ICICI Bank Limited

for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sandeep Bakshi, Managing Director and Chief Executive Officer of ICICI Bank. Thank you and over to you.

Thank you. Good evening to all of you. and welcome to the ICICI Bank Earnings Call to discuss the results for Q4 of FY 2025. Joining us today on this call are Sandeep Batra, Rakesh, Ajay, Anandya, and Abhinik. At ICICI Bank, our strategic focus continues to be on growing profit before tax, excluding treasuries. through 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 13.2% year-on-year, to 165.34 billion rupees in this quarter and by 11.4% year on year to 607.13 billion rupees in financial year 2025. The core operating profit increased by 13.7% year on year to 174.25 billion rupees in this quarter and by 12.5% year on year to 653.96 billion rupees in financial year 2025. The profit after tax grew by 18% year on year to 126.30 billion rupees in this quarter. For the fiscal year 2025, the profit after tax grew by 15.5% year on year to 472.27 billion rupees. The consolidated profit after tax grew by 15.7% year on year to 135.02 billion rupees in this quarter and by 15.3% year-on-year to Rs. 510.29 billion in FY2025. The Board has recommended a dividend of Rs. 11 per share for FY2025, subject to requisite approvals. Total deposits grew by 14% year-on-year and 5.9% sequentially at March 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%. The domestic loan portfolio grew by 13.9% year-on-year and 2.2% sequentially at March 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. 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 March 31, 2025. The net NPA ratio was 0.39% at March 31, 2025 compared to 0.42% at December 31, 2024, and 0.42% at March 31, 2024. The total provisions during the quarter were 8.91 billion rupees, 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 March 31, 2025. In addition, the bank continues to hold contingency provision of Rs. 131 billion or about 1% of total advances at March 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 March 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 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 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, Saviv. I will talk about loan growth, credit quality, P&L details, technology initiatives, portfolio trends and the performance of subsidies. We 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. 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 9.1% and 4.3% of the overall loan book respectively at March 31, 2025. The overseas loan portfolio in US dollar terms declined 10.2% year-on-year at March 31, 2025. The overseas loan portfolio was about 2.3% of the overall loan book at March 31, 2025. Of the overseas corporate portfolio, about 91% comprises Indian corporates. On credit quality, the gross NPA additions were 51.42 billion rupees in the current quarter. compared to 60.85 billion rupees in the previous quarter. Recoveries and upgrades from gross NPAs excluding write-offs and sale were 38.17 billion rupees in the current quarter compared to 33.92 billion rupees in the previous quarter. The net additions to gross NPAs were 13.25 billion rupees in the current quarter compared to 26.93 billion rupees in the previous quarter. The gross NP additions from the retail and rural portfolios were Rs. 43.39 billion in the current quarter compared to Rs. 53.04 billion in the previous quarter. Recoveries and upgrades from the retail and rural portfolios were Rs. 30.39 billion compared to Rs. 27.86 billion in the previous quarter. The net additions to gross NPAs in the retail and rural portfolios were 13 billion rupees compared to 25.18 billion rupees in the previous quarter. The gross NPA additions from the corporate and business banking portfolios were 8.03 billion rupees in the current quarter compared to 7.81 billion rupees in the previous quarter. Recoveries and upgrades from the corporate and business banking portfolios were 7.78 billion rupees compared to 6.06 billion rupees in the previous quarter. There were net additions to gross NPAs of 0.25 billion rupees in the corporate and business banking portfolios compared to net additions of 1.75 billion rupees in the previous quarter. The gross NPAs written off during the quarter were 21.18 billion rupees Further, there was sale of NPAs of Rs. 27.86 billion in the current quarter compared to Rs. 0.58 billion in the previous quarter. These were fully provided NPAs and in lieu of sale, the bank received Rs. 16.05 billion of security receipts and Rs. 3.14 billion in cash with the balance Rs. 8.67 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 non-performing was 30.75 billion rupees as of March 31, 2025 compared to 31.60 billion rupees as of December 31, 2024. The provisions on this non-fund-based outstanding were 16.6 billion rupees at March 31, 2025 compared to 17.12 billion rupees at December 31, 2024. The total fund-based outstanding to all standard borrowers under resolution as per various guidelines declined to 19.56 billion rupees or about 0.1% of the total loan portfolio excuse me, at March 31, 2025 from 21.07 billion rupees at December 31, 2024. Of the total fund-based outstanding under resolution at March 31, 2025, 17.55 billion rupees was from the retail and rural portfolios and 2.01 billion rupees was from the corporate and business banking portfolios. The bank holds provisions of 6.43 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 11% year-on-year to 211.93 billion rupees in this quarter. 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 name 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. 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 Rs. 17.21 billion in Q4 of 2025. Fee income increased by 16% year-on-year to Rs. 63.06 billion in this quarter. Fees from retail, rural and business banking customers constituted about 80% of the total fees in this quarter. Dividend income from subsidiaries was 6.75 billion rupees in this quarter compared to 4.84 billion rupees in Q4 of last year. Dividend income from subsidiaries was 26.19 billion rupees in FY 2025 compared to 20.73 billion rupees in FY 2024. The year-on-year increase in dividend income was primarily due to higher dividend from ICICI Bank Canada ICICI Prudential Asset Management Company and ICICI Securities Primary Dealership. On costs, the banks 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. Excuse me. Our branch count has increased by 241 in Q4 and 460 in FY 2025. We had 6,983 branches as of March 31, 2025. Technology expenses were about 10.7% of our operating expenses in FY 2025. The total provisions during the quarter were 8.91 billion rupees or 5.1% of core operating profit and 0.27% of average advances compared to the provisions of 12.27 billion rupees in the previous quarter. The total provisions during FY 2025 increased by 28.5% year-on-year to 46.83 billion rupees. 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 non-performing loans was 76.2% as of March 31, 2025. In addition, we hold 6.43 billion rupees of provisions on borrowers under resolution. Further, the bank continues to hold Contingency provision of Rs. 131 billion as of March 31, 2025. At the end of March, the total provisions, other than specific provisions or fund-based outstanding to borrowers classified as non-performing, were Rs. 226.51 billion or 1.7% of loans. The profit before tax excluding treasury grew by 13.2% year-on-year. to 165.34 billion rupees in Q4 of this year and by 11.4% year-on-year to 607.13 billion rupees in FY2025. Treasury gains were 2.39 billion rupees in Q4 as compared to a Treasury loss of 2.81 billion rupees in Q4 of the previous year The treasury loss in Q4 of the previous year includes the transfer of negative balance of 3.4 billion rupees 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 41.43 billion rupees in this quarter compared to 36.13 billion rupees in the corresponding quarter last year. The profit after tax grew by 18.0% year-on-year to Rs. 126.3 billion in this quarter. The profit after tax grew by 15.5% year-on-year to Rs. 472.2 billion in FY2025. 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 28.54 billion rupees at March 31, 2025 compared to 21.93 billion rupees at December 31, 2024. This portfolio was about 0.2% of our advances at March 31, 2025. Other than two accounts, the maximum single borrower outstanding in the BB and below portfolio was less than 5 billion rupees at March 31, 2025. The bank holds provision of 4.38 billion rupees against this portfolio at March 31, 2025. The total outstanding to NBFCs and HFCs was 918.38 billion rupees at March 31, 2025 compared to 893.6 billion rupees at December 31, 2024. The total outstanding to NDFCs and HFCs were about 6.8% of our advances at March 31, 2025. The builder portfolio including construction finance, lease rental discounting, term loans and working capital was 606.24 billion rupees at March 31, 2025 compared to 586.36 billion rupees at December 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 March 31, 2025 was either rated BB and below internally or was classified as non-performing compared to 1.7% at December 31, 2024. Moving on to the consolidated results, the consolidated profit after tax grew by 15.7% year-on-year to 135.02 billion rupees in this quarter. The consolidated profit after tax grew by 15.3% year-on-year to 510.29 billion rupees in FY 2025. The details of the financial performance of key subsidiaries are covered in slides 36 to 38. and 57 to 62 in the investor presentation. The annualized premium equivalent of ICICI Life was 104.07 billion rupees in FY 2025 compared to 90.46 billion rupees in FY 2024. The value of new business was 23.7 billion rupees in FY 2025 compared to 22.27 billion rupees in FY 2024. The value of new business margin was 22.8% in FY2025 compared to 24.6% in FY2024. The profit after tax of ISSA Life was 11.89 billion rupees in FY2025 compared to 8.52 billion rupees in FY2024 and was 3.86 billion rupees in the current quarter compared to 1.74 billion rupees in Q4 of last year. The gross direct premium income of ICICI in general was Rs. 247.76 billion in FY 2024 compared to Rs. 268.33 billion in FY 2025. The combined ratio stood at 102.8% in FY 2025 compared to 103.3% in FY 2024. including the impact of cash losses of 0.94 billion rupees in FY2025 and 1.37 billion rupees in FY2024. The combined ratio was 102.4% and 102.5% respectively. The profit after tax was 25.08 billion rupees in FY2025 compared to 19.19 billion rupees In FY2024, the profit after tax was 5.1 billion rupees in this quarter compared to 5.19 billion rupees in Q4 of last year. The profit after tax of ICHAMC as per NDIS was 6.92 billion rupees in this quarter compared to 5.29 billion rupees in Q4 of last year. The profit after tax of ICICI Securities as per NDIS on a consolidated basis was 3.85 billion rupees in this quarter compared to 5.37 billion rupees in Q4 of last year. Pursuant to the scheme of arrangement among ICICI Bank Limited and ICICI Securities Limited and their respective shareholders, ICICI Securities Limited has been delisted from stock exchanges on March 24, 2025 and become a wholly owned subsidiary of the bank. Isasia Bank Canada had a profit after tax of 12.5 million Canadian dollars in this quarter compared to 19.9 million Canadian dollars in Q4 of last year. Isasia Bank UK had a profit after tax of 6 million US dollars in this quarter compared to 9.5 million US dollars in Q4 of last year. As per India, Isasia Home Finance had a profit after tax of 2.41 billion rupees in the current quarter. compared to 1.69 billion rupees in Q4 of last year. With this, we conclude our opening remarks and we will now be happy to take your questions.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Maharukh Jania from Novama Wealth Management. Please go ahead.

Hello. 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. So is there any cautious approach and if there is, why? Or is this the general demand that, uh, you know, the bank is presented with. Uh, so that's my first question. And then I have another question on deposit.

So as far as the loan growth is concerned, I don't think anything specific incrementally in terms of caution on the credit side. Uh, I think we are pretty comfortable with what we are underwriting. Uh, 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. And also, I guess, on the pricing side, you know, some consciousness given that You know, during this quarter, we were at the sort of cusp of the, you know, downward movement in benchmark rates. So we had to be, I think, a little more, I would say, disciplined in terms of the spreads, et cetera, that we were charging over the benchmark. But other than that, no specific caution on the credit side. Yeah.

Okay, thanks. 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?

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, you know, and as the rate, you know, now, of course, If you look at it, the repo rate has fallen by 50 bps. So that will start to see a transmission into deposit rates, which is what has started. So I think that's, you know, in the natural course of things.

Okay. Thanks a lot. Thank you.

Thank you. The next question is from the line of Kunal Shah from Citigroup. Please go ahead.

Hello. Yeah, so the question was on margin. When we look at it in terms of the yields particularly, there has been 21 digit points expansion So, firstly, obviously, there could be some elements of lower results on K2C. But besides that, anything else to look into this? Was there maybe in the recovery, there was anyone else impressed or something which was there? Besides the interest on income tax equipment, was there any other one in the build-on advances?

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, you know, 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, is what you alluded to, the absence of the KCC non-accrual in Q4 relative to Q3. We did speak about the two bits of, you know, interest on tax refund. 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, you know, requires to be called out, I would say.

Yeah, so this day recognition would be the significant component of it because it was thought to be like earlier when you indicated it seemed like there is a benefit of 3 to 4 or the response which is coming in margin. But then it seems like that component was quite high.

I am sorry, what component? This day recognition.

Okay.

Yeah, that would be some number, but I think the larger number is really on account of the day count convention. So, you know, 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. That would be a more representative number.

Yeah. And in terms of also 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 100 bps kind of a repo rate cut over say 4 MTCs, would 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 rate? reset and business banking happens immediately and maybe that will entirely flow through and are there any levers available to improve margins or maybe to take care of the EBLR repricing impact?

So I don't think so whether the rate cut were you know relatively less or more there would be some impact on margins because the deposit rates are 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, you know, falling. So we will have to see as we go along how we manage through this, but there would be an impact on margins, you know, definitely. What that will be, we'll have to see, you know, as we go through the year because there are a number of factors that will come into play. I think overall, you know, 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 lever starting with growth margins and other aspects of that that we have to optimize and that's what we'll keep continuing to do.

Okay. Thanks and all the best.

Thank you. The next question is from the line of Anand Swaminathan from Bank of America. Please go ahead.

Thank you. I have a couple of questions. One is on the Elasticity of savings rate card. Yes, sir. Can you hear me better now?

Yes, sir.

Okay, thank you. I had a couple of questions. One is on the elasticity of savings rate cards. What, according to you, is the kind of modeling you have done in kind of going ahead with a concerted all banks have done at 25 bps rate card? 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 report rate cuts over the next few quarters? That's my first question. 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 You know, I would say the repo rate has fallen by 25 bits 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, you know, any direct relation in that sense, which is quantifiable at this stage. Okay. But theoretically, there is no limit to how much savings it can go down from here. It's a rate which, you know, each bank can set for itself in that sense. So it can move as per, you know, what a bank thinks is optimal. Okay. And second question is on the business banking side. The loan grower has been exceptionally good, especially it seems to have accelerated in the last few quarters. Can you help us understand what is the risk in this business? How are you assessing the incremental risk? 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 going to contribute to a slightly higher average credit cost down the line? Some color on this to get a better understanding would be good. Thank you. 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 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. 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, you know, it's not in that sense a particularly high-yield business. So this is not the sort of 15 lending rate, you know, kind of business. It's a pretty, you know, 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, you know, we have a very much better scope to do the customer 360 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, you know, quite good. In fact, if we look back five years, I think at the onset of the pandemic, when of course we were also, you know, 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. Even if you look at a systemic level, you know, utilization and so on relative to this portfolio has been marginal. So it has behaved well. Currently credit costs are, you know, 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, you know, managing the portfolio dynamically. And 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, you know, the segment-wise yield. It would be, you know, somewhat higher. But I think more importantly, it is the holistic P&L of the business in terms of the full customer 360, the liability side, and the transaction banking and the ability to manage delivery costs and credit costs, which yields, you know, the bigger benefit. And, of course, you know, the granularity of it.

Sure. Thank you. Thank you.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants, please limit your question to two per participant. If you have a follow-up question, I would request you to rejoin the queue. The next question is from the line of Nitin Agarwal from Motilal Oswal Financial Services. Please go ahead.

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

I request you to please use your handset.

Hi, is it any better?

Yes.

Sorry about that. So first question is around asset quality. So if I look back, the 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 it trending now in unsecure retail products? Actually, we were always quite comfortable, so we were never too worried. But I would say that, you know, 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. 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 some 30 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, you know, some right back this quarter and so on, it will still be, you know, just about 40 odd bips or so. 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. Right. And the second question is on 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 where I think the bank is so how do you see the trend about the overall loan growth where it remains skewed in favor of select products which fits our POP and the profitability thresholds or one can expect more about this growth 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, et cetera, in a particular customer or segment or product for a particular period of time, I think our funding franchise gives us the flexibility to do that. But overall, we are quite focused on the overall PPOP. I think that, you know, if we look, you know, 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. And I think as the rate environment stabilizes during the year, you know, pricing may also stabilize. So, kind of that's where I would look at it. On the unsecured side, probably, you know, the growth has bottomed out and we may see some improved growth from here is what we feel.

Right.

And lastly, on the PSL front line, if I see the stronger growth in business banking but slightly toned down growth in retail and rural, how is the bank faring on the PSL front? So, you know, I think it's pretty similar to what we have seen in past quarters. We meet our overall PSL requirement. We also meet our, you know, MSME requirement. In fact, overall and MSME, we have some surplus. In some of the categories like the, you know, small farmer and weaker section, et cetera, we do have shortfalls, which we try to address, you know, through either buyouts or through purchase of the PSLC certificate. So pretty much the same continues.

Okay, Shah. Thanks so much, Rishi. All the best.

Thank you. The next question is from the line of M.D. Mahesh from Kotak Security.

Hi. 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, like 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?

No, that the cash, the cash portion of the NPS sale is, would be reflected as a write-back in provisions, not as interest income. And there is nothing there in the interest income line from There will always be some interest recovery on NPS, you know, in any quarter. It may vary a little quarter to quarter, but it will always be there. Okay. So the 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 part of the bank side in comparison to public bank that is.

Are you talking about competition in the lending rates? Yes. When I look at some of the housing loan products, the Yeah, clearly it is, you know, an issue. I don't, you know, 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, you know, very large, capable competitors who are also priced meaningfully below us. So it does create, you know, 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.

And one final clarification, unsecured loans, today you would say that we are well past the peak in terms of cash slippages?

Or is there a still amount of uncertainty?

So I would say it has, you know, it's broadly stable. You know, 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. which we did maybe 18 months ago. The behavior of those portfolios gives us a fair degree of comfort on building the portfolio incrementally. Perfect. Thank you.

Thank you. The next question is from the line of Harsh Modi from J.P. Morgan. Please go ahead.

Hi, thanks for the opportunity to ask question. I 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. Thank you.

You know, it's an 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 make some larger positions as the interest rate went up.

uh you know interest rate environment turned favorable for taking trading positions got it um thanks the follow-up is on just the use of capital you have significant of capital generation pd1 is at 15.94 and the way it seems your incremental rwa of 2.4 trillion growth versus profit of almost half a trillion. So let's say over 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 next two to three years. Thank you.

We, you know, I think, let's see, two, three things. One, clearly I think that there is a certain expectation among stakeholders, market, et cetera, of the level of capital that a large private sector bank should be maintaining. And I think 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, you know, we will see as we go along. But I think that, you know, capital, maintaining a certain level of capital is important from a strategic perspective and a, you know, market confidence perspective.

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 so 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

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, you know, 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. Got it.

Thank you.

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

Yeah, hi. Thanks for taking my question. Firstly, on the network movement in the quarter, so it's up 20,000 crore quarter on quarter, which is higher than the PAD. So what is that the ASS market that's happened?

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

Okay. Not as much as I said. Got it. Okay. Secondly, so broadly the outlook on CASA, right, so over the last year, you know, the CASA ratio for the bank is almost flat, which is a great outcome given the context. But, you know, if you compare with, say, the pre-COVID period when CASA used to be 48%, 49%, we are lower. And we are looking at, like you pointed out, a very accommodative RBI on liquidity.

do you think this has legs to go up going ahead seeing the scenario as it is building up say from a macro perspective yeah I think that we basically have to look at you know 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 you know the large banks so 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, you know, not really we wouldn't have a specific outlook on CASA per se. Okay. Okay. Would you think that the worst of the CASA pressures for yourself and the sector are largely behind? Logically, that should be so. Logically, that should be so.

Okay. Perfect.

Thanks, Adindya.

All the best. Thank you.

Thank you. The next question is from the line of Peran from CLSA.

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

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 that the sort of some calm in capital markets, but it's something we'll have to see as we go ahead.

Okay. Okay. That's the reason. Just moving on to my questions, firstly on vehicle growth slowdown, how do we really interpret this? Is this just a function of, you know, more competition at the counter or are you all intentionally scaling back due to asset quality or pricing or is it just something else?

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

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

Similar to... Or is it a number of days thing?

Yeah, it would be partly a number of days thing.

Okay, okay. And just my last question, out of your build-up portfolio of 60,000 crores, how much would be LRD?

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

Would it be significant or more minor?

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

Okay. Okay, fair enough. That's all from my end. And if I could just squeeze in one, you know, 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 HTFC bank call, it doesn't do justice to either of the banks. So if you could take that suggestion, it would be great. I'm done. Thank you.

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

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

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