ICICI Bank Limited

Ladies and gentlemen, good day and welcome to the Q1 FY26 earnings conference call of ICICI Bank. As a reminder, all participant lines will be in listen-only mode and there will be an opportunity 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, sir.

Thank you. Good evening to all of you and welcome to the ICICI Bank Earnings Call to discuss the results for Q1 of FY26. Joining us today on this call are Sandeep Batra, Rakesh, Ajay, Anandya and Abhinav. At ICICI Banks, 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 micromarkets. We continue to operate within the framework of our values to strengthen our franchise, maintaining high standards of governance, deepening coverage, and enhancing delivery capabilities with a focus on simplicity and operational resilience, are key drivers for a risk-calibrated profitable growth. The profit before tax excluding Treasury grew by 11.4% year-on-year to Rs. 156.90 billion in this quarter. The core operating profit increased by 13.6% year-on-year at Rs. 175.05 billion in this quarter. The profit after tax grew by 15.5% year-on-year to 127.68 billion rupees in this quarter. Total deposits grew by 12.8% year on year and were flat sequentially at June 30, 2025. During the quarter, average deposits grew by 11.2% year on year and 3.1% sequentially. And average current and savings account deposits grew by 8.7% year on year and 3.9% sequentially. the bank's average liquidity coverage ratio for the quarter was about 128%. The domestic loan portfolio grew by 12% year-on-year and 1.5% sequentially at June 30, 2025. The retail loan portfolio grew by 6.9% year-on-year and 0.5% sequentially. Including non-fund-based outstanding, the retail portfolio was 43.2% of the total portfolio. The rural portfolio declined by 0.4% year on year and 1.5% sequentially. The business banking portfolio grew by 29.7% year on year and 3.7% sequentially. The domestic corporate portfolio grew by 7.5% year on year and declined by 1.4% sequentially. The overall loan portfolio, including the international branches portfolio, grew by 11.5% year on year and 1.7% sequentially. at June 30, 2025. The overseas loan portfolio was about 2.4% of the overall loan book at June 30, 2025. The net NPA ratio was 0.41% at June 30, 2025, compared to 0.43% at June 30, 2024. During the quarter, there were net additions of 30.34 billion rupees to gross NPAs, excluding write-offs and sales. The total provisions during the quarter were 18.15 billion rupees or 10.4% of core operating profit and 0.53% of average advances. The provisioning coverage ratio on non-performing loans was 75.3% at June 30, 2025. In addition, the bank continues to hold contingency provisions of 131 billion rupees or about 1% of total advances at June 30, 2025. The capital position of the bank continued to be strong with a CET1 ratio of 16.31% and total capital adequacy ratio of 16.97% at June 30, 2025, including profits for Q1 of financial year 26. Looking ahead, we see many opportunities to drive risk-calibrated profitable growth and grow market share across key segments. We remain focused on maintaining a strong balance sheet, prudent provisioning and healthy levels of capital while delivering sustainable and predictable returns to our shareholders. I now hand the call over to Anand here.

Thank you, Sandeep. I will talk about loan growth, credit quality, P&L details, and the performance of subsidiaries. Sandeep covered the loan growth across various segments. Coming to the growth across retail products, the mortgage portfolio grew by 10.3% year-on-year and 1.9% sequentially. Auto loans grew by 2.2% year-on-year and declined by 0.7% sequentially. The commercial vehicles and equipment portfolio grew by 5.9% year-on-year and 1.1% sequentially. Personal loans grew by 1.4% year-on-year and declined by 1.3% sequentially. The credit card portfolio grew by 1.5% year-on-year and declined by 5.4% sequentially. The personal loans and credit card portfolio were 8.8% and 4% of the overall loan book respectively at June 30, 2025. Within the corporate portfolio, the total outstanding to NBFCs and HFCs was Rs. 874.17 billion at June 30, 2025 compared to Rs. 918.38 billion at March 31, 2025. The total outstanding to NBFCs and HFCs were about 6.4% of our advances at June 30, 2025. The builder portfolio including construction finance, lease rental discounting, term loans and working capital was 628.33 billion rupees at June 30, 2025 compared to 616.24 billion rupees at March 31, 2025. 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 1.9% of the builder portfolio at June 30th, 2025 was either rated double B and below internally or was classified as non-performing. On credit quality, the gross NPA additions were 62.45 billion rupees in the current quarter compared to 59.16 billion rupees in Q1 of last year. There were gross NPA additions of about 7.67 billion rupees from the Kisan credit card portfolio in the current 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 gross NPAs including write-offs and sales were 32.11 billion rupees in the current quarter compared to 32.92 billion rupees in Q1 of last year. The net additions to gross MTAs were 30.34 billion rupees in the current quarter compared to 26.24 billion rupees in Q1 of last year. The gross MTA additions from the retail and rural portfolios were 51.93 billion rupees in the current quarter compared to 52.04 billion rupees in Q1 of last year. These include the KCC NPAs mentioned earlier. Recoveries and upgrades from the retail and rural portfolios were 25.25 billion rupees in the current quarter compared to 25.32 billion rupees in Q1 of last year. The net additions to gross NPAs in the retail and rural portfolios were 26.68 billion rupees in the current quarter compared to 26.72 billion rupees in Q1 of last year. The gross NP additions from the corporate and business banking portfolios were 10.52 billion rupees in the current quarter, compared to 7.12 billion rupees in Q1 of last year. Recoveries and upgrades from the corporate and business banking portfolios were 6.86 billion rupees in the current quarter, compared to 7.6 billion rupees in Q1 of last year. There were thus net additions to gross NPAs of 3.66 billion rupees in the current quarter in the corporate and business banking portfolios compared to net deletions of 0.48 billion rupees in Q1 of last year. The gross NPAs written off during the quarter were 23.59 billion rupees. Further, there was sale of NPAs of 1.08 billion rupees in the current quarter compared to 1.14 billion rupees in Q1 of last year. The sale of NP includes about 0.6 billion rupees in cash in the current quarter. The non-fund-based outstanding to borrowers classified as non-performing was 32.98 billion rupees as of June 30, 2025 compared to 30.75 billion rupees as of March 31, 2025 and 35.43 billion rupees as of June 30, 2024. The total fund-based outstanding to all standard borrowers under resolution, as per various guidelines, declined to Rs. 17.88 billion or about 0.1% of the total loan portfolio at June 30, 2025 from Rs. 19.56 billion at March 31, 2025 and Rs. 27.35 billion at June 30, 2024. Of the total fund-based outstanding under resolution at June 30th, 2025, 16.22 billion rupees was from the retail and rural portfolios and 1.66 billion rupees was from the corporate and business banking portfolios. The loans and non-fund-based outstanding to performing corporate borrowers rated WD and below were 29.95 billion rupees at June 30th, 2025 compared to 28.54 billion rupees at March 31, 2025, and 41.64 billion rupees at June 30, 2024. This portfolio was about 0.2% of our advances at June 30, 2025. Other than two accounts, the maximum single borrower outstanding in the WB below portfolio was less than 5 billion rupees at June 30, 2025. At the end of June, the total provisions other than specific provisions on fund-based outstanding to borrowers classified as non-performing, were 226.64 billion rupees, or 1.7% of loans. This includes the contingency provisions of 131 billion rupees, as well as general provisions on standard assets, provisions held for non-fund-based outstanding to borrowers classified as non-performing, and fund and non-fund-based outstanding to standard borrowers under resolution, and the BBN below portfolio. Moving on to the P&L details, net interest income increased by 10.6% year-on-year to Rs. 2,16.35 billion in this quarter. The net interest margin was 4.34% in this quarter compared to 4.41% in the previous quarter and 4.36% in Q1 of last year. From Q1 of 2026, the bank has changed its convention of computation of NIM and other return ratios from actual number of days to number of months. While the full year NIM would remain unchanged, the revised convention eliminates the quarter-to-quarter volatility in NIM computation due to difference in the number of days. The impact on reported ratios in this quarter was negligible. The impact of interest on income tax refund was about 7 basis points in the current quarter compared to about 2 basis points in the previous quarter and nil in Q1 of last year. 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 remaining 31% of loans have fixed interest rates. In comparison to the first quarter, the impact of transmission of repo rate cuts on external benchmark linked loans is expected to be higher in the second quarter. This impact would be partially offset by reduction in savings account interest rates in May and June and the gradual repricing of term deposits. The domestic name was 4.4% in this quarter compared to 4.48% in the previous quarter and 4.44% in Q1 of last year. The cost of deposits was 4.85% in this quarter compared to 5% in the previous quarter and 4.84% in Q1 of last year. Non-interest income excluding treasury grew by 13.7% year-on-year to Rs. 72.64 billion in Q1 of FY2026. Fee income increased by 7.5% year-on-year to Rs. 59 billion in this quarter compared Fees from retail, rural and business banking customers constituted about 79% of the total fees in this quarter. Dividend income from subsidiaries was 13.36 billion rupees in this quarter compared to 8.94 billion rupees in Q1 of last year. The year-on-year increase in dividend income was primarily due to higher dividend from ICICI Securities, ICICI AMC and ICICI General. and receipt of dividend from ICSA securities primary dealership in the current quarter compared to Q2 of last year. On costs, the bank's operating expenses increased by 8.2% year-on-year in this quarter compared to 8.3% in FY 2025. Employee expenses increased by 8.5% year-on-year in this quarter. reflecting mainly the impact of annual increments and promotions that take place during the first quarter of every fiscal year. Non-employee expenses increased by 8% year-on-year in this quarter. Our branch count has increased by 83 in the first quarter, and we had 7,066 branches as of June 30, 2025. The technology expenses were about 10.7% of our operating expenses in this quarter, 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. The total provisions during the quarter were 18.15 billion rupees as compared to the provisions of 13.32 billion rupees in Q1 of last year. Provisions in Q1 of last year included the impact of release of AIF-related provisions of 3.89 billion rupees. The provisions during the quarter were 10.4% of core operating profit and 0.53% of average advances. Adjusting for the seasonality of KCC provisioning, which occurs only in Q1 and Q3, the credit cost to advances would be about 50 basis points. The profit before tax, excluding Treasury, grew by 11.4% year-on-year to Rs. 156.9 billion in Q1 of this year. Treasury gains were Rs. 12.41 billion in Q1 of the current year as compared to Rs. 6.13 billion in Q1 of the previous year, primarily reflecting realized and mark-to-market gains in fixed income securities and equities. The tax expense was 41.63 billion rupees in this quarter compared to 36.34 billion rupees in the corresponding quarter last year. The profit after tax grew by 15.5% year on year to 127.68 billion rupees in this quarter. The consolidated profit after tax grew by 15.9% year on year to 135.58 billion rupees in this quarter compared The details of the financial performance of key subsidiaries are covered in slides 34 to 35 and 54 to 59 in the investor presentation. The annualized premium equivalent of ICICI Life was 18.64 billion rupees in Q1, 2026 compared to 19.63 billion rupees in Q1, 2025. The value of new business was 4.57 billion rupees in Q1, 2026 compared to 4.72 billion rupees In Q1 2025, the value of new business margin was 24.5% in Q1 2026 compared to 22.8% in FY 2025. The profit after tax of ICICI Life was 3.02 billion rupees in Q1 2026 compared to 2.25 billion rupees in Q1 2025. Ross Direct premium income of ICICI General increased to 77.35 billion rupees in Q1 2026 from 76.88 billion rupees in Q1 2025. The combined ratio stood at 102.9% in Q1 2026 compared to 102.3% in Q1 2025. The profit after tax increased to 7.47 billion rupees in this quarter from 5.8 billion rupees in Q1 of last year. With effect from October 1, 2024, long-term products are accounted on 1 by N basis as mandated by IRDAI. Hence, Q1 numbers are not fully comparable with prior periods. The profit after tax of ICICI AMC as per NDIS was 7.82 billion rupees in this quarter. The profit after tax of ICICI securities as per NDIS on a consolidated basis was 3.91 billion rupees in this quarter. compared to 5.27 billion rupees in Q1 of last year. ICICI Bank Canada had a profit after tax of 7.8 million Canadian dollars in this quarter, compared to 20.3 million Canadian dollars in Q1 last year. ICICI Bank UK had a profit after tax of 5.9 million US dollars in this quarter, compared to 7.7 million US dollars in Q1 of last year. As per NDIS, ICSA Home Finance had a profit after tax of 2.14 billion rupees in the current quarter compared to 1.17 billion rupees in Q1 of last year. With this, we conclude our opening remarks and we will now be happy to take your questions.