ICICI Bank Limited

Ladies and gentlemen, good day and welcome to ICICI Bank Limited Q3 FI25 Earnings Conference Call. 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. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference Over to Mr. Sandeep Bakshi, MD and CEO, ICICI Bank. Thank you and over to you, sir.

Thank you. Good evening to all of you and welcome to the ICICI Bank earnings call to discuss the results for Q3 of FY25. Joining us today on this call are Sandeep Batra, Rakesh, Ajay, Anandya and Abhinayak. The operating environment for the banking system continues to be dynamic based on evolving global and domestic economic factors. We will continue to monitor domestic inflation, liquidity, rates, and uncertainties in the global environment. At ICICI Bank, our strategic focus continues to be on growing profit before tax, excluding treasury, to the 360-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. 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 12.8% year-on-year and 3.2% quarter-on-quarter, to Rs. 152.89 billion in this quarter. The core operating profit increased by 13.1% year-on-year and 2.9% quarter-on-quarter to Rs. 165.16 billion in this quarter. Excluding dividend income from subsidiaries, the core operating profit increased by 14.7% year-on-year and 3.3% quarter-on-quarter to Rs. 160.07 billion in this quarter. The profit after tax grew by 14.8% year-on-year to Rs. 117.92 billion in this quarter. Total deposits grew by 14.1% year-on-year and 1.5% sequentially at December 31, 2024. During the quarter, average deposits grew by 13.7% year on year and 2.1% sequentially. And average current and savings account deposits grew by 12.6% year on year and 2.3% sequentially. The bank's average liquidity coverage ratio for the quarter was about 123%. The domestic loan portfolio grew by 15.1% year on year and 3.2% sequentially. at December 31, 2024. The retail loan portfolio grew by 10.5% year on year and 1.4% sequentially. Including non-fund-based outstanding, the retail portfolio was 43.9% of the total portfolio. The rural portfolio grew by 12.2% year on year and 0.9% sequentially. The business banking portfolio grew by 31.9% year on year and 6.4% sequentially. The domestic corporate portfolio grew by 13.2% year-on-year and 4.3% sequentially. The overall loan portfolio including the international branches portfolio grew by 13.9% year-on-year and 2.9% sequentially at December 31, 2024. The net NPA ratio was 0.42% at December 31, 2024 compared to 0.42% at September 30, 2024 and 0.44% at December 31, 2023. The total provisions during the quarter were 12.27 billion rupees, or 7.4% of core operating profit, and 0.37% of average advances. The provisioning coverage ratio on non-performing loans was 78.2% at December 31, 2024. In addition, the bank continues to hold contingency provisions of 131 billion rupees, or about 1% of total loans at December 31, 2024. The capital position of the bank continued to be strong with a CET1 ratio at 15.93% and total capital adequacy ratio at 16.6% at December 31, 2024, including profits for nine months, 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 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, people, distribution, and building a brand. We are laying strong emphasis on strengthening our operational resilience for seamless delivery of services to customers. We'll 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 Anand here.

Thank you, Sunil. I will talk about loan growth, credit quality, P&L details, technology initiatives, portfolio trends, and the performance of subsidies. Sandeep covered the loan growth across various segments. Coming to the growth across retail products, the mortgage portfolio grew by 11.4% year-on-year and 2.1% sequentially. Auto loans grew by 6.6% year-on-year and 1.7% sequentially. The commercial vehicles and equipment portfolio grew by 7.4% year-on-year and 1.7% sequentially. Personal loans grew by 8.8% year-on-year and declined 1.3% sequentially. The credit card portfolio grew by 17.9% year-on-year and 2.8% sequentially. The personal loans and credit card portfolio were 9.2% and 4.3%. of the overall loan book respectively at December 31, 2024. The overseas loan portfolio in US dollar terms declined 21.2% year-on-year at December 31, 2024. The overseas loan portfolio was about 2.4% of the overall loan book at December 31, 2024. Of the overseas corporate portfolio, about 90% comprises Indian corporates. Moving on to credit quality, the gross NPA additions were 60.85 billion rupees in the current quarter compared to 59.16 billion rupees in the first quarter of the current fiscal year and 50.73 billion rupees in the previous quarter, i.e. the second quarter. Recoveries and upgrades from gross NPAs excluding write-offs and sale were 33.92 billion rupees in the current quarter compared to 32.92 billion rupees in the first quarter of the current fiscal year and 33.19 billion rupees in the previous quarter. The net additions to gross NPAs were thus 26.93 billion rupees in the current quarter, compared to 26.24 billion rupees in the first quarter of the current fiscal year and 17.54 billion rupees in the previous quarter. The gross NPA additions from the retail and rural portfolios were 53.04 billion rupees in the current quarter compared to 52.04 billion rupees in the first quarter of the current fiscal year and 43.41 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. There were gross NPA additions of about 7.14 billion rupees from the Kisan credit card portfolio in the current quarter compared to 7.21 billion rupees in the first quarter of the current fiscal year. Recoveries and upgrades from the retail and rural portfolios were 27.86 billion rupees compared to 25.32 billion rupees in the first quarter of the current fiscal year and 25.92 billion rupees in the previous quarter. The net additions to gross NPAs in the retail and rural portfolios were 25.18 billion rupees compared to 26.72 billion rupees in the first quarter of the current fiscal year and 17.49 billion rupees in the previous quarter. The gross NP additions from the corporate and business banking portfolios were 7.81 billion rupees compared to 7.32 billion rupees in the previous quarter. The recoveries and upgrades from the corporate and business banking portfolios were 6.06 billion rupees compared to 7.27 billion rupees in the previous quarter. There were net additions to gross NPAs of 1.75 billion rupees in the corporate and business banking portfolios compared to net addition of 0.05 billion rupees in the previous quarter. The gross NPAs written off during the quarter were 20.11 billion rupees. There was sale of NPAs of 0.58 billion rupees for cash and in the current quarter compared to 0.16 billion rupees in the previous quarter. The non-fund based outstanding to borrowers classified as non-performing was 31.6 billion rupees as of December 31, 2024 compared to 33.82 billion rupees as of September 30, 2024. The provisions on this non-fund based outstanding declined to 17.12 billion rupees at December 31, 2024 from 19.11 billion rupees at September 30, 2024, reflecting the decline in the outstanding itself. The total fund-based outstanding to all standard borrowers under resolution as per various guidelines declined to 21.07 billion rupees, or about 0.2% of the total loan portfolio at December 31, 2024, or from 25.46 billion rupees at September 30, 2024, of the total fund-based outstanding under resolution at December 31, 2024, 19.36 billion rupees was from the retail and rural portfolios and 1.71 billion rupees was from the corporate and business banking portfolios. The bank holds provisions of 6.91 billion rupees against these borrowers, which is higher than the requirement as per RBI guidelines. Moving on to the P&L details, Net interest income increased by 9.1% year-on-year to 203.71 billion rupees in this quarter. The net interest margin was 4.25% in this quarter compared to 4.27% in the previous quarter and 4.43% in Q3 of last year. The impact of interest on income tax refund on net interest margin was one basis point in the current quarter. nil in the previous quarter and four basis points in Q3 of last year. The domestic name was 4.32% in this quarter compared to 4.34% in the previous quarter and 4.52% in Q3 of last year. The cost of deposits was 4.91% in this quarter compared to 4.88% in the previous quarter. Of the total domestic loans, interest rates on 52% of the loans are linked to the repo rate 16% 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 12.1% year-on-year to 66.97 billion rupees in Q3 of 2025. Fee income increased by 16.3% year-on-year to 61.8 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 5.09 billion rupees in this quarter compared to 6.5 billion rupees in Q3 of last year. Dividend income from subsidiaries was 19.44 billion rupees in 9 months of the current year compared to 15.89 billion rupees in 9 months of last year. On costs, the banks operating expenses increased by 5% year-on-year in this quarter. Employee expenses increased by 3.1% year-on-year and non-employee expenses increased by 6.2% year-on-year in this quarter. Our branch count has increased by 129 in Q3 and 219 in the nine months of the current year. We had 6,742 branches as of December 31st, 2024. The technology expenses were about 10.5% of our operating expenses in nine months of the current year. The total provision during the quarter were 12.27 billion rupees or 7.4% of core operating profit and 0.37% of average advances compared to the provisions of 12.33 billion rupees in the previous quarter. The provisioning coverage on non-performing loans was 78.2% as of December 31st, 2024 In addition, we hold 6.91 billion rupees of provisions on borrowers under resolution. Further, the bank continues to hold contingency provision of 131 billion rupees as of December 31, 2024. At the end of December, the total provisions other than specific provisions on fund-based outstanding to borrowers classified as non-performing were 225.69 billion rupees or 1.7% of loans. The profit before tax excluding Treasury grew by 12.8% year-on-year to Rs. 152.89 billion in Q3 of this year. Treasury gains were Rs. 3.71 billion in Q3 as compared to a Treasury gain of Rs. 1.23 billion in Q3 of the previous year. As you are aware, the Treasury gains for the current quarter vis-à-vis the same quarter last year would not be comparable due to the implementation of the revised investment accounting guidelines from the 1st of April of the current year. The tax expense was 38.68 billion rupees in this quarter compared to 34.02 billion rupees in the corresponding quarter last year. The profit after tax grew by 14.8% year-on-year to 117.92 billion rupees in this quarter. We continue to enhance the use of technology in our operations to provide simplified solutions to customers. The bank has introduced DigiEase, a digital platform designed to streamline the customer onboarding process for business banking. This enhances operational efficiency and the customer experience by integrating multiple digital services into a single seamless workflow. iLend, the retail lending platform, is being upgraded on an ongoing basis. with retail credit cards now integrated in the platform along with mortgages, personal loans, and education loans. We continue to make investments in the computing infrastructure and upgrade digital channels to further strengthen system resilience and simplify processes for enhancing customer experience. We have provided details on our retail, rural, and business banking portfolios on slides 25 to 28 of the investor presentation. The loan and non-fund based outstanding to performing corporate borrowers rated BBN below was 21.93 billion rupees at December 31, 2024 compared to 33.86 billion rupees at September 30, 2024. This portfolio was about 0.2% of our advances at December 31, 2024. Other than one account, the maximum single borrower outstanding in the BBN below portfolio was less than 5 billion rupees at December 31, 2024. The bank holds provisions of 0.92 billion rupees against this portfolio at December 31, 2024. The total outstanding to NBFCs and HFCs was 893.6 billion rupees at December 31, 2024 compared to 880.27 billion rupees at September 30, 2024. The total outstanding loans to NBFCs and HFCs were about 6.8% of our advances at December 31, 2024. The builder portfolio including construction finance, lease rental, discounting, term loans and working capital was 586.36 billion rupees at December 31, 2024 compared to 542.16 billion rupees at September 30, 2024. The builder portfolio was about 4.5% 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 portfolio at December 31, 2024 was either rated BB and below internally or was classified as non-performing, compared to 1.9% at September 30, 2024. Finally, the consolidated results. The consolidated profit after tax grew by 16.6% year-on-year to 128.83 billion rupees in this quarter. The details of the financial performance of key subsidies are covered in slides 36 to 38 and 57 to 62 in the investor presentation. The annualized premium equivalent of ICICI Life was 69.05 billion rupees in the nine months ended December 31, 2024, compared to 54.3 billion rupees in the nine months of last year. The value of new business was 15.75 billion rupees in the nine months ended December 31, 2024, compared to 14.51 billion rupees in nine months of last year. The value of new business margin was 22.8% in these nine months compared to 26.7% in the nine months of last year and 24.6% in FY 2024. The profit after tax of ICICI Life was 8.03 billion rupees in nine months ended December 31, 2024 compared to 6.79 billion rupees in nine months of last year and 3.26 billion rupees in the current quarter compared to 2.27 billion rupees in Q3 of last year. Gross direct premium income of ICICI General was Rs. 62.14 billion in the current quarter compared to Rs. 62.3 billion in Q3 of last year. The combined ratio stood at 102.7% in the current quarter compared to 103.6% in Q3 of last year. The profit after tax was Rs. 7.24 billion in the current quarter compared to Rs. 4.31 billion in Q3 of last year. With effect from October 1, 2024, long-term products are accounted on a one-by-one basis as mandated by IRDAI. Hence, the Q3 numbers are not fully comparable. The profit after tax of ICICI ANC as per NBS was Rs. 6.32 billion in this quarter compared to Rs. 5.46 billion in Q3 of last year. The profit after tax of ICICI securities as per NDIS on a consolidated basis was 5.04 billion rupees in this quarter compared to 4.66 billion rupees in Q3 of last year. ICICI Bank Canada had a profit after tax of 19.6 million Canadian dollars in this quarter compared to 15.9 million Canadian dollars in Q3 of last year. ICICI Bank UK had a profit after tax of 5.1 million US dollars in this quarter compared to 6.7 million US dollars in Q3 of last year. As per INDS, ICICI Home Finance had a profit after tax of 2.03 billion rupees in the current quarter, compared to 1.86 billion rupees in Q3 of last year. With this, we conclude our opening remarks and we will now be happy to take your questions.