Detailed Narrative
ICICI Bank reported its Q3 FY26 earnings with a mixed financial performance. The core operating profit demonstrated robust growth, increasing by 6.0% year-on-year and 2.5% quarter-on-quarter to ₹175.13 billion. However, the reported profit after tax for the quarter stood at ₹113.18 billion, a decrease from ₹117.92 billion in the corresponding quarter of the previous year. This decline was primarily attributed to higher total provisions of ₹25.56 billion, which included a significant additional standard asset provision of ₹12.83 billion mandated by the Reserve Bank of India following its annual supervisory review. This specific provision related to a portfolio of agricultural priority sector credit facilities found to be non-compliant with regulatory classification requirements, with the underlying portfolio estimated to be between ₹200 billion and ₹250 billion.
The bank showcased strong loan book expansion, with the domestic loan portfolio growing by 11.5% year-on-year and 4.0% quarter-on-quarter. Business banking was a standout performer, growing by 22.8% year-on-year and 4.7% quarter-on-quarter. Retail loans also saw healthy growth of 7.2% year-on-year, although the credit card portfolio experienced a sequential decline of 6.7% due to festive season repayments. On the liabilities side, total deposits grew by 9.2% year-on-year and 2.9% quarter-on-quarter, with average current and savings account deposits increasing by 8.9% year-on-year. The bank maintained a healthy average Liquidity Coverage Ratio (LCR) of approximately 126% for the quarter.
Asset quality continued its improving trend, with the net NPA ratio further declining to 0.37% at December 31, 2025, from 0.39% in the previous quarter and 0.42% a year ago. The provisioning coverage ratio on non-performing loans remained strong at 75.4%, complemented by contingency provisions of ₹131.00 billion. Net interest income (NII) increased by 7.7% year-on-year and 1.9% quarter-on-quarter to ₹219.32 billion, with the Net Interest Margin (NIM) holding steady at 4.30% quarter-on-quarter. Operating expenses increased by 13.2% year-on-year, partly due to provisions for new Labour Codes.
Management expressed a bullish outlook, anticipating that the NIM would remain "range-bound" going forward⏳, supported by continued repricing of retail deposits. They expect loan growth momentum to sustain into Q4 FY26, with the credit card and unsecured loan portfolios projected to pick up from current levels. While acknowledging the impact of the RBI-directed provision, the bank plans to work towards bringing the affected agricultural portfolio into conformity with PSL guidelines to minimize future impact. Management also indicated that the pace of operating cost increases is expected to moderate📎, though recurring costs related to new Labour Codes will be absorbed.
During the Q&A, management was generally transparent, providing detailed figures and explanations for performance metrics. However, they were cautious about delving into the specific details of the RBI's classification issue for the agricultural portfolio, stating they "wouldn't want to go into those details." Similarly, no further elaboration was provided on the rationale behind the CEO's two-year extension beyond his current term. Despite these minor areas of evasion, the overall communication style was data-driven, reinforcing confidence in the bank's strategic direction and operational resilience.