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    IBN
    Earnings call· Dec 2025(Q3 FY26)

    ICICI BANK Q3 FY26 earnings call IBN

    Jan 17, 2026 Source

    Executive summary

    ICICI Bank Q3 FY26 — Strong Core Operating Profit Growth and Capital Position

    ICICI Bank delivered robust core operating profit growth and maintained a strong capital position in Q3 FY26, driven by healthy domestic loan growth and stable net interest margins. The quarter saw an additional standard asset provision mandated by the RBI, impacting reported profitability, alongside a decline in the credit card portfolio. Management remains focused on risk-calibrated growth and balance sheet strength, with expectations for NIM to remain range-bound.

    Highlights

    5

    • Core operating profit increased by 6% YoY and 2.5% QoQ to INR 175.13 billion.

    • Domestic loan portfolio grew by 11.5% YoY and 4% QoQ.

    • Net NPA ratio improved to 0.37% at December 31, 2025, from 0.39% at September 30, 2025.

    • CET1 ratio remained strong at 16.46% at December 31, 2025.

    • Net interest margin (NIM) held steady at 4.3% QoQ and expanded from 4.25% YoY.

    Concerns

    4

    • Additional standard asset provision of INR 12.83 billion directed by RBI for agricultural priority sector credit facilities.

    • Credit card portfolio declined by 3.5% YoY and 6.7% sequentially.

    • Treasury loss of INR 1.57 billion in Q3 FY26, compared to a gain of INR 2.2 billion in Q2 FY26 and INR 3.71 billion in Q3 FY25.

    • Profit after tax decreased by 4% YoY to INR 113.18 billion.

    Segment performance

    20
    SegmentRevenueYoYQoQMargin
    Domestic Loan Portfolio
    At December 31, 2025, compared to 10.6% and 3.3% at September 30, 2025.
    		—11.5%4%—
    Retail Loan Portfolio
    % of total portfolio (including non-fund-based outstanding): 42.2%
    		—7.2%1.9%—
    Rural Portfolio
    		—4.9%7.2%—
    Business Banking Portfolio
    		—22.8%4.7%—
    Domestic Corporate Portfolio
    		—5.6%6.5%—
    Overall Loan Portfolio
    Including the international branches portfolio.
    Overseas loan portfolio % of overall loan book: 2.4%
    		—11.5%4.1%—
    Mortgage Portfolio
    		—11.1%3.2%—
    Auto Loans
    		—0.7%0.9%—
    Commercial Vehicles and Equipment Portfolio
    		—7.9%3.2%—
    Personal Loans
    		—2.4%1.7%—
    Credit Card Portfolio
    Sequential decline due to high festive spends in previous quarter and subsequent repayments.
    		—-3.5%-6.7%—
    NBFCs and HFCs
    Total outstanding at December 31, 2025, compared to INR 794.33 billion at September 30, 2025.
    % of advances: 4.3%
    		INR 791.18 billion———
    Builder Portfolio
    Including construction finance, lease rental discounting, term loans and working capital at December 31, 2025, compared to INR 635.83 billion at September 30, 2025.
    % of total loan portfolio: 4.3%Rated BB and below internally or nonperforming: 1.1%
    		INR 680.83 billion———
    ICICI Life
    For 9 months ended December 31, 2025. APE compared to INR 69.05 billion in 9 months last year. VNB compared to INR 15.75 billion in 9 months last year. VNB margin compared to 22.8% in FY25 and 9 months last year.
    Annualized premium equivalent (APE): INR 68.11 billionValue of new business (VNB): INR 16.64 billionVNB margin: 24.4%
    		———PAT: INR 9.92 billion
    ICICI General
    For Q3 FY26. Gross direct premium income compared to INR 62.14 billion in Q3 last year. Combined ratio compared to 102.7% in Q3 last year. PAT compared to INR 7.24 billion in Q3 last year.
    Combined ratio: 104.5%
    		Gross direct premium income: INR 70.41 billion——PAT: INR 6.59 billion
    ICICI AMC
    For Q3 FY26, compared to INR 6.32 billion in Q3 last year.
    		———PAT: INR 9.17 billion
    ICICI Securities
    For Q3 FY26, compared to INR 5.04 billion in Q3 last year.
    		———PAT: INR 4.75 billion
    ICICI Bank Canada
    For Q3 FY26, compared to CAD 19.6 million in Q3 last year.
    		———PAT: CAD 5.4 million
    ICICI Bank U.K.
    For Q3 FY26, compared to USD 5.1 million in Q3 last year.
    		———PAT: USD 5 million
    ICICI Home Finance
    For Q3 FY26, compared to INR 2.03 billion in Q3 last year.
    		———PAT: INR 1.95 billion

    Operational metrics

    49
    Core operating profit
    INR 175.13 billionup 6% YoY, up 2.5% QoQ
    Q3 FY26
    Total provisions
    INR 25.56 billion
    Q3 FY26

    Includes additional standard asset provision of INR 12.83 billion.

    Profit before tax (excluding treasury)
    INR 149.57 billiondown from INR 152.89 billion in Q3 FY25
    Q3 FY26
    Profit after tax
    INR 113.18 billiondown from INR 117.92 billion in Q3 FY25
    Q3 FY26
    Average deposits growth
    8.7%YoY
    Q3 FY26
    Average CASA deposits growth
    8.9%YoY
    Q3 FY26
    Average LCR
    126%
    Q3 FY26
    Net additions to gross NPAs (excl. write-offs & sales)
    INR 20.74 billioncompared to INR 26.93 billion in Q3 FY25
    Q3 FY26
    Contingency provisions
    INR 131 billion
    Q3 FY26
    Additional standard asset provision (RBI directed)
    INR 12.83 billion
    Q3 FY26

    In respect of a portfolio of agricultural priority sector credit facilities, where terms were not fully compliant with regulatory requirements.

    Gross NPA additions
    INR 53.56 billioncompared to INR 60.85 billion in Q3 FY25
    Q3 FY26
    Recoveries and upgrades from gross NPAs (excl. write-offs & sale)
    INR 32.82 billioncompared to INR 33.92 billion in Q3 FY25
    Q3 FY26
    Gross NPA additions (Retail & Rural)
    INR 42.77 billioncompared to INR 53.04 billion in Q3 FY25
    Q3 FY26
    Gross NPA additions (Kisan Credit Card)
    INR 7.36 billioncompared to INR 7.14 billion in Q3 FY25
    Q3 FY26

    Typically sees higher NPA additions in Q1 and Q3 of a fiscal year.

    Net additions to gross NPAs (Retail & Rural)
    INR 17.38 billioncompared to INR 25.18 billion in Q3 FY25
    Q3 FY26
    Gross NPA additions (Corporate & Business Banking)
    INR 10.79 billioncompared to INR 7.81 billion in Q3 FY25
    Q3 FY26
    Net additions to gross NPAs (Corporate & Business Banking)
    INR 3.36 billioncompared to INR 1.75 billion in Q3 FY25
    Q3 FY26
    Gross NPAs written off
    INR 20.46 billion
    Q3 FY26
    Sale of NPAs
    INR 1.2 billion
    Q3 FY26

    For cash.

    Non-fund-based outstanding to nonperforming borrowers
    INR 22.29 billion
    Q3 FY26
    Loans & non-fund-based outstanding to performing corporate borrowers (BB and below)
    INR 33.92 billion
    Q3 FY26
    Fund-based outstanding to standard borrowers under resolution
    INR 16.66 billion
    Q3 FY26
    Total provisions (excl. specific provisions on nonperforming fund-based outstanding)
    INR 226.57 billion
    Q3 FY26

    Includes contingency provisions of INR 131 billion, general provision on standard assets, provisions for non-fund-based outstanding to nonperforming borrowers, and for standard borrowers under resolution and BB and below portfolio. Excludes additional standard asset provision directed by RBI.

    Net interest income
    INR 219.32 billionup 7.7% YoY, up 1.9% QoQ
    Q3 FY26
    Cost of deposits
    4.55%down from 4.64% in Q2 FY26 and 4.91% in Q3 FY25
    Q3 FY26
    Benefit of interest on tax refund
    1 bpsnil in Q2 FY26, 1 bps in Q3 FY25
    Q3 FY26
    Domestic loans linked to external benchmarks
    56%
    Q3 FY26

    Linked to repo rate and other external benchmarks.

    Domestic loans linked to MCLR/older benchmarks
    13%
    Q3 FY26

    Linked to MCLR and other older benchmarks.

    Domestic loans with fixed interest rates
    31%
    Q3 FY26
    Noninterest income (excl. treasury)
    INR 75.25 billionup 12.4% YoY, up 2.3% QoQ
    Q3 FY26
    Fee income
    INR 65.72 billionup 6.3% YoY, up 1.2% QoQ
    Q3 FY26
    Dividend income from subsidiaries
    INR 6.81 billioncompared to INR 8.1 billion in Q2 FY26 and INR 5.09 billion in Q3 FY25
    Q3 FY26

    YoY increase primarily due to interim dividend from ICICI Securities.

    Operating expenses
    increased by 13.2%YoY
    Q3 FY26
    Employee expenses
    increased by 12.5%YoY
    Q3 FY26
    Non-employee expenses
    increased by 13.6%YoY
    Q3 FY26
    Branch count increase
    402
    9 months of current year
    Total branches
    7,385
    Q3 FY26
    Technology expenses as % of operating expenses
    11%
    9 months of current year
    Total provisions (excl. additional standard asset provision)
    INR 12.73 billioncompared to INR 12.27 billion in Q3 FY25
    Q3 FY26
    Treasury performance
    INR -1.57 billioncompared to gain of INR 2.2 billion in Q2 FY26 and gain of INR 3.71 billion in Q3 FY25
    Q3 FY26

    Primarily reflecting market movements.

    Tax expense
    INR 34.82 billioncompared to INR 38.68 billion in Q3 FY25
    Q3 FY26
    Adjusted Profit before tax (excl. treasury)
    INR 162.40 billionup 6.2% YoY
    Q3 FY26

    Adjusting for additional standard asset provisioning.

    Adjusted Profit after tax
    INR 122.80 billionup 4.1% YoY
    Q3 FY26

    Adjusting for additional standard asset provisioning.

    Adjusted Return on average assets
    2.3%
    Q3 FY26
    Adjusted Stand-alone ROE
    15.5%
    Q3 FY26
    Consolidated profit after tax
    INR 125.38 billioncompared to INR 128.83 billion in Q3 FY25
    Q3 FY26
    ICICI Life Annualized premium equivalent (APE)
    INR 68.11 billioncompared to INR 69.05 billion in 9 months last year
    9 months ended Dec 31, 2025
    ICICI Life Value of new business (VNB)
    INR 16.64 billionincreased from INR 15.75 billion in 9 months last year
    9 months ended Dec 31, 2025
    ICICI Life Value of new business margin (VNB margin)
    24.4%compared to 22.8% in FY25 and 9 months last year
    9 months ended Dec 31, 2025

    Industry KPIs

    12
    MetricValueDetails
    Loans11.5%%
    Deposits9.2%%
    Rotce ROE15.5%%
    Cet1 ratio16.46%%
    Fee income linesINR 65.72 billionINR
    Allowance reserves75.4%%
    Net interest incomeINR 219.32 billionINR
    Net interest margin4.3%%
    Net charge offs npls0.37%%
    Total operating expenses—
    Provision for credit lossesINR 25.56 billionINR
    Efficiency ratio operating leverage—

    Risks & headwinds

    5
    Additional standard asset provision mandated by RBIOngoing until loans are repaid or renewed in conformity with PSL classification guidelines.

    INR 12.83 billion provision for a portfolio of INR 200 billion to INR 250 billion of agricultural priority sector credit facilities.

    Mitigation: Bank will work to bring the portfolio into conformity with regulatory expectations to minimize provisioning and PSL impact.

    Treasury loss due to market movementsQ3 FY26

    INR 1.57 billion loss in Q3 FY26, compared to gains in prior periods.

    Mitigation: Not explicitly stated, but implies market-driven and not operational.

    Credit card portfolio declineQ3 FY26

    Declined by 3.5% YoY and 6.7% sequentially.

    Mitigation: Attributed to seasonal festive spend and repayments; expects book to grow from here.

    Rising cost of PSL complianceOngoing

    Not explicitly quantified for this quarter, but noted as 'steadily gone up over the last few quarters.'

    Mitigation: Continuously analyzing the most efficient way to meet PSL requirements, including buying PSLCs or managing RIDF calls.

    Impact of new labor code on operating costsOngoing, with marginal increase in recurring operating costs.

    INR 1.45 billion provision for estimated liability in Q3 FY26.

    Mitigation: Will absorb as part of ongoing operations, focus on maximizing PPOP.

    What to watch in Q4 FY26

    5

    Net Interest Margin (NIM) trajectory

    From here on (next quarter and beyond)
    Current4.3%
    TargetRange-bound

    Why it matters

    NIM is a key driver of bank profitability, and its stability or movement will impact earnings.

    I think we would stay with our view that the NIM should be range bound from here on.

    Q&A highlights

    5

    Inquired about the size of the portfolio affected by the RBI-mandated standard asset provision, the nature of the non-compliance, and the impact on future operating expenses. Also asked about the outlook for NIM given rate cuts and mortgage competition, and if deposit repricing would help.

    The affected portfolio is INR 200 billion to INR 250 billion. The bank will work to bring it into conformity with PSL guidelines to minimize impact. Declined to detail the specific non-compliance. For NIM, noted Q3 saw loan repricing and KCC non-accrual offset by deposit repricing and CRR cut. Expects NIM to be range-bound going forward, with Q4 seeing repo/MCLR repricing but also continued retail deposit repricing.

    “I think we would stay with our view that the NIM should be range bound from here on.”

    asked by Mahrukh Adajania · answered by Anindya Banerjee

    2 min read6 chapters

    Detailed Narrative

    01

    RBI Mandated Standard Asset Provision

    The Reserve Bank of India (RBI) directed ICICI Bank to make an additional standard asset provision of INR 12.83 billion in Q3 FY26. This provision relates to a portfolio of agricultural priority sector credit facilities, where terms were not fully compliant with regulatory classification requirements. The underlying portfolio requiring conformity with PSL guidelines is estimated between INR 200 billion to INR 250 billion. The bank plans to work on bringing this portfolio into compliance to minimize future provisioning and PSL impact.

    02

    Loan Portfolio Dynamics

    The domestic loan portfolio expanded by 11.5% YoY and 4% QoQ, with strong sequential growth in mortgage (3.2%), rural (7.2%), and corporate (6.5%) segments. The business banking portfolio also grew significantly at 22.8% YoY and 4.7% QoQ. However, the credit card portfolio saw a sequential decline of 6.7% and a YoY decline of 3.5%, attributed to high festive spends and subsequent repayments in the prior quarter.

    03

    Net Interest Margin Stability

    Net interest margin (NIM) remained stable at 4.3% QoQ, expanding from 4.25% in Q3 FY25. This stability was achieved despite the impact of loan repricing due to repo and MCLR rate changes, and seasonally higher non-accrual on Kisan Credit Card (KCC) NPAs. These factors were offset by deposit repricing benefits and the CRR cut. Management expects NIM to remain range-bound going forward⏳.

    04

    Deposit Growth and Mix

    Total deposits grew by 9.2% YoY and 2.9% QoQ. While average current and savings account (CASA) deposits grew by 8.9% YoY and 1.5% QoQ, the overall savings account growth was impacted by a reduction in institutional banking savings accounts. Retail savings accounts and retail term deposits continued to show strong growth. The bank's average LCR for the quarter was 126%.

    05

    Credit Quality Improvement

    The net NPA ratio improved to 0.37% at December 31, 2025, from 0.39% at September 30, 2025, and 0.42% at December 31, 2024. Gross NPA additions were INR 53.56 billion, lower than INR 60.85 billion in Q3 FY25. The provisioning coverage ratio on nonperforming loans stood at 75.4%, with additional contingency provisions of INR 131 billion (0.9% of total advances).

    06

    Operating Expenses and Efficiency

    Operating expenses increased by 13.2% YoY and 1.2% QoQ. Employee expenses rose 12.5% YoY, including a INR 1.45 billion provision for the new labor code. The bank added 402 branches in 9 months, reaching 7,385 branches. Technology expenses constituted about 11% of operating expenses for the 9-month period. Management aims to maximize profit before provisions and tax (PPOP) rather than strictly cutting costs.

    AI-generated summary of the company’s earnings call. Not investment advice.