ICICI Bank Limited

Ladies and gentlemen, good day and welcome to ICICI Bank Limited Q4F526 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 the conference call, please signal an operator by pressing star then zero on your touchstone 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 Q4 of FY2026. Joining us today on this call are Sandeep Batra, Rakesh, Ajay, Anandiya and Abhinay. At ICSA Bank, our strategic focus continues to be on growing profits before tax, excluding treasury, through the 360-degree customer-centering approach and by serving opportunities across ecosystems and micro-markets. We continue to operate within the framework of our values to strengthen our franchise. Maintaining high standards of governance, keeping 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 10.1% year-on-year to Rs. 182.09 billion in this quarter and by 7.1% year-on-year to Rs. 650.21 billion in FY2026. The core operating profit increased by 5.1% year-on-year to 183.05 billion rupees in this quarter and by 7.7% year-on-year to 704.01 billion rupees in FY2026. The profit after tax grew by 8.5% year-on-year to 137.02 billion rupees in this quarter and by 6.2% year-on-year to 501.47 billion rupees in financial year 2026. The consolidated profit after tax grew by 9% year-on-year to Rs. 147.55 billion in this quarter and by 6.2% year-on-year to Rs. 542.08 billion in FY2026. The Board has recommended a dividend of Rs. 12 per share for FY2026 subject to requisite approvals. Total deposits grew by 11.4% year-on-year and 8.1% sequentially at March 31, 2026. Average current and savings account deposits grew by 11.3% year-on-year and 2.7% sequentially during this quarter. The bank's average LCR for the quarter was about 126%. The overall loan portfolio, including the international branches portfolio, grew by 15.8% year-on-year and 6% sequentially at March 31, 2026. The retail loan portfolio grew by 9.5% year-on-year and 4.2% sequentially at Including non-fund-based outstanding, the retail portfolio was 41.7% of the total portfolio. The rural portfolio, including gold loan, grew by 25.6% year-on-year and 18% sequentially. The business banking portfolio grew by 24.4% year-on-year and 7.6% sequentially. The domestic corporate portfolio grew by 9% year-on-year and 3.1% sequentially. The domestic loan portfolio grew by 15.3% year-on-year and 5.6% sequentially at March 31, 2026. The overseas loan portfolio was 2.7% of the overall loan book at March 31, 2026. The net NP ratio was 0.33% at March 31, 2026 compared to 0.37% at December 31, 2025. and 0.39% at March 31, 2025. The total provisions during the quarter were 0.96 billion rupees, or 0.5% of core operating profit, and 0.03% of average advances. The provisioning coverage ratio on non-performing loans was 75.8% at March 31, 2026. In addition, the bank continues to hold contingency provisions of 131 billion rupees, or about 0.9% of total advances at March 31, 2026. The capital position of the bank continued to be strong with a CET1 ratio of 16.35% and total capital adequacy of 17.18% at March 31, 2026, after reckoning the impact of proposed dividend. 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, good information, 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, portfolio trends, 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 13.2% year-on-year and 4.7% sequentially. Auto loans grew by 1.7% year-on-year and 1.4% sequentially. The commercial vehicles and equipment portfolio grew by 11.6% year-on-year and 6.4% sequentially. Personal loans grew by 7.2% year-on-year and 5.2% sequentially. The credit card portfolio declined by 5.6% year-on-year and 1.3% sequentially. Within the corporate portfolio, the total outstanding to NDFCs and HFCs was 859.04 billion rupees at March 31, 2026 compared to 791.18 billion rupees at December 31, 2025. The total outstanding loans to NDFCs and HFCs were about 4.6% of our advances at March 31, 2026. The builder portfolio including construction finance, lease rental discounting, term loans and working capital was 714.21 billion rupees at March 31, 2026 compared to 680.83 billion rupees at December 31, 2025. The builder loan portfolio was 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 0.9% of the builder portfolio at March 31, 2026 was either rated BB and below internally or was classified as non-performing. On credit quality, the gross MPA additions were Rs. 42.42 billion in the current quarter compared to Rs. 51.42 billion in Q4 of last year. recoveries and upgrades from gross NPAs excluding write-offs and sales were 30.68 billion rupees in the current quarter compared to 38.17 billion rupees in Q4 of last year. The net additions to gross NPAs were 11.74 billion rupees in the current quarter compared to 13.25 billion rupees in Q4 of last year. The gross NPA additions from the retail and rural portfolios were 31.45 billion rupees in the current quarter compared to Rs. 43.39 billion in Q4 of last year. Recoveries and upgrades from the retail and rural portfolios were Rs. 22.93 billion in the current quarter, compared to Rs. 30.39 billion in Q4 of last year. The net additions to gross NPAs in the retail and rural portfolios were Rs. 8.52 billion in the current quarter, compared to Rs. 13 billion in Q4 of last year. The gross NP additions from the corporate and business banking portfolios were 10.97 billion rupees in the current quarter compared to 8.03 billion rupees in Q4 of last year. Recoveries and upgrades from the corporate and business banking portfolios were 7.75 billion rupees in the current quarter compared to 7.78 billion rupees in Q4 of last year. There were net additions to gross NPAs of 3.22 billion rupees in the current quarter in the corporate and business banking portfolios compared to 0.25 billion rupees in Q4 of last year. The gross NPAs written off during the quarter was 17.68 billion rupees. Further, there was sale of NPAs of 1.12 billion rupees for cash in the current quarter. The non-fund outstanding to borrowers classified as non-performing was Rs. 21.74 billion as of March 31, 2026 as compared to Rs. 22.29 billion as of December 31, 2025. The loans and non-fund outstanding to performing corporate borrowers rated WB and below was Rs. 35.19 billion at March 31, 2026 as compared to Rs. 33.92 billion At December 31, 2025, this portfolio was about 0.2% of our advances at March 31, 2026. The total fund-based outstanding to all standard borrowers under resolution as per various guidelines declined to Rs. 14.96 billion at March 31, 2026 from Rs. 16.66 billion at December 31, 2025. At the end of March, the total provisions other than specific provisions on fund-based outstanding to borrowers classified as non-performing were Rs. 227.1 billion or 1.5% of loans. This includes the contingency provisions of Rs. 131 billion as well as general provision on standard assets, provisions held for non-fund-based outstanding to borrowers Classified as non-performing, fund and non-fund based outstanding to standard borrowers under resolution and the double B and below portfolio, the bank also continues to hold additional standard asset provision of 12.83 billion rupees made in Q3 as directed by RBI in respect of the agricultural priority sector portfolio. Moving on to the P&L details, net interest income increased by 8.4% year-on-year, and 4.8% sequentially to 229.79 billion rupees in this quarter. The net interest margin was 4.32% in this quarter compared to 4.30% in the previous quarter. The cost of deposits was 4.43% in this quarter compared to 4.55% in the previous quarter. The benefit of interest on tax refund was 5 basis points in the current quarter compared to 1 basis point in the previous quarter. The margins for the quarter reflect the impact of external benchmark linked loans repricing, repricing of term deposits, and seasonally lower interest reversal on the KCC portfolio. The net interest margin in FY2026 was 4.32%, similar to FY2025. Of the total domestic loans, interest rates on about 56% of the loans are linked to the repo rate and other external benchmarks. 13% to NCLR and other older benchmarks and the remaining 31% of loans have fixed interest rates. Non-interest income excluding treasury grew by 5.6% year-on-year to Rs. 74.15 billion in Q4 of fiscal 2026. Fee income increased by 7.5% year-on-year to Rs. 67.79 billion in this quarter. Fees from retail, rural and business banking customers constituted about 78% of the total fees in this quarter. Dividend income from subsidies was 6.31 billion rupees in this quarter compared to 6.75 billion rupees in Q4 of last year. On costs, the bank's operating expenses increased by 12% year-on-year in this quarter and 11.5% year-on-year in FY2026. Employee expenses increased by 8.8% year-on-year and non-employee expenses increased by 14% year-on-year in this quarter. Our branch count has increased by 126 in Q4 and 528 in FY2026. We had 7,511 branches as of March 31st, 2026. The sequential increase in operating expenses primarily reflects the impact of market movements resulting in higher provisions for retireal benefits. The technology expenses were about 11% of our operating expenses in FY2026. The total provisions during the quarter were Rs. 0.96 billion or 0.5% of core operating profit and 0.03% of average advances compared to the provisions of Rs. 8.91 billion in Q4 of last year, reflecting healthy asset quality and higher recoveries and ridebacks. The credit cost was 38 basis points in FY2026 adjusted for the additional standard asset provision in respect of the agricultural priority sector portfolio and the corporate recoveries. The credit cost was under 50 basis points in fiscal 2026. The profit before tax excluding treasury grew by 10.1% year on year to 182.09 billion rupees in Q4. and by 7.1% year-on-year to Rs. 650.21 billion in FY2026. There was a treasury loss of Rs. 1.06 billion in this quarter as compared to a loss of Rs. 1.57 billion in the previous quarter and a gain of Rs. 2.99 billion in Q4 of last year, primarily reflecting market movements and including the impact of capping of FX net open positions in the onshore market as per recent RBI guidelines. The tax expense was 44.01 billion rupees in this quarter compared to 41.43 billion rupees in the corresponding quarter last year. The profit after tax grew by 8.5% year-on-year to 137.02 billion rupees in this quarter. The profit after tax grew by 6.2% year-on-year to 501.47 billion rupees in FY2026. The consolidated profit after tax grew by 9.3% year-on-year to 147.55 billion rupees in this quarter. The consolidated profit after tax grew by 6.2% year-on-year to 542.08 billion rupees in FY2026. The details of the financial performance of these subsidiaries are covered in slides 33 to 35 and 54 to 59 in the investor presentation. The annualized premium equivalent of ICICI Life increased to 106.41 billion rupees in FY2026 from 104.07 billion rupees in FY2025. The value of new business increased to 26.29 billion rupees in FY2026 from 23.70 billion rupees in FY2025. The value of new business margin was 24.7% in FY2026 compared to 22.8% in FY2025. The profit after tax of ICICI life increased to 16 billion rupees in FY2026 from 11.89 billion rupees in FY2025 and 6.09 billion rupees in this quarter from 3.86 billion rupees in Q4 of last year. The gross direct premium income of ICICI General increased to Rs. 287.12 billion in FY2026 from Rs. 268.33 billion in FY2025. The combined ratios to that 103.4% in FY2026 compared to 102.8% in FY2025. The profit after tax increased to Rs. 27.72 billion in FY2026 from Rs. 25.08 billion in FY2026. In FY 2025, the profit after tax increased to 5.47 billion rupees in this quarter from 5.1 billion rupees in Q4 of last year. The profit after tax of ICICI AMC as per INDS increased to 7.63 billion rupees in this quarter from 6.92 billion rupees in Q4 of last year. The profit after tax of ICICI securities as per INDS on a consolidated basis was 4.22 billion rupees in this quarter compared to 3.81 billion rupees in Q4 of last year. Isatia Bank Canada had a profit after tax of 4.4 million Canadian dollars in this quarter compared to 12.5 million Canadian dollars in Q4 of last year, primarily reflecting the impact of reduction in benchmark interest rates and lower business volumes. Isatia Bank UK had a profit after tax of 8 million US dollars in this quarter compared compared to 6 million US dollars in Q4 of last year. As per NDIS, ICSA Home Finance had a profit after tax of 2.49 billion rupees in the current quarter, compared to 2.41 billion rupees in Q4 of last year. With this, we conclude our opening remarks and we will now be happy to take your questions.