees, particularly, there has been 21 basis points expansion. So firstly, obviously, there could be some elements of a lower the it reversals on p two c. But besides that, anything else to look into this? Was there maybe in the recovery, there was any one off interest or something which was there besides the interest on income tax refund?

[Kunal Shah, Director - India Banks & Financials at Citigroup]

Was there any other one off in the build on advances?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So there was no one off in the yield on advances. I think probably the largest component driving up the yield was what we had spoken of in, I think, Q2 and Q3 last year, which is the benefit of the day count, which brought down the yield in Q2 vis a vis Q1, and we had mentioned at that time that this would reverse out largely in Q4, which has happened. So that is one factor. The second factor is what you alluded to, the absence of the KCC non accrual in Q4 relative to Q3. We did speak about the two bps of interest on tax refund.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Other than that, I think nothing one off in that sense. There would be maybe some better returns on liquidity deployment, a little better interest collection on NPL, things like that, but no single item that requires to be called out, I would say.

[Kunal Shah, Director - India Banks & Financials at Citigroup]

Yes. So this bear recognition would be then a significant component of it because it was thought to be like earlier when you indicated it seemed like there is a benefit of three to four odd basis points which is coming in margin. But then it seems like that component was quite high.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

I'm sorry. What component?

[Kunal Shah, Director - India Banks & Financials at Citigroup]

This the recognition.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Yes, that would be some number, but I think the larger number is really on account of the day count convention. So as we had said, I think we would really the number margin number to focus on in our mind is really the 4.3% for the full year.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

That would be a more representative number.

[Kunal Shah, Director - India Banks & Financials at Citigroup]

Yes.

[Kunal Shah, Director - India Banks & Financials at Citigroup]

And in terms of so going forward, in fact, you have always been indicating that maybe if it's a shallow rate cut cycle, we should be able to manage the margins. But now if we expect, like, say, hundred bps kind of a repo rate cut over, say, four NPCs, will you still believe it to be shallow rate? And maybe from here on in terms of the margin trajectory, if we have to look at it, how do we see it on the repricing of the yields? Do we follow like a monthly reset and business banking happens immediately? And maybe that will entirely flow through?

[Kunal Shah, Director - India Banks & Financials at Citigroup]

And are there any levers available to improve margins or maybe to take care of the ABLR repricing impact?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So I don't think so whether the rate cut was relatively less or more, there would be some impact on margins because the deposit rates would the deposit repricing would occur with a lag while the loan repricing would be immediate. Indeed, the expectations of the rate cut have gone up compared to where they were, say, a couple of months ago and a higher level of rate cuts is now expected. At the same time, as we spoke earlier, the deposit rates have also started falling. So we will have to see as we go along how we manage through this, but there would be an impact on margins definitely. What that will be, we'll have to see as we go through the year because there are a number of factors that will come into play.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

I think overall, we have to look at the way we look at it is we have to look at kind of the overall risk adjusted PPOP and what are all the levers starting with growth margins and other aspects of that that we have to optimize, and that's what we'll keep continuing to do.

[Operator]

The

[Operator]

next question is from the line of Anand Swaminathan from Bank of America.

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

I

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

have a couple of questions. One is on the elasticity of savings rate

[Operator]

handset. Sir?

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

Yes. Sure.

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

Can you hear me better now?

[Operator]

Yes. You do, please. Yes. Yes, sir.

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

Okay. Thank you. I had a couple of questions. One is on the elasticity of savings rate cards. What according to you kind of is the kind of modeling you have done in kind of going ahead with a concerted all banks have done a 25 bps rate cut?

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

And is there theoretically a base limit that we should think about for savings rate cuts? Or can it kind of continue to mirror the reported cuts over the next few quarters? That's my first question.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So we'll have to see as we go along. I don't think we can say that there is a sort of any kind of direct relationship. We are at the I would say the repo rate has fallen by 25 bps and significant actions have also happened on liquidity in the system. And we will have to see how it goes on from here. I don't think that there is any direct relation in that sense, which is quantifiable at this stage.

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

Okay. But theoretically, there is no limit to how much sales rates can go down from here?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

It's a rate which each bank can set for itself in that sense. So it can move as per what a bank thinks is optimal.

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

Okay. Great. My second question is on the business banking side. The loan growth has been exceptionally good, especially it seems to have accelerated in the last few quarters. Can you help us understand kind of what is the risk in this business?

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

How are you assessing the incremental risk? Like, how much riskier is it versus your corporate book? If you can give us something in terms of how much is the self funded nature of the business. Is it kind of going to contribute to a slightly higher average credit cost down the line? Some color on this to get a better understanding would be great.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Yes. I think last quarter, we had had a fairly extensive commentary on this in the earnings call. So the way we have built this business over the last several years, I think we have invested in, I would say, three aspects. One, certainly in the distribution, so equipping more and more of our branches to deal with the business banking or self employed segment customers. Second, investing in our credit underwriting models and processes for this segment to be able to understand and assess the credit and deliver credit in a timely manner.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

And third, I think on the digital side because our technology offerings, digital offerings and transaction banking capabilities for this segment have been pretty good. And that has driven growth in the business, I would say holistically, both on the lending side as well as on the fee and current account side. And in terms of, I would say, the risk profile of this business, it is a fairly granular portfolio and pretty well diversified geographically and industry wise and so on. Secondly, I think it's not in that sense a particularly high yield business. So, this is not the sort of mid teens lending rate kind of business.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

It's a pretty it's at the higher end of the quality spectrum and pretty much competed for amongst the banks. But it's also a business where we have a very much better scope to do the Customer three sixty because you are really doing a lot of things for the business and the owners. So in terms of the credit performance, it has actually been quite good. In fact, if we look back five years, I think at the onset of the pandemic, when of course we were also the portfolio was relatively more recently built for us. This would have been one of the portfolios that we would have been most concerned about, but it is probably the portfolio which surprised significantly on the upside.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Even if you look at a systemic level, you see LGS utilization and so on relative to this portfolio has been marginal. So it has behaved well. Currently, costs are pretty low, I would say, almost mirroring what we are seeing on the corporate side. But of course, it is something that has to be tightly monitored as we go along. So we will keep monitoring it and managing the portfolio dynamically.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Anindya, what would be the average yield on this business versus your corporate business, just to understand how much more profitable this is? We don't really give the segment wise yield. It would be somewhat higher. But I think more importantly, it is the holistic P and L of the business in terms of the full customer three sixty, the liability side and the transaction banking and the ability to manage delivery costs and credit costs, which yields the bigger benefit, and of course, the granularity of it.

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

Sure. Thank you. Thanks, guys.

[Operator]

The next question is from the line of Nitin Agrawal from Motilal Uswal Financial Services. Please go ahead.

[Nitin Aggarwal, Head of BFSI Research at Motilal Oswal]

Yes. Hi. Good evening, everyone, and congratulations on a very strong performance. Have few questions.

[Operator]

Sorry.

[Operator]

I want

[Operator]

request you to please use your handset.

[Nitin Aggarwal, Head of BFSI Research at Motilal Oswal]

Hi. Is it any better?

[Operator]

Yes.

[Nitin Aggarwal, Head of BFSI Research at Motilal Oswal]

Sorry about that. So first question is around asset quality.

[Nitin Aggarwal, Head of BFSI Research at Motilal Oswal]

So, like, if I look back, like, that normalization trend that started at the beginning of the year has reached a fair degree of stability. So just wanted to know your views, like, how comfortable you feel about asset quality now versus how, say, the situation was six months back, and how is the trending now in unsecured retail products?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Actually, we were always quite comfortable, so we were never too worried. But I would say that what we have been saying holds true. I think the corporate portfolio continues to behave extremely well as does business banking. On the retail side, the secured products, I think, are behaving quite well. On unsecured, I think that generally the NPL formation has broadly stabilized, I would say.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

We would hope for it to come down, but let us wait for that to happen. Maybe it will take another couple of quarters. And all of that is getting absorbed in the credit costs that we are reporting. This quarter, of course, we had a very low credit cost of sub-thirty basis points. But even if we kind of were to try and adjust out the fact that there were KCC provisions in the previous quarter and we had some write back this quarter and so on, it will still be just about 40 odd bps or so.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So, things are quite stable. Of course, as we go into the year, I think what happens to the overall economy globally and in India and this whole trade related issues is something we'll have to watch out for. But as of today, we are very comfortable with the portfolio.

[Nitin Aggarwal, Head of BFSI Research at Motilal Oswal]

Right. My second question is around growth again. So we have seen a very healthy growth, continued growth across business banking, but the retail growth has moderated if you compare over the prior years. Now looking forward with other banks becoming more and more aggressive in lending in certain products the right as the bank is. So how how do you see the trend about the overall loan growth?

[Nitin Aggarwal, Head of BFSI Research at Motilal Oswal]

Will it remain skewed in favor of select products, which fits our and the profitability thresholds, or one can expect more about this growth?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So we are really focused on the risk adjusted PPOP. And of course, I think as we focus on that, should we want to make tactical calls on pricing, etcetera, in a particular customer or segment or product for a particular period of time, I think our funding franchise gives us flexibility to do that. But overall, we are quite focused on the overall PPOP. I think that if we look we would, I would say, continue to see pretty healthy growth on the business banking side as things currently stand. Retail, we will see how the market evolves.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

And I think as the rate environment stabilizes during the year, pricing may also stabilize. So kind of that's where I would look at it. On the unsecured side, probably the growth has bottomed out and we may see some improved growth from here is what we see.

[Nitin Aggarwal, Head of BFSI Research at Motilal Oswal]

Right. And lastly, on the PSL front line, if I see the stronger growth in Business Banking, but slightly tone down growth in retail and rural, how is the bank faring on the PSL front?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So I think it's pretty similar to what we have seen in past quarters. We meet our overall PSL requirement. We also meet our MSME requirement. In fact, overall in MSME, we have some surplus. In the some of the categories like the small farmer and weaker section, etcetera, we do have shortfalls, which we try address through either buyouts or through purchase of the PSLC certificate.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So pretty much the same continues.

[Operator]

The

[Operator]

next question is from the line of MB Mahesh from Kotak Securities.

[M B Mahesh, Director at Kotak Securities Limited]

Just a couple of questions. First one is on the income, if any, which moves on the interest income line on recovery of bad loans. Right? On, let's say, an SR receipts have come in on cash basis. Does anything of it move to the interest income line as well?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

No. That the cash portion of the NPA sale is would be reflected as a write back in provisions, not as interest income.

[M B Mahesh, Director at Kotak Securities Limited]

And there is nothing there in the interest income line from

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

the There will always be some interest recovery on NPLs in any quarter. It may vary a little quarter to quarter, but it

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

will always be there.

[M B Mahesh, Director at Kotak Securities Limited]

Okay. So second one is on the current differential that exists on, let's say, some of the benchmark loans between, let's say, private sector banks and public sector banks. How much does it hurt you right now? Some color on because the transmission seems to be a bit clear from the price of the bank side in comparison to public banks at least.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Are you talking about competition, I mean the lending rates?

[M B Mahesh, Director at Kotak Securities Limited]

Yes. Because I look at some of the housing loans for half of the year.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Yes, clearly, it is an issue. I don't I think in retail, it's not just about pricing because you really need the distribution scale processing capacity to back up your pricing. So I wouldn't say it's just about pricing, but certainly there are very large capable competitors who are also priced meaningfully below us. So it does create some challenges in terms of growth, but I guess that's part of life. So we will have to keep dealing with it as we go along and look at how we can drive other levers to continue to maintain profitable growth.

[M B Mahesh, Director at Kotak Securities Limited]

And one final clarification. Unsecured loans, today, would say that we are well past the peak in terms of specialty business? Or is there a still amount of uncertainty?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So I would say it has it's broadly stable. We would we are yet to see it coming down meaningfully. But I think more importantly, the behavior of portfolios originated more recently, say, what we originated post making some of the credit changes in the last which we did maybe eighteen months ago, The behavior of those portfolios gives us a fair degree of comfort on

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

filling the portfolio incrementally.

[Operator]

The

[Operator]

next question is from the line of Harsh Modi from JPMorgan. I

[Harsh Modi, Managing Director at J.P. Morgan]

just want to understand on RWA growth, it's 17% year on year for growth of around 13%. Could you please explain what drove the faster growth in risk weighted assets? I have a follow-up question after that.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So, it's evolving mix of the different categories of loans and how one classifies them, what you can justify in which risk weight category. In the year end, I think market risk also went up because we did take some larger positions as the interest rate environment turn favorable for taking trading positions.

[Harsh Modi, Managing Director at J.P. Morgan]

Got it. The follow-up is on just the use of capital. You have significant capital generation. PD-one is at 15.94. And the way it seems your incremental RWA of $2,400,000,000,000 growth versus profit of almost BRL $05,000,000,000,000.

[Harsh Modi, Managing Director at J.P. Morgan]

So let's say over the next two to three years, how do you see the use of capital at the bank? Assuming, given your competitive position and the modes, you may be able to generate significant amount of capital over the next two to three years?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

I

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

think, see, one two, three things. One, clearly, think that there is a certain expectation among stakeholders, market, etcetera, of the level of capital that a large private sector bank should be maintaining. And I think we are our capital levels are not out of line with most of our peers in that context. And as far as the capital generation that will happen in future and how much of that is absorbed by growth, we will see as we go along. But I think that capital maintaining a certain level of capital is important from a strategic perspective and a market confidence perspective.

[Harsh Modi, Managing Director at J.P. Morgan]

Right. And that was exactly my question that organically seems growth would be you're already doing quite well focused on, as you said, risk adjusted PPOP. And given the excess capital generation, because right now, your RWA growth is just 5x of your net profit. Is there any possibility of for strategic purposes, what are the places where you may incrementally allocate capital over the next two to three years?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So, we will, I think, believe that our franchise gives us sufficient opportunity to grow and leverage the capital. If at a stage we feel that we are we can always look at other things like maybe increasing payouts or things like that. But for the time being, I think we believe that given the franchise that we have, we have a lot of runway for growth.

[Harsh Modi, Managing Director at J.P. Morgan]

Got it. Thank you.

[Operator]

Thank you. The next question is from the line of Param Subramaniam from Investec Capital. Please go ahead.

[Param Subramanian, Equity Research Analyst at Investec]

Yes. Hi. Thanks for taking my question. Firstly, on the network movement in the quarter, so it's up INR 20,000 crore quarter on quarter, which is higher than the past. So what is that

[Param Subramanian, Equity Research Analyst at Investec]

the AFS mark to market that's happened?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So, Bharg, the main item this quarter would be the issue of shares, the recording of the additional investment in ISEC. So we would have issued shares to minority shareholders of ISEC. That would have while it's CapEx neutral, it would have increased the net worth by a substantial amount. That would be the biggest item.

[Param Subramanian, Equity Research Analyst at Investec]

Okay. Not as much ASF, got it. Secondly, on your so broadly, outlook on CASA, right? So over the last year, the CASA ratio for the bank is almost flat Y o Y, which is a great outcome given the context. But if you compare with, say, the pre COVID period when Tata used to be forty eight percent, forty nine percent,

[Param Subramanian, Equity Research Analyst at Investec]

we are lower. And we

[Param Subramanian, Equity Research Analyst at Investec]

are looking at, like you pointed out,

[Param Subramanian, Equity Research Analyst at Investec]

a very accommodative RBI on liquidity.

[Param Subramanian, Equity Research Analyst at Investec]

Do you think this has legs to go up going ahead, seeing the scenario as it is building up, say, from a macro perspective?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Yes. I think that we basically have to look at the total quantum of and cost of funding that is available to us and that should be superior to our competitors because CASA trends will not vary very widely across the large banks. So, we would not that is the right way to look at it rather than think too much about what is going to be the CASA growth for us. I think we have to really look at what is the total quantum of funding and the cost of that funding and its deployability because very volatile CASA may not help also and its deployability and really look at it from that perspective, which is what we do. And not really, we wouldn't have a specific outlook on CASA per se.

[Param Subramanian, Equity Research Analyst at Investec]

Okay. Okay. Would you think that the worst of CASA pressures for yourself and the sector are largely behind?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Logically, that should be so. Logically, that should be so.

[Param Subramanian, Equity Research Analyst at Investec]

Okay. Perfect. Thanks, Anandiya. All the best. Thank you.

[Operator]

Thank you. The next question is from the line of Piran from CLSA. Please go ahead.

[Piran Engineer, Investment Analyst at CLSA india]

Yes. Hi, team. Congrats on the quarter. Firstly, just on the previous question of Param, why do you say that the CASA pressure is over? Sorry, I missed that.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

No, I said logically that should be so given the monetary easing, the improvement in system liquidity and to the extent that it was a factor, the sort of some calm in capital markets, but it's something we'll have to see as we go ahead.

[Piran Engineer, Investment Analyst at CLSA india]

Okay. Okay. That's the reasoning. Fair enough. Just moving on to my questions.

[Piran Engineer, Investment Analyst at CLSA india]

Firstly, vehicle growth slowdown, how do we really interpret this? Is this just a function of more competition at the counter? Or are you all intentionally scaling back due to asset quality or pricing? Or is it just something else?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

I think it's for the underlying demand and maybe at the margin a little bit on the pricing side, nothing on asset quality per se.

[Piran Engineer, Investment Analyst at CLSA india]

Okay. Anindya, just on cost of deposits, you all were it was inching up two, three bps a quarter, which was understandable. This quarter, it's up almost 10 bps. And the CASA ratio probably or the drop in CASA ratio explains maybe two, three bps of that. What explains the rest?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Similar to

[Piran Engineer, Investment Analyst at CLSA india]

Or is it a number of thing?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Yes. It would be partly a number of days thing.

[Piran Engineer, Investment Analyst at CLSA india]

Okay. Okay. And just my last question, out of your buildup portfolio of INR 60,000 crores, how much would be LRD?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

We have not given that breakup. There will be some component of LRD there.

[Piran Engineer, Investment Analyst at CLSA india]

Would it be significant or more minor?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

I don't think it will be minor, but we have not given the breakout. I mean, it will be a reasonable number.

[Piran Engineer, Investment Analyst at CLSA india]

Okay. Fair enough. That's all from my end. And if I could just squeeze in one humble suggestion, if we could move our calls and our, you know, results releases to either a weekday or a Saturday morning, it would be great. You know, times like this when it's literally clashing and in a minute, we've got an HDFC bank call, it doesn't do justice to either of the banks.

[Piran Engineer, Investment Analyst at CLSA india]

So she could take that suggestion would be great. Yes. I'm done at my end. Yes. Thank you.

[Operator]

Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Thank you, everyone, and we'll be happy to take any other questions offline. Thank you.

[Sandeep Bakhshi, Managing Director & CEO at ICICI Bank]

Thank you.

[Operator]

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

Participants

Executives

• Sandeep Bakhshi, Managing Director & CEO
• Anindya Banerjee, Group CFO & Head of Investor Relations

Analysts

• Mahrukh Adajania, Senior Equity Research Analyst at Nuvama
• Kunal Shah, Director - India Banks & Financials at Citigroup
• Anand Swaminathan, Director, Equity Research Analyst at Bank of America
• Nitin Aggarwal, Head of BFSI Research at Motilal Oswal
• M B Mahesh, Director at Kotak Securities Limited
• Harsh Modi, Managing Director at J.P. Morgan
• Param Subramanian, Equity Research Analyst at Investec
• Piran Engineer, Investment Analyst at CLSA india