ICICI Bank Q3 Earnings Call Highlights

ICICI Bank (NYSE:IBN) management said it remained focused on “risk-calibrated, profitable growth” in the fiscal third quarter of 2026, with leadership emphasizing profit-before-tax growth excluding treasury and a customer-centric “360-degree” operating approach. On the earnings call, executives highlighted steady margins, improved momentum in select lending segments, and credit quality metrics that remained stable, while also addressing a Reserve Bank of India (RBI) directive that drove a notable portion of quarterly provisions.

Profitability and the impact of RBI-directed provisioning

Managing Director and CEO Sandeep Bakhshi said core operating profit rose 6% year-over-year and 2.5% sequentially to INR 175.13 billion. Total provisions for the quarter were INR 25.56 billion, which included an additional standard asset provision of INR 12.83 billion pursuant to the RBI’s annual supervisory review.

Profit before tax excluding treasury was INR 149.57 billion, compared with INR 152.89 billion in the prior-year quarter, while profit after tax was INR 113.18 billion versus INR 117.92 billion a year earlier. Management noted that a treasury loss of INR 1.57 billion weighed on results, compared with a gain of INR 3.71 billion in the year-ago quarter.

Executive Director Anindya described the RBI directive as relating to “a portfolio of agricultural priority sector credit facilities” where the terms were found “not fully compliant with the regulatory requirements for classification as agricultural priority sector lending.” He emphasized there was “no change in asset classification” and no change to borrower terms or repayment behavior. The bank expects the provision to continue “until the loans are repaid or renewed in conformity with the PSL classification guidelines.”

In the Q&A, management estimated the underlying portfolio needing work to bring it into conformity at “between INR 200-INR 250 billion or so,” while declining to detail the specific regulatory observations beyond what was disclosed. Management also said it would work to minimize both provisioning and any priority sector lending (PSL) impact by bringing the portfolio into conformity with regulatory expectations.

Management provided an adjusted view of earnings excluding the incremental standard-asset provisioning. On that basis, profit before tax excluding treasury would have increased 6.2% year-over-year to INR 162.40 billion, and profit after tax would have increased 4.1% year-over-year to INR 122.80 billion. The return on average assets and standalone ROE would have been 2.3% and 15.5%, respectively, on that adjusted basis.

Deposit growth, liquidity, and loan expansion

Average deposits grew 8.7% year-over-year and 1.8% sequentially, and average current and savings account (CASA) deposits rose 8.9% year-over-year and 1.5% sequentially. Total deposits were up 9.2% year-over-year and 2.9% sequentially as of Dec. 31, 2025. The bank’s average liquidity coverage ratio (LCR) for the quarter was about 126%.

During Q&A, management said a softer trend in overall savings balances reflected a reduction in “institutional banking savings accounts,” which include certain government entities and schemes. Management said retail savings account growth remained strong, but institutional savings balances declined in absolute terms over the past two quarters. The institutional savings portion was described as “10-12%” and “definitely around less than 15%” of the average savings account base.

On the lending side, the domestic loan portfolio grew 11.5% year-over-year and 4% sequentially as of Dec. 31, 2025. Retail loans increased 7.2% year-over-year and 1.9% sequentially, and including non-fund-based outstanding, retail represented 42.2% of the total portfolio. Business banking grew 22.8% year-over-year and 4.7% sequentially, while the domestic corporate portfolio grew 5.6% year-over-year and 6.5% sequentially. Overall loan growth, including international branches, was 11.5% year-over-year and 4.1% sequentially; overseas loans were 2.4% of the total.

Executives said they saw a pickup in sequential growth momentum in the quarter and expected it to sustain into the fourth quarter, while maintaining underwriting discipline.

Retail product trends: mortgages stronger, credit cards down sequentially

Anindya said mortgages increased 11.1% year-over-year and 3.2% sequentially. Auto loans grew 0.7% year-over-year and 0.9% sequentially, while commercial vehicles and equipment rose 7.9% year-over-year and 3.2% sequentially. Personal loans grew 2.4% year-over-year and 1.7% sequentially.

The credit card portfolio declined 3.5% year-over-year and 6.7% sequentially. Management attributed the sequential decline primarily to high festive spending late in the previous quarter that boosted Q2 balances, followed by repayments in Q3. In response to multiple analyst questions about the flat-to-down trend versus earlier periods, management said it views cards as part of a broader customer relationship strategy and expects the book to “gradually improve from here on,” while also noting improved credit quality in the retail portfolio excluding seasonal rural-related effects.

Margins, income mix, and expense trends

Net interest income rose 7.7% year-over-year and 1.9% sequentially to INR 219.32 billion. Net interest margin was 4.3%, unchanged from the prior quarter and up from 4.25% a year earlier. The cost of deposits was 4.55%, down from 4.64% in the prior quarter and 4.91% in the year-ago quarter.

In Q&A, management said margin performance in Q3 included loan repricing impacts from repo and MCLR changes, as well as seasonally higher non-accrual effects tied to Kisan Credit Card (KCC) NPAs, offset by deposit repricing and the benefit of a cash reserve ratio (CRR) cut. Looking ahead, management said it expected non-accrual impacts to ease in Q4 and reiterated its view that NIM should be “range-bound” from current levels.

Non-interest income excluding treasury increased 12.4% year-over-year and 2.3% sequentially to INR 75.25 billion. Fee income rose 6.3% year-over-year and 1.2% sequentially to INR 65.72 billion, with fees from retail, rural, and business banking customers comprising about 78% of total fees. Dividend income from subsidiaries was INR 6.81 billion, down sequentially but up year-over-year, with management attributing the annual increase primarily to an interim dividend from ICICI Securities.

Operating expenses grew 13.2% year-over-year and 1.2% sequentially. Employee expenses rose 12.5% year-over-year, including INR 1.45 billion of provisions “on an estimated basis” related to the new labor code. Non-employee expenses increased 13.6% year-over-year. Management said its branch count increased by 402 over the first nine months of the year to 7,385 branches as of Dec. 31, 2025, and that technology expenses were about 11% of operating expenses over the nine-month period.

Credit quality and portfolio specifics

The bank reported a net NPA ratio of 0.37% at Dec. 31, 2025, compared with 0.39% at Sept. 30, 2025, and 0.42% at Dec. 31, 2024. Provisioning coverage on non-performing loans was 75.4%. The bank also held contingency provisions of INR 131 billion, about 0.9% of total advances.

During the quarter, gross NPA additions were INR 53.56 billion, down from INR 60.85 billion a year earlier. Recoveries and upgrades from gross NPAs (excluding write-offs and sales) were INR 32.82 billion, resulting in net additions to gross NPAs of INR 20.74 billion. Retail and rural gross NPA additions were INR 42.77 billion, with KCC gross NPA additions of INR 7.36 billion; management noted it “typically” sees higher KCC NPA additions in the first and third fiscal quarters. Corporate and business banking gross NPA additions were INR 10.79 billion, with net additions of INR 3.36 billion. Gross NPAs written off during the quarter totaled INR 20.46 billion, and NPAs sold for cash were INR 1.2 billion.

On corporate exposures, management said outstanding to NBFCs and HFCs was INR 791.18 billion (about 4.3% of advances). The builder portfolio was INR 680.83 billion (4.3% of the total loan portfolio), with about 1.1% internally rated BB and below or classified as non-performing. Management also said loans and non-fund-based outstanding to performing corporate borrowers rated BB and below were INR 33.92 billion, about 0.2% of advances.

Capital remained strong, with a CET1 ratio of 16.46% and total capital adequacy ratio of 17.34% at Dec. 31, 2025, including profits for nine months of FY26.

Management concluded by reiterating its focus on maintaining a strong balance sheet, prudent provisioning, and healthy capital levels while pursuing market share gains in targeted segments.

About ICICI Bank (NYSE:IBN)

ICICI Bank Limited is an Indian multinational banking and financial services company that provides a broad range of products and services to retail, corporate and institutional customers. The bank traces its origins to the Industrial Credit and Investment Corporation of India, founded in 1955, and was converted into a commercial bank during the 1990s as part of its evolution into a full-service financial institution. It is one of India’s largest private-sector banks and is listed in the United States as an American depositary receipt under the ticker IBN.

The bank’s core activities include retail banking (deposit accounts, consumer loans, mortgages, credit cards and payments), corporate and commercial banking (working capital, term lending, trade finance and cash management), and treasury operations.