ICICI Bank Limited

Thank you. Good evening to all of you, and welcome to the ICICI Bank Earnings Call to discuss the results for Q2 of financial year 2025. Joining us today on this call are Sandeep Batra, Rakesh, Ajay, Anandia, and Abhinik. The Indian economy remains resilient based on its long-term growth drivers, and the actions and initiatives of the policymakers. The global and domestic inflation, liquidity, and rate environment continue to evolve, and we will continue to monitor the same. At ICICI Bank, our strategic focus continues to be on growing profit before tax, excluding treasury, through the 360-degree customer-centric approach, and by serving opportunities across ecosystems and micro-markets. We continue to operate within our strategic framework to strengthen our franchise. 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 7.9% year-on-year and 5.2% quarter-on-quarter. to 148.10 billion rupees in this quarter. The core operating profit increased by 12.1% year-on-year and 4.1% quarter-on-quarter to 160.43 billion rupees in this quarter. Excluding dividend income from the subsidiaries and associates, the core operating profit increased by 13.4% year-on-year and 6.8% quarter-on-quarter to 155.02 billion rupees in this quarter. The profit after tax grew by 14.5% year on year and 6.2% quarter on quarter to 117.46 billion rupees in this quarter. Total deposits grew by 15.7% year on year and 5% sequentially at September 30, 2024. Term deposits increased by 15.9% year on year and 5.5% sequentially at September 30, 2024. During the quarter, average deposits grew by 15.6% year-on-year and 3.6% sequentially, and average current and savings account deposits grew by 10.4% year-on-year and 1.8% sequentially. The bank's average liquidity coverage ratio for the quarter was about 120%. The domestic loan portfolio grew by 15.7% year on year and 4.6% sequentially at September 30, 2024. The retail loan portfolio grew by 14.2% year on year and 2.9% sequentially. Including non-fund-based outstanding, the retail portfolio was 44.9% of the total portfolio. The rural portfolio grew by 16.5% year on year and 1.7% sequentially. The business banking portfolio grew by 30% year-on-year and 10.7% sequentially. The domestic corporate portfolio grew by 11.8% year-on-year and 4.9% sequentially. The overall loan portfolio, including the international branches portfolio, grew by 15% year-on-year and 4.4% sequentially at September 30, 2024. We have revised the presentation of loans to reflect a consolidated view of the business banking portfolio, which Anandya will explain later on the call. The net NPA ratio was 0.42% at September 30, 2024, compared to 0.43% at June 30, 2024, and 0.43% at September 30, 2023. The total provisions during the quarter were 12.33 billion rupees, or 7.7% of core operating profits, and 0.38% of average advances. The provision coverage ratio on non-performing loans was 78.5% at September 30, 2024. In addition, the bank continues to hold contingency provisions of 131 billion rupees, or about 1% of the total loans at September 30, 2024. The capital position of the bank continued to be strong with a CET1 ratio of 15.9%, 15.96% and total capital adequacy ratio of 16.66% at September 30, 2024, including profits for H1 2025. Looking ahead, we see many opportunities to drive risk-calibrated profitable growth. We believe our focus on customer 360-degree extensive franchise and collaboration within the organizations. 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, people, distribution, and building our brand. We are laying strong emphasis on strengthening our operational resilience for seamless delivery of services to customers. We will 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 Anandya.

Thank you, Sandeep. I will talk about loan growth, credit quality, P&L details, growth in digital offerings, portfolio trends, and performance of subsidiaries. As Sandeep mentioned, we have revised the presentation of loans to reflect a consolidated view of the business banking portfolio. This comprises all borrowers with a turnover of up to Rs. 7.5 billion, which was earlier reflected in the reported S&E and business banking portfolios, as well as rural business credit forming part of the rural portfolio, dealer funding forming part of the retail portfolio, and lending to mid-corporates forming part of the corporate portfolio. Over the past few years, the bank has seen healthy loan growth in this category and has adopted an integrated approach to coverage, credit, and delivery to these customers. Aligning with the same, we would be reporting the retail, rural business banking and corporate portfolios on this revised basis. The comparable data for previous periods have been provided on slide 67 of the investor presentation. Coming to the growth across retail products, the mortgage portfolio grew by 13.2% year-on-year and 3.2% sequentially. Auto loans grew by 9.6% year-on-year and 0.8% sequentially. The commercial vehicles and equipment portfolio grew by 9.1% year-on-year and was flat sequentially. Personal loans grew by 17.3% year-on-year and 3.5% sequentially. The credit card portfolio grew by 27.9% year-on-year and 3.4% sequentially. The personal loans and credit card portfolios were 9.6% and 4.3% of the overall loan book respectively at September 30, 2024. The overseas loan portfolio in U.S. dollar terms declined by 6.9% year-on-year at September 30, 2024. The overseas loan portfolio was about 2.6% of the overall loan book at September 30, 2024. Of the overseas corporate portfolio, about 92% comprises Indian corporates. Moving on to credit quality, the gross NPA additions were 50.73 billion rupees in the current quarter compared to 59.16 billion rupees in the previous quarter. Recoveries and upgrades from gross NPAs, excluding write-offs and sale, were 33.19 billion rupees in the current quarter compared to 32.92 billion rupees in the previous quarter. The net additions to gross NPAs were 17.54 billion rupees in the current quarter compared to 26.24 billion rupees in the previous quarter. The gross NPA additions from the retail and rural portfolios were 43.41 billion rupees in the current quarter compared to 52.04 billion rupees in the previous quarter. We typically see higher NPA additions from the Kisan credit card portfolio in the first and third quarter of a fiscal year. Recoveries and upgrades from the retail and rural portfolios were Rs. 25.92 billion compared to Rs. 25.32 billion in the previous quarter. The net additions to gross NPAs in the retail and rural portfolios were Rs. 17.49 billion compared to Rs. 26.72 billion in the previous quarter. The gross NPA additions from the corporate and business banking portfolios were 7.32 billion rupees compared to 7.12 billion rupees in the previous quarter. The recoveries and upgrades from the corporate and business banking portfolios were 7.27 billion rupees compared to 7.6 billion rupees in the previous quarter. There were net additions to gross NPAs of 0.05 billion rupees in the corporate and business banking portfolios compared to net deletion of 0.48 billion rupees in the previous quarter. The gross NPAs written off during the quarter were 33.36 billion rupees. There was sale of NPAs of 0.16 billion rupees for cash in the current quarter, compared to 1.14 billion rupees in the previous quarter. The non-fund-based outstanding to borrowers classified as non-performing was Rs. 33.82 billion as of September 30, 2024, compared to Rs. 35.43 billion as of June 30, 2024. The bank holds provisions amounting to Rs. 19.11 billion against this non-fund-based outstanding. The total fund-based outstanding to all standard borrowers under resolution as per various guidelines declined to 25.46 billion rupees or about 0.2% of the total loan portfolio at September 30, 2024 from 27.35 billion rupees at June 30, 2024. Of the total fund-based outstanding at the resolution at September 30, 2024, 21.29 billion rupees was from the retail and rural portfolios and 4.17 billion rupees was from the corporate and business banking portfolios. The bank holds provisions of 8.12 billion rupees against these borrowers, which is higher than the requirement as per RBI guidelines. Moving on to the P&L details, the net interest income increased by 9.5% year-on-year to 200.48 billion rupees in this quarter. The net interest margin was 4.27% in this quarter compared to 4.36% in the previous quarter. and 4.53% in Q2 of last year. The impact of interest on income tax refund on net interest margin was nil in the current quarter, the previous quarter, and Q2 of last year. The movement in net interest margin from Q1 to Q2 of the current year includes the impact of the higher number of days in the current quarter, which should seasonally reverse in Q4. The domestic NIM was 4.34% in this quarter compared to 4.44% in the previous quarter and 4.61% due to last year. The cost of deposits was 4.88% in this quarter compared to 4.84% in the previous quarter. Of the total domestic loans, interest rates of 51% of the loans are linked to the repo 1% to other external benchmarks and 16% to NCLR and other older benchmarks. The balance 32% of loans have fixed interest rates. Non-interest income excluding treasury grew by 10.8% year-on-year to 64.96 billion rupees in Q2 of 2025. Fee income increased by 13.3% year-on-year to 58.94 billion rupees in this quarter. Fees from retail, rural and business banking customers constituted about 78% of the total fees in this quarter. Dividend income from subsidiaries was 5.41 billion rupees in this quarter compared to 6.48 billion rupees in Q2 of last year. Dividend income from subsidiaries and associates was 14.35 billion rupees in H1 of the current year compared to 9.40 billion rupees in H1 of the last year. On costs, The bank's operating expenses increased by 6.6% year-on-year in this quarter. Employee expenses increased by 11% year-on-year, and non-employee expenses increased by 3.8% year-on-year in this quarter. The technology expenses were about 10% of our operating expenses in H1 of the current year. Our branch count has increased by 90 in H1 of the current year. we had 6613 branches as of September 30, 2024. The total provisions during the quarter were 12.33 billion rupees, or 7.7% of the core operating profit, and 0.4% of average advances compared to the provisions of 13.32 billion rupees in Q1 of 2025. The provisions in Q1 of 2025 also included the impact of release of EIF provisions of 3.89 billion, pursuant to clarity on the regulatory requirements. The provisioning coverage on non-performing loans was 78.5% as of September 30, 2024. In addition, we hold 8.12 billion rupees of provisions on borrowers under resolutions. Further, the bank continues to hold contingency provision of Rs. 131 billion as of September 30, 2024. At the end of September, the total provisions other than specific provisions on fund-based outstanding to borrowers classified as non-performing were Rs. 231.91 billion or 1.8% of loans. The profit before tax, excluding Treasury, grew by 7.9% year-on-year to Rs. 148.10 billion in Q2 of this year. Treasury gains were 6.80 billion rupees in Q2 as compared to a Treasury loss of 0.85 billion rupees in Q2 of the previous year, primarily reflecting realized and mark-to-market gains in equities and fixed income securities. The tax expense was 37.44 billion rupees in this quarter compared to 33.85 billion rupees in the corresponding quarter last year. The profit after tax grew by 14.5% year-on-year to Rs. 117.46 billion in this quarter. Growth in digital offerings. We continue to enhance the use of technology in our operations to provide simplified solutions to customers. About 72% of trade transactions were done digitally in Q2 of 2025. The volume of transactions done through trade online grew by 20% year-on-year in Q2 of 2025. We have provided details on our retail, rural, and business banking portfolios on slides 29 to 32 of the investor presentation. In line with the revised presentation of composition of the loan portfolio, we would be providing the BBN below corporate portfolio from the current quarter onwards. The loan and non-fund-based outstanding to performing corporate borrowers rated BBN below was Rs. 33.86 billion at September 30, 2024. compared to 41.64 billion rupees at June 30th, 2024. This portfolio was about 0.3% of our advances at September 30th, 2024. Other than two accounts, the maximum single borrower outstanding in the WDN below portfolio was less than 5 billion rupees at September 30th, 2024. As of that date, we held provisions of 6.26 billion rupees on the WDN below portfolio compared to 8.41 billion rupees at June 30, 2024. While the SME portfolio has been carved out from this disclosure, the loan and non-farm-based outstanding to performing SME borrowers rated BB and below also declined in the current quarter. The total outstanding to NDFCs and HFCs was Rs. 880.27 billion at September 30, 2024, compared to Rs. 854.12 billion at June 30, 2024, The total outstanding loans to NBFCs and HFCs were about 6.9% of our advances on September 30, 2024. The sequential increase in the outstanding to NBFCs and HFCs is mainly due to disbursement to entities having long vintage and owned by well-established corporate groups. The builder portfolio, including construction finance, lease rental, discounting, term loans, and working capital, was 542.16 billion rupees at September 30, 2024, compared to 521.30 billion rupees at June 30, 2024. The builder portfolio was about 4.2% 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 1.9% of the builder portfolio at September 30, 2024, was either rated double B and below internally or was classified as non-performing compared to 2.1% at June 30, 2024. Moving on to the consolidated results, the consolidated profit after tax grew by 18.8% year-on-year to Rs. 129.48 billion in this quarter. The details of the financial performance of key subsidiaries are covered in slides 40 to 42 and 61 to 66 in the investor presentation. The annualized premium equivalent of ICICI Life was 44.67 billion rupees in H1 of this year as compared to 35.23 billion rupees in H1 of last year. The value of new business was 10.58 billion rupees in H1 of this year compared to 10.15 billion rupees in H1 of last year. The value of new business margin was 23.7% in H1 of this year compared to 24.6% in FY2024 and 28.8% in H1 of last year. The profit after tax of ISSA Life was 4.77 billion rupees in H1 of this year, compared to 4.51 billion rupees in H1 of last year, and 2.52 billion rupees in Q2 2025, compared to 2.44 billion rupees in Q2 2024. The gross direct premium income of ICICI General was 67.21 billion rupees in Q2 of 2025 compared to 60.86 billion rupees in Q2 of 2024. The combined ratio stood at 104.5% in Q2 of 2025 compared to 103.9% in Q2 of 2024. Excluding the impact of CAT losses of Rs. 0.94 billion in the current quarter and Rs. 0.48 billion in the corresponding quarter previous year, the combined ratio was 102.6% and 102.8% respectively. The profit after tax was Rs. 6.94 billion in Q2 of 2025 compared to Rs. 5.77 billion in Q2 of 2024. The profit after tax of ICICI AMC as per NDIS was 6.94 billion rupees in this quarter compared to 5.01 billion rupees in Q2 of last year. The profit after tax of ICICI securities as per NDIS on a consolidated basis was 5.29 billion rupees in this quarter compared to 4.24 billion rupees in Q2 of last year. ICICI Bank Canada had a profit after tax of 19.1 million Canadian dollars in this quarter compared to 21.1 million Canadian dollars in Q2 last year. ICICI Bank UK had a profit after tax of 8 million US dollars in this quarter compared to 3.3 million US dollars in Q2 of last year. As per INDS, ICICI Home Finance had a profit after tax of 1.83 billion rupees in the current quarter compared to 1.12 billion rupees in Q2 of last year. With this, we conclude our opening remarks and we will now be happy to take your questions.

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