Detailed Narrative
ICICI Bank delivered a robust performance in Q1 FY26, demonstrating strong growth across key financial indicators. The bank reported a profit before tax excluding treasury of 156.90 billion Rupees, marking an 11.4% year-on-year increase. Core operating profit rose by 13.6% year-on-year to 175.05 billion Rupees, while profit after tax saw a 15.5% year-on-year growth, reaching 127.68 billion Rupees. Consolidated profit after tax also increased by 15.9% year-on-year to 135.58 billion Rupees. Net interest income (NII) grew by 10.6% year-on-year to 216.35 billion Rupees, although the net interest margin (NIM) for the quarter was 4.34%, a slight decline from 4.41% in the previous quarter and 4.36% in Q1 FY25. The bank clarified a change in NIM computation convention to monthly basis from Q1 FY26 to eliminate quarter-to-quarter volatility, with negligible impact on reported ratios for the current quarter. Non-interest income, excluding treasury, grew by 13.7% year-on-year to 72.64 billion Rupees, supported by a 7.5% increase in fee income to 59.00 billion Rupees and higher dividend income from subsidiaries. Operating expenses increased by 8.2% year-on-year, with employee expenses up 8.5% and non-employee expenses up 8.0%. The bank added 83 branches, bringing the total to 7,066 as of June 30, 2025.
On the lending front, total deposits grew by 12.8% year-on-year, remaining flat sequentially. The domestic loan portfolio expanded by 12.0% year-on-year and 1.5% sequentially. Retail loans grew by 6.9% year-on-year, while the business banking portfolio showed strong growth of 29.7% year-on-year. The domestic corporate portfolio grew by 7.5% year-on-year. The bank's overall loan portfolio, including international branches, grew by 11.5% year-on-year. Management noted that the business banking segment is expected to grow faster than the overall loan book in the coming years. They also expressed confidence in picking up volumes in personal loans and credit cards, where growth has been modest in Q1 FY26.
Asset quality remained strong, with the net NPA ratio improving to 0.41% at June 30, 2025, from 0.43% a year ago. Gross NPA additions were 62.45 billion Rupees, with net additions of 30.34 billion Rupees. Total provisions for the quarter were 18.15 billion Rupees, representing 10.4% of core operating profit and 0.53% of average advances. The provisioning coverage ratio on non-performing loans stood at 75.3%. The bank continues to hold substantial contingency provisions of 131.00 billion Rupees, or about 1.0% of total advances. Management indicated that the underlying credit cost to advances, adjusted for KCC seasonality, is expected to be around 50 basis points, with no major movement anticipated.
Capital position remained robust, with a CET-1 ratio of 16.31% and a total capital adequacy ratio of 16.97% at June 30, 2025. Management highlighted their strategic focus on risk-calibrated profitable growth, leveraging a 360-degree customer-centric approach across ecosystems and micromarkets. They acknowledged the competitive environment and some softness in overall credit demand but expressed optimism about future opportunities, particularly with monetary easing and continued focus on customer acquisition and wallet share. The impact of repo rate cuts on loan yields and the gradual repricing of deposits are expected to influence margins in the coming quarters.