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ICICI Bank Ltd

| Earnings conference call - Quarter ended September 30, 2025

NEUTRAL SENTIMENT

Report Source

⬤18th Oct 25

Summary : ICICI Bank reported solid Q2-FY2026 results with strong loan and deposit growth, improved asset quality, and robust capital, while maintaining a positive outlook.

Management Perspective positive : 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.

Concall Report Analysis & Insights

Business Overview

  1. Profit before tax (excluding treasury) grew 9.1% year-on-year to 161.64 billion Rupees.
  2. Core operating profit increased 6.5% year-on-year to 170.78 billion Rupees.
  3. Profit after tax grew 5.2% year-on-year to 123.59 billion Rupees.
  4. Domestic loan portfolio grew 10.6% year-on-year; total loan portfolio grew 10.3% year-on-year.
  5. Net NPA ratio improved to 0.39% from 0.41% sequentially, with strong provisioning coverage of 75.0%.

Future Growth Prospects

  1. Strategic focus on risk-calibrated profitable growth and increasing market share across key segments.
  2. Continuing investment in distribution and allocating capacity to higher growth opportunities.
  3. Positive outlook for growth, especially in retail and business banking, with trends expected to sustain.
  4. Leveraging transaction banking space and digital platforms to sustain CASA growth.
  5. Deepening synergy with ICICI Direct through the 3-in-1 platform for further growth.

Management Insights

  1. Strategic focus remains on growing profit before tax (excluding treasury) via a 360-degree customer-centric approach.
  2. Committed to maintaining a strong balance sheet, prudent provisioning, and healthy capital levels.
  3. Margins have performed better than expectations and are anticipated to be range-bound for the next couple of quarters.
  4. Loan growth has picked up sequentially, driven by retail and business banking portfolios.
  5. Increasing personal loan disbursements, confident in asset quality after past corrective actions.

Signs of Skepticism

  1. Management declined to provide specific year-end loan growth numbers.
  2. Uncertainty regarding the final form and impact of new RBI guidelines on ECL and risk weights.
  3. Management did not provide specific data on term deposit acquisition in the last six months.
  4. No specific plan on dividend payouts, prioritizing balance sheet strength and capital for growth.

Risk Factors

  1. Forward-looking statements involve risks like regulatory changes, economic instability, and nonperforming loans.
  2. Unanticipated changes in interest rates, foreign exchange rates, and equity prices could impact results.
  3. Kisan Credit Card (KCC) seasonality typically leads to higher NPA additions in Q1 and Q3.
  4. RBI guidelines on Expected Credit Loss (ECL) and risk weights are still open for comments and assessment.
  5. Competitive dynamics in the market continue to influence deposit and loan pricing.

Good To Know

  1. Average deposits grew 9.1% year-on-year; CASA deposits grew 9.7% year-on-year.
  2. Domestic Net Interest Margin (NIM) was 4.37% in Q2, with cost of deposits at 4.64%.
  3. Non-interest income (excluding treasury) grew 13.2% year-on-year to 73.56 billion Rupees.
  4. Operating expenses increased 12.4% year-on-year, driven by retail business and festive marketing spends.
  5. Bank's capital position remains strong with a CET-1 ratio of 16.35% and total capital adequacy of 17.00%.

Key Drivers

  1. Strong retail and business banking growth.
  2. Improved asset quality across segments.
  3. Robust capital for future expansion.
  4. Digital platforms attracting new customers.

Key Analyst Discussions

Competitive Environment

  1. Analysts asked about the bank's improving CASA market share and sustained competitive advantages.
  2. Questions on corporate loan growth environment, noting corporate India is well-funded.
  3. Inquiries about the bank's strategy to deepen corporate relationships and transaction banking.

Market Trends & Consumer Behavior

  1. Questions on green shoots in growth and acceleration due to government measures.
  2. Inquiries about the impact of GST cuts on vehicle loan momentum.
  3. Discussion on potential unemployment in the IT services sector due to AI and its impact on salaried accounts.

Financial Highlights

  1. Analysts questioned the sustainability and future trajectory of Net Interest Margins (NIMs).
  2. Questions were raised about the Loan-to-Deposit Ratio (LDR) and deposit repricing impact.
  3. Inquiries about the impact of new RBI guidelines on Expected Credit Loss (ECL) and risk weights.
  4. Discussion on capital adequacy ratios and potential for improved payouts given strong capital.

Product Composition

  1. Questions regarding growth in specific retail segments like vehicle loans, personal loans, and mortgages.
  2. Inquiries about the asset quality of retail and rural portfolios, particularly slippages.
  3. Discussion on the builder loan portfolio and outstanding loans to NBFCs/HFCs.

Strategic Considerations

  1. An analyst asked about the CEO's intention to continue for another term.
  2. Questions on the trade-off between growth and profitability, and potential for lower ROAs for higher growth.
ICICI Bank Ltd (ICICIBANK) Concall Report Analysis & Insights | Dhanarthi