ICICI Bank — Q3 FY26 earnings call

Call held 17 Jan 2026

Management summary

ICICI Bank delivered a resilient performance in Q3 FY26, marked by healthy domestic loan and deposit growth, stable Net Interest Margins, and improved asset quality. The reported profit was impacted by a one-time RBI-directed standard asset provision of ₹1,283 crore for an agricultural priority sector portfolio. The bank maintains strong capital adequacy and continues its focus on risk-calibrated profitable growth and customer-centric digital initiatives.

Highlights

  • Domestic loan portfolio grew by 11.5% year-on-year, driven by business banking (+22.8% YoY) and mortgage (+11.1% YoY).

  • Net Interest Margin (NIM) remained stable at 4.30% in Q3-2026, consistent with the previous quarter.

  • Asset quality improved with Net NPA ratio at 0.37% (down from 0.39% QoQ) and Provisioning Coverage Ratio (PCR) at 75.4%.

  • Core operating profit grew by 6.0% year-on-year to ₹17,513 crore, reflecting strong underlying business performance.

  • Capital adequacy remains robust with CET-1 ratio at 16.46% and total capital adequacy ratio at 17.34%.

Concerns

  • Profit after tax (PAT) declined by 4.02% YoY to ₹11,318 crore, primarily due to a one-time RBI-directed standard asset provision of ₹1,283 crore.

  • The credit card portfolio saw a decline of 3.5% YoY and 6.7% QoQ, attributed to festive season spending patterns.

  • The bank reported a treasury loss of ₹157 crore in Q3 FY26, compared to a gain of ₹220 crore in Q2 FY26, mainly due to mark-to-market movements.

Key financials

  1. Net Interest Income ₹21,932 Cr +7.7%YoY
  2. Net Interest Margin 4.3% 0%QoQ
  3. Core Operating Profit ₹17,513 Cr +6%YoY
  4. Adjusted Profit After Tax ₹12,280 Cr +4.1%YoY
  5. Domestic Loan Growth 11.5% +11.5%YoY
  6. Net NPA Ratio 0.37%

What they filed

Q1 FY27: revenue up 6.4%, net profit up 12.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue46,326 47,037 48,387 49,080 48,181 +4%48,364 +3%49,594 +2%52,241 +6%
Net profit13,906 13,847 14,354 14,456 14,318 +3%13,481 −3%15,681 +9%16,276 +13%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Retail Loan Portfolio
    7.2% Growth42.2% Share of Total Portfolio
  • Mortgage Portfolio
    11.1% Growth
  • Business Banking Portfolio
    22.8% Growth
  • Domestic Corporate Portfolio
    5.6% Growth
  • Credit Card Portfolio
    -3.5% Growth

Capital allocation

high confidence
  • M&A Pension Fund Business Acquisition · Closed

    Synergy with the Bank will be better and the business will be able to expand in a much better fashion. So, it is essentially about synergizing with the banking set of customers.

    Sandeep Batra: Yes, we have. ... It was a step-down subsidiary. We explained this, I think, about two quarters back when we made the decision. We do believe that the synergy with the Bank will be better and the business will be able to expand in a much better fashion. So, it is essentially about synergizing with the banking set of customers and which we hope to achieve in the coming quarter.
  • Liquidity Liquidity disclosed Average Liquidity Coverage Ratio (LCR) for the quarter was about 126%.
    The Bank's average LCR for the quarter was about 126%.

Guidance & targets

Profitability

  • Net Interest Margin (NIM) Profitability · going forward · Medium confidence range bound
    Looking ahead, we do expect NIMs to remain more or less range bound, reflecting the repricing of the external benchmarks on loans and investments, as you rightly pointed out. And of course, competition intensity. This would get offset by retail term repricing

    — Sandeep Batra

Asset Quality

  • Incremental Provisions for Agri-book Asset Quality · going forward · High confidence no major incremental provisions
    No, the additional provisions will continue until the loans are repaid or renewed in conformity with the PSL classification guidelines. This is what I mentioned, and we will work towards the same. Based on our current assessments, we do not see any major incremental provisions going forward.

    — Sandeep Batra

Market context

  • Pace of Operating Expense Growth Operating Expenses · going forward · Medium confidence moderate
    I don't expect, cost to go up at the pace at which they had gone up maybe till a couple of quarters ago.

    — Anindya Banerjee

What to watch in Q4 FY26

Resolution of Agri-PSL Non-Compliance

next quarter
Current ₹20,000-₹25,000 crore portfolio identified for non-compliance, ₹1,283 crore provision made.
Target Progress on bringing the portfolio into conformity with PSL guidelines and minimizing future provisioning impact.

Why it matters

To assess the effectiveness of management's efforts to resolve the RBI-flagged issue and prevent recurring provisions.

We will work towards repayment and renewal of these loans to make them in conformity with the PSL guidelines, and our endeavour would be to minimise the PSL and provisioning impact.

Risks & concerns

  • RBI-directed Standard Asset Provision

    high

    A one-time provision of ₹1,283 crore was mandated by RBI for an agricultural priority sector portfolio due to non-compliance with regulatory terms.

    Both acknowledged

  • Interest Rate Cycle and NIM Compression

    medium

    Rate cuts and competitive intensity could impact Net Interest Margins, though management expects NIMs to remain range-bound.

    Both acknowledged

  • Credit Card Portfolio Decline

    medium

    The credit card portfolio declined YoY and QoQ, attributed to seasonal festive spending and repayments, with management expecting future growth.

    Both downplayed

Q&A highlights

6 direct, 1 evasive
RBI-directed Standard Asset Provision for Agri-PSL Direct
RBI has made an assessment that the terms of the facilities were not fully in compliance with the regulatory requirement for PSL. I also want to categorically state there is no change of asset classification, or in terms and conditions applicable to the borrowers, or in repayment behaviour of the borrower as per these terms. So, we are very comfortable with the quality of the book that we have done. We will work towards repayment and renewal of these loans to make them in conformity with the PSL guidelines, and our endeavour would be to minimise the PSL and provisioning impact.

Clarifies the nature of the one-time provision, its impact on reported PAT, and management's plan to address the underlying issue without implying asset quality deterioration.

Asked by Ritu Singh

CEO Reappointment Term Evasive
The Board, in its wisdom, in discussion with the Managing Director decided that two years, and I just wanted to clarify again, that it's an extension from October 2026. So, it is nearly three years at this point of time. So, we have informed the market well in advance.

Analysts questioned the shorter two-year term for the CEO, implying a potential succession plan. Management reiterated the decision without providing further rationale, leading to continued speculation.

Asked by Vishwanath Nair

Impact of PSL Provision on PAT Direct
And secondly, I thought I will just clarify, in case if this specific provision was not there, instead of a minus 4%, we would have had a plus 4.1% on PAT.

Management explicitly quantified the impact of the one-time RBI-directed provision on the reported PAT, indicating that underlying profitability was stronger.

Asked by Vishwanath Nair

Net Interest Margin (NIM) Trajectory Direct
Looking ahead, we do expect NIMs to remain more or less range bound, reflecting the repricing of the external benchmarks on loans and investments, as you rightly pointed out. And of course, competition intensity. This would get offset by retail term repricing

Provides forward-looking guidance on NIM, acknowledging the impact of rate cuts and competition while highlighting offsetting factors like retail deposit repricing.

Asked by Vishwanath Nair

Credit Card Portfolio Decline Direct
On the credit card specifically, we had a very strong book growth sequentially in Q2 because of the last week festive spends, which were billed and repaid in the current quarter. So, that is the main reason for the movement in the current quarter. We feel that the book should grow from here on.

Explains the reasons for the sequential decline in the credit card portfolio, attributing it to seasonal factors and indicating an expectation for future growth.

Asked by Rikin Shah

Deposit Growth Lagging Loan Growth & LDR Direct
In the current quarter, as you are aware, there was a reduction in the CRR requirement. So, you would have seen the credit-deposit ratio go up across the system, and for most banks, the LDR would have gone up because of the CRR cut. Given the current level of capital that we hold and the regulatory requirements of liquidity, this is an okay level. I don't see it going up from here.

Addresses concerns about the widening gap between deposit and credit growth and the rising Loan-to-Deposit Ratio (LDR), explaining systemic factors and the bank's comfort with its current position.

Asked by Ram Kumar

ICICI Home Finance Capital Infusion Direct
I think ICICI Home Finance has been doing exceedingly well. We are happy to infuse the capital to meet the regulatory requirement and expansion that is required from their business point of view. So, it is an important subsidiary. They have improved their NPA provisions, and just to maintain a healthy capital adequacy ratio over there. We are happy... this, we will continue to invest in this business.

Clarifies the rationale behind the capital infusion into a subsidiary, affirming its strategic importance, healthy performance, and the bank's commitment to supporting its growth.

Asked by Hamsini Karthik

Operating Expense Growth Partial
I don't expect, cost to go up at the pace at which they had gone up maybe till a couple of quarters ago. If you would see, sequentially this quarter, other than the impact of the Labour Code, costs would have come down marginally on an absolute basis.

Addresses analyst concern about higher operating expense growth, attributing part of it to one-time provisions for Labour Codes and indicating an expectation for moderation in the growth pace.

Asked by Kunal Shah

2 min read 6 chapters

Detailed narrative

Q3 FY26 Financial Performance Overview

ICICI Bank reported a Net Interest Income (NII) of ₹21,932 crore, marking a 7.7% year-on-year increase. The Net Interest Margin (NIM) remained stable at 4.30% quarter-on-quarter. Core operating profit grew by 6.0% year-on-year to ₹17,513 crore. However, the reported Profit After Tax (PAT) stood at ₹11,318 crore, a 4.02% decline year-on-year, primarily due to a one-time RBI-directed standard asset provision. Adjusting for this provision, PAT would have increased by 4.1% year-on-year to ₹12,280 crore.

Loan and Deposit Growth Dynamics

The domestic loan portfolio expanded by 11.5% year-on-year, with significant contributions from the business banking segment, which grew by 22.8% year-on-year, and the mortgage portfolio, up 11.1% year-on-year. The retail loan portfolio grew by 7.2% year-on-year, constituting 42.2% of the total portfolio. Total period-end deposits increased by 9.2% year-on-year to ₹16,59,611 crore, while average deposits grew by 8.7% year-on-year. The bank's average CASA deposits increased by 8.9% year-on-year.

Asset Quality and Provisions

Asset quality continued to improve, with the Net NPA ratio declining to 0.37% at December 31, 2025, from 0.39% at September 30, 2025. The Provisioning Coverage Ratio (PCR) on non-performing loans stood at a healthy 75.4%. Gross NPA additions for the quarter were ₹5,356 crore, with net additions to gross NPAs at ₹2,074 crore. The bank holds contingency provisions of ₹13,100 crore, representing 0.9% of total advances.

RBI-Directed Standard Asset Provision

A key event impacting the quarter's reported financials was an RBI-directed standard asset provision of ₹1,283 crore. This provision was made for a ₹20,000-₹25,000 crore agricultural priority sector credit facilities portfolio, where terms were found not fully compliant with regulatory requirements. Management clarified that this does not reflect a change in asset classification or borrower repayment behavior, and they are working to bring the portfolio into conformity with guidelines, expecting no major incremental provisions going forward.

Capital Adequacy and Liquidity

ICICI Bank maintains a strong capital position, with a CET-1 ratio of 16.46% and a total capital adequacy ratio of 17.34% as of December 31, 2025, including profits for the nine months ended. The bank's average Liquidity Coverage Ratio (LCR) for the quarter was approximately 126%, indicating robust liquidity management. Management expressed comfort with the current LDR levels, attributing recent increases partly to the CRR cut and emphasizing moderate reliance on wholesale funding.

Strategic Focus and Digital Initiatives

The bank's strategic focus remains on growing profit before tax (excluding treasury) through a 360-degree customer-centric approach and serving opportunities across ecosystems. Initiatives like 'Banking with Care for Senior Citizens,' 'SmartLock' on iMobile for enhanced security, and 'Digital Lending Enhancement' for Loan Against Securities customers underscore its commitment to customer centricity and operational resilience. The bank also acquired a pension fund business from a step-down subsidiary to leverage synergies with its banking customer base.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Financial Services earnings calls