ICICI Bank Q3 FY26 Earnings Call - Resilient Core Profit with Strategic Focus on Risk-Calibrated Growth and Strong Capital Position

Conference Operator: Ladies and gentlemen, good day and welcome to ICICI Bank Limited Q3 FY26 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 this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sandeep Bakhshi, Managing Director and Chief Executive Officer of ICICI Bank. Thank you, and over to you, sir.

Sandeep Bakhshi, Managing Director and Chief Executive Officer, ICICI Bank: Thank you. Good evening to all of you, and welcome to the ICICI Bank earnings call to discuss the results for Q3 of FY 2026. Joining us today on this call are Sandeep Batra, Rakesh, Ajay, Anindya, and Abhinek. At ICICI Bank, our strategic focus continues to be on growing profit before tax, excluding treasury, through the 360-degree customer-centric 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, deepening coverage, and enhancing delivery capabilities with a focus on simplicity and operational resilience are key drivers for our risk-calibrated, profitable growth. The core operating profit increased by 6% year-on-year and 2.5% quarter-on-quarter to INR 175.13 billion in this quarter. The total provisions during the quarter were INR 25.56 billion.

This includes additional standard asset provision of INR 12.83 billion made pursuant to Reserve Bank of India’s annual supervisory review, which Anindya will explain later on the call. The profit before tax, excluding treasury, was INR 149.57 billion in this quarter, compared to INR 152.89 billion in Q3 of last year. The profit after tax was INR 113.18 billion in this quarter, compared to INR 117.92 billion in Q3 of last year. Average deposits grew by 8.7% year-on-year and 1.8% sequentially, and average current and savings account deposits grew by 8.9% year-on-year and 1.5% sequentially in this quarter. The bank continued to see healthy growth in current account deposits and individual term and savings deposits. Total deposits grew by 9.2% year-on-year and 2.9% sequentially at December 31, 2025. The bank’s average LCR for the quarter was about 126%.

The domestic loan portfolio grew by 11.5% year-on-year and 4% sequentially at December 31, 2025, compared to 10.6% and 3.3% at September 30, 2025. The retail loan portfolio grew by 7.2% year-on-year and 1.9% sequentially. Including non-fund-based outstanding, the retail portfolio was 42.2% of the total portfolio. The rural portfolio grew by 4.9% year-on-year and 7.2% sequentially. The business banking portfolio grew by 22.8% year-on-year and 4.7% sequentially. The domestic corporate portfolio grew by 5.6% year-on-year and 6.5% sequentially. The overall loan portfolio, including the international branches portfolio, grew by 11.5% year-on-year and 4.1% sequentially at December 31, 2025. The overseas loan portfolio was 2.4% of the overall loan book at December 31, 2025. The net NPA ratio was 0.37% at December 31, 2025, compared to 0.39% at September 30, 2025, and 0.42% at December 31, 2024.

During the quarter, there were net additions of ₹20.74 billion to gross NPAs, excluding write-offs and sales. The provisioning coverage ratio on non-performing loans was 75.4% at December 31, 2025. In addition, the bank continues to hold contingency provisions of ₹131 billion, or about 0.9% of total advances at December 31, 2025. The capital position of the bank continued to be strong with a CET1 ratio of 16.46% and total capital adequacy ratio of 17.34% at December 31, 2025, including profits for nine months 2026. Looking ahead, we see many opportunities to drive risk-calibrated, profitable growth, and grow market shares across key segments. We remain focused on maintaining a strong balance sheet, prudent provisioning, and healthy levels of capital while delivering sustainable and predictable returns to our shareholders. I now hand the call over to Anindya.

Anindya, CFO/Senior Executive, ICICI Bank: Thank you, Sandeep. Let me first talk about the additional standard asset provision. Following its annual supervisory review, RBI has directed the bank to make a standard asset provision of INR 12.83 billion in respect of a portfolio of agricultural priority sector credit facilities, wherein the terms of the facilities were found to be not fully compliant with the regulatory requirements for classification as agricultural priority sector lending. There is no change in asset classification or in the terms and conditions applicable to the borrowers or in the repayment behavior of borrowers as per these terms. The bank has been originating this portfolio over some years and will work to bring it in conformity with regulatory expectations. This additional standard asset provision will continue until the loans are repaid or renewed in conformity with the PSL classification guidelines.

I will now talk about loan growth, credit quality, P&L details, 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 11.1% year-on-year and 3.2% sequentially. Auto loans grew by 0.7% year-on-year and 0.9% sequentially. The commercial vehicles and equipment portfolio grew by 7.9% year-on-year and 3.2% sequentially. Personal loans grew by 2.4% year-on-year and 1.7% sequentially. The credit card portfolio declined by 3.5% year-on-year and 6.7% sequentially. During the quarter, we saw improved growth trends across the mortgage, rural, and corporate portfolios. The sequential decline in the credit card portfolio was due to high festive spends towards the end of the previous quarter, which had resulted in high sequential book growth in that quarter and saw repayments in the current quarter.

Within the corporate portfolio, the total outstanding to NBFCs and HFCs was INR 791.18 billion at December 31, 2025, compared to INR 794.33 billion at September 30, 2025. The total outstanding loans to NBFCs and HFCs were about 4.3% of our advances at December 31, 2025. The builder portfolio, including construction finance, lease rental discounting, term loans, and working capital, was INR 680.83 billion at December 31, 2025, compared to INR 635.83 billion at September 30, 2025. The builder loan portfolio was 4.3% 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 1.1% of the builder portfolio at December 31, 2025, was either rated BB and below internally or was classified as non-performing. Moving on to credit quality, the gross NPA additions were INR 53.56 billion in the current quarter, compared to INR 60.85 billion in Q3 of last year.

Recoveries and upgrades from gross NPAs, excluding write-offs and sale, were ₹32.82 billion in the current quarter, compared to ₹33.92 billion in Q3 of last year. The net additions to gross NPAs were ₹20.74 billion in the current quarter, compared to ₹26.93 billion in Q3 of last year. The gross NPA additions from the retail and rural portfolios were ₹42.77 billion in the current quarter, compared to ₹53.04 billion in Q3 of last year. There were gross NPA additions of about ₹7.36 billion from the Kisan Credit Card portfolio in the current quarter, compared to ₹7.14 billion in Q3 of last year. We typically see higher NPA additions from the Kisan Credit Card portfolio in the first and third quarter of a fiscal year. Recoveries and upgrades from the retail and rural portfolios were ₹25.39 billion in the current quarter, compared to ₹27.86 billion in Q3 of last year.

The net additions to gross NPAs in the retail and rural portfolios were INR 17.38 billion in the current quarter, compared to INR 25.18 billion in Q3 of last year. The gross NPA additions from the corporate and business banking portfolios were INR 10.79 billion in the current quarter, compared to INR 7.81 billion in Q3 of last year. Recoveries and upgrades from the corporate and business banking portfolios were INR 7.43 billion in the current quarter, compared to INR 6.06 billion in Q3 of last year. There were net additions to gross NPAs of INR 3.36 billion in the current quarter in the corporate and business banking portfolios, compared to INR 1.75 billion in Q3 of last year. The gross NPAs written off during the quarter were INR 20.46 billion. Further, there was sale of NPAs of INR 1.2 billion for cash in the current quarter.

The non-fund-based outstanding to borrowers classified as non-performing was INR 22.29 billion as of December 31, 2025. The loans and non-fund-based outstanding to performing corporate borrowers rated BB and below was INR 33.92 billion at December 31, 2025. This portfolio was about 0.2% of our advances at December 31, 2025. The total fund-based outstanding to all standard borrowers under resolution as per various guidelines was INR 16.66 billion or about 0.1% of the total loan portfolio at December 31, 2025. At the end of December, the total provisions, other than specific provisions on fund-based outstanding to borrowers classified as non-performing, were INR 226.57 billion, or 1.5% of loans. This includes the contingency provisions of INR 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 BB and below portfolio.

These provisions do not include the additional standard asset provision as directed by RBI in respect of a portfolio of agricultural priority sector credit facility. Moving on to the P&L details, net interest income increased by 7.7% year-on-year and 1.9% sequentially to INR 219.32 billion in this quarter. The net interest margin was 4.3% in this quarter, compared to 4.3% in the previous quarter and 4.25% in Q3 of last year. The cost of deposits was 4.55% in this quarter, compared to 4.64% in the previous quarter and 4.91% in Q3 of last year. The benefit of interest on tax refund was one basis point in the current quarter, compared to nil in the previous quarter and one basis point in Q3 of last year.

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 MCLR and other older benchmarks, and the remaining 31% of loans have fixed interest rates. Non-interest income, excluding treasury, grew by 12.4% year-on-year and 2.3% sequentially to ₹75.25 billion in Q3 of FY 2026. Fee income increased by 6.3% year-on-year and 1.2% sequentially to ₹65.72 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 subsidiaries was ₹6.81 billion in this quarter, compared to ₹8.1 billion in the previous quarter and ₹5.09 billion in Q3 of last year. The year-on-year increase in dividend income was primarily due to the receipt of interim dividend from ICICI Securities.

On costs, the bank’s operating expenses increased by 13.2% year-on-year and 1.2% sequentially in this quarter. Employee expenses increased by 12.5% year-on-year and 1.2% sequentially in this quarter, including the impact of ₹1.45 billion of provisions on an estimated basis pursuant to the new labor code. Non-employee expenses increased by 13.6% year-on-year and 0.8% sequentially in this quarter. Our branch count has increased by 402 in nine months of the current year. We had 7,385 branches as of December 31, 2025. The technology expenses were about 11% of our operating expenses in nine months of the current year. The total provisions during the quarter were ₹25.56 billion. Excluding the additional standard asset provision, the total provisions were ₹12.73 billion, or 7.3% of core operating profit and 0.36% of average advances, compared to the provisions of ₹12.27 billion in Q3 of last year.

The profit before tax, excluding treasury, was ₹149.57 billion in this quarter, compared to ₹152.89 billion in Q3 of last year. There was a treasury loss of ₹1.57 billion in Q3 of the current year, as compared to a gain of ₹2.2 billion in Q2 of the current year, and gain of ₹3.71 billion in Q3 of the previous year, primarily reflecting market movements. The tax expense was ₹34.82 billion in this quarter, compared to ₹38.68 billion in the corresponding quarter last year. The profit after tax was ₹113.18 billion in this quarter, compared to ₹117.92 billion in Q3 of last year. Adjusting for additional standard asset provisioning, the profit before tax, excluding treasury, would have increased by 6.2% year-on-year to ₹162.40 billion. And similarly, profit after tax would have increased by 4.1% year-on-year to ₹122.80 billion in this quarter.

The return on average assets and standalone ROE would have been 2.3% and 15.5%, respectively, in this quarter. The consolidated profit after tax was INR 125.38 billion in this quarter, compared to INR 128.83 billion in Q3 of last year. The details of the financial performance of key subsidiaries are covered in slides 33 to 36 and 55 to 60 in the investor presentation. The annualized premium equivalent of ICICI Life was INR 68.11 billion in the nine months ended December 31, 2025, as compared to INR 69.05 billion in nine months of last year. The value of new business increased to INR 16.64 billion in nine months ended December 31, 2025, from INR 15.75 billion in nine months of last year. The value of new business margin was 24.4% in nine months ended December 31, 2025, compared to 22.8% in FY 2025 and in the nine months of last year.

The profit after tax of ICICI Life was INR 9.92 billion in the nine months ended December 31, 2025, compared to INR 8.03 billion in nine months.

Sandeep Bakhshi, Managing Director and Chief Executive Officer, ICICI Bank: Sorry, sir, you’re not audible. Ladies and gentlemen, please stay connected. Ladies and gentlemen, we have the management team back, so please go ahead.

Anindya, CFO/Senior Executive, ICICI Bank: I’ll just repeat. Gross direct premium income of ICICI General increased to INR 70.41 billion in this quarter, from INR 62.14 billion in Q3 of last year. The combined ratios stood at 104.5% in this quarter, compared to 102.7% in Q3 of last year. The profit after tax was INR 6.59 billion in this quarter, compared to INR 7.24 billion in Q3 of last year. The profit after tax of ICICI AMC, as per Ind AS, was INR 9.17 billion in this quarter, compared to INR 6.32 billion in Q3 of last year. The profit after tax of ICICI Securities, as per Ind AS, on a consolidated basis was INR 4.75 billion in this quarter, compared to INR 5.04 billion in Q3 of last year. ICICI Bank Canada had a profit after tax of CAD 5.4 million Canadian dollars in this quarter, compared to CAD 19.6 million Canadian dollars in Q3 of last year.

ICICI Bank UK had a profit after tax of $5 million US dollars in this quarter, compared to $5.1 million US dollars in Q3 of last year. As per Ind AS, ICICI Home Finance had a profit after tax of ₹1.95 billion in the current quarter, compared to ₹2.03 billion in Q3 of last year. With this, we conclude our opening remarks, and we will now be happy to take your questions.

Sandeep Bakhshi, Managing Director and Chief Executive Officer, ICICI Bank: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We’ll take a first question from the line of Mahrukh Adajania from Nuvama. Please go ahead.

Mahrukh Adajania, Analyst, Nuvama: Hello. Hi. My first question is under standard asset provision. So what is the size of the portfolio on which these provisions were to be made, and what will be the impact on OpEx now that you have that much lower priority portfolio? Also, what was the classification issue? As in, I mean, what was non-compliant about the classification? So that’s my first question. And my second question is on margins. So obviously, margins have held steady. There is a rate cut, and there’s again aggressive competition in mortgage pricing. So how do you view your margins from here on? Is there some amount of deposit repricing still left, which will help hold up margins at these levels in the near future? So those are my questions.

Anindya, CFO/Senior Executive, ICICI Bank: Yeah, so coming to the first set of questions, I think, as we have said, following the supervisory review, the regulator has directed us to make this provision of INR 12.83 billion, and that is what has been communicated, and we have made it. The underlying portfolio that we need to work out and resolve in terms of ensuring conformity with the PSL guidelines would be between INR 200-INR 250 billion or so, and as far as the cost aspect is concerned, I think what we will be working on is to bring this portfolio into conformity with the regulatory expectations and thereby minimize both the provisioning and the PSL impact. On the underlying issues, I think those are really observations made by the regulator as part of its inspection process, so we wouldn’t want to go into those details, but the outcomes are what we have reported.

Coming to your next question on margins, I think, as you rightly said, if we look at the current quarter Q3, which has gone by, we did have the impact of repricing of loans, both on account of repo and MCLR, and we also had the seasonally higher non-accrual impact on the KCC NPAs. This was offset by some amount of deposit repricing and also the benefit of the CRR cut. If we look ahead into Q4, I think that level of non-accrual will not be there. We will see the impact of the repo repricing as well as MCLR on the floating rate loan book, the repo cut which happened in December in particular, but at the same time, we should continue to see some amount of repricing of the retail deposits.

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

Mahrukh Adajania, Analyst, Nuvama: Okay. Thank you. Thanks a lot.

Sandeep Bakhshi, Managing Director and Chief Executive Officer, ICICI Bank: Thank you. We’ll take the next question from the line of Rikin Shah from IIFL Capital. Please go ahead.

Rikin Shah, Analyst, IIFL Capital: Good evening, sir. I had three questions. So the first one is on, I just wanted to understand, was there any additional PSL cost due to the declassification of these agri loans as non-PSL? Was there any cost in the P&L this quarter or any potential cost in OPEX in the quarters to come? So that’s first. The second one is on the growth. So just wanted to get a sense if are you seeing any momentum of growth improving, even on month-on-month basis during 3Q? And would you expect now the growth to improve from the current levels within the constraints of your quality and risk framework? And the third one, specifically on the credit card. So what is weighing on the overall credit card book growth?

Is it merely a decline in the share of transactor loans following the festive pickup in 2Q, or there is more to read into it? Those are my questions.

Anindya, CFO/Senior Executive, ICICI Bank: So first, I think in general, the cost of PSL compliance has been going up. We do meet a part of our PSL obligations by buying the priority sector lending certificates, and the cost of those has steadily gone up over the last few quarters. So part of the increase, for example, or the level of operating expenses over the last couple of quarters has been due to that. But I would say that’s not being done specifically in the context of this regulatory observation. That’s something we keep looking at on a totality basis and analyzing what is the most efficient thing to do in terms of meeting the priority sector lending requirements. As far as this particular observation is concerned, as I said, we would be working to kind of bring this portfolio into conformity with the regulatory expectations and thereby minimize the impact.

And so I would not want to say call out any additional cost, etc., at this juncture. I mean, we’ll assess it in totality and see where we go and try to absorb it in the P&L. So that was the first one. I think your second question was on growth. So I think clearly we have seen a pickup in the if you look at the sequential growth rate in the fourth quarter vis-à-vis the third quarter, despite the rundown in cards, which I’ll come to separately, certainly there has been a pickup in momentum. And we see that momentum sustaining into the fourth quarter as well. And I think even the year-on-year growth rate, which is impacted by the trailing four quarters, has picked up in the current quarter, reflecting more recent trends. And I would expect that to continue into Q4 as well.

On the credit card specifically, I think we had a very strong book growth sequentially in Q2 because of the last week kind of festive spend, which were billed and repaid in the current quarter. So that is the main reason for the movement in the current quarter. I mean, we feel that the book should grow from here on. I think in both credit cards and PL, one thing, as we have been saying, that the quality of credit has certainly improved. So if you look at our aggregate retail NPAs, excluding the KCC, have come down in terms of NPL formation. And we are pretty comfortable with the quality now across secured and unsecured. In personal loans also, it’s a very small uptick, but there has been an uptick in Q3 on the year-on-year growth and the sequential growth.

I think we are quite positive on what we are underwriting. I think it’s a question of leveraging our franchise to grow these businesses. Of course, there is price competition across the board, but that’s something we will have to keep optimizing and managing.

Rikin Shah, Analyst, IIFL Capital: Right. So just a clarification on the first one. While you are not calling out any additional OpEx-related cost due to this regulatory observation, there would be this INR 200-INR 250 billion of the loans which are now declassified as PSL. So to meet that shortfall, would you be requiring to do more of RIDF bonds or PSLC, or do you think that the organic PSL generation itself will take care of the shortfall and hence no additional cost impact?

Anindya, CFO/Senior Executive, ICICI Bank: So I think the first step is that we will work to bring this portfolio into conformity with the PSL requirements. And that is how we will minimize the shortfall and the impact thereof. That would be the first objective. Thereafter, we will assess overall, as we do in any case on an ongoing basis, that to the extent after organic and inorganic generation of priority sector loans, whether we should buy PSLCs or we can live with some amount of RIDF call. That is an analysis that we anyway do on an ongoing basis. And over the years, I think we have improved our PSL compliance. So our RIDF book outstanding currently is on a relatively larger balance sheet is down, I think, to one-third of its peak levels.

Rikin Shah, Analyst, IIFL Capital: Got it, sir. Thank you. And congratulations, Mr. Bakhshi, for the reappointment. Thank you.

Anindya, CFO/Senior Executive, ICICI Bank: Thank you.

Sandeep Bakhshi, Managing Director and Chief Executive Officer, ICICI Bank: Thank you. Next question is from the line of Kunal Shah from Citi. Please go ahead.

Kunal Shah/M.B. Mahesh, Analyst, Citi/Kotak Securities: Yeah. So a couple of questions, sorry, again to harp upon on the credit card side. But even now, when we look at the portfolio, it is almost at a similar level to where we were in June. Okay. In fact, hardly any growth out there over and above June. And this kind of a trend we had not seen in the earlier years during the festive wherein it tends to run down. So any particular cohort or maybe the transactor proportion significantly going up, which is leading to this?

Anindya, CFO/Senior Executive, ICICI Bank: So I think that the transactor portion has gone up across most players, I would think. In our case, there’s nothing specific other than the fact that we had an unusually strong growth in Q2, and that has got an offset in Q3. We continue to.

Kunal Shah/M.B. Mahesh, Analyst, Citi/Kotak Securities: But how should we compare it with first quarter or maybe Q4 end? Because since Q4 end, also, there is a decline in the portfolio. And even from first quarter, it has just been flat over two quarters despite these spikes going up. Yeah.

Anindya, CFO/Senior Executive, ICICI Bank: So I see we are, as we have said in the past, we are not looking at credit card just as a product portfolio in itself, but really as part of an overall customer offering. And most of our new launches are aimed at enriching the offering to attract good customers and really be able to bank them on a 360 basis. But as I said, I think in this quarter, the book decline is more one-off, and we should see it gradually improve from here on.

Kunal Shah/M.B. Mahesh, Analyst, Citi/Kotak Securities: Sure. And secondly, on the corporate side, so significant action on a quarter-on-quarter basis. And within the risk framework or maybe on a risk-related operating profit level, earlier, it was thought that maybe PSU entities would not be giving us that kind of a benefit or operating profit. And we are seeing the increase in the BBB proportion as well. No doubt you have earlier alluded that that’s because of the business banking. But is the larger part of the growth on the corporate also coming in that segment of BBB or not really?

Anindya, CFO/Senior Executive, ICICI Bank: No. So I think that if we look overall, if we look at our approach to the corporate sector, to the corporate loan growth, one, corporates are well-funded and have multiple sources of funding. To the extent that they are accessing bank funding, we are very happy to participate. It has been very price competitive. So we do look at what is the overall relationship with the corporate. And wherever we have a franchise and we want to build a franchise, we do participate quite actively. I think one of the things that has changed maybe relative to the past couple of quarters is kind of the settling of the benchmark because a lot of the lending is happening at external benchmark linked rates. So the settling of the benchmark kind of gives us more confidence to price and lend.

From a credit quality perspective, I think we are quite comfortable with these rating grades, and we have our own limits on BBB, for example, origination, and both in terms of aggregate and in terms of borrower size, and we are within those frameworks. So we are quite comfortable with the quality.

Kunal Shah/M.B. Mahesh, Analyst, Citi/Kotak Securities: Sure. And lastly, on overall OpEx growth, now getting closer to, let’s say, 30-odd %, we had seen OpEx growth being contained almost in a single digit. So you indicated some cost of compliance being there. But is there any other element, and would we see cost almost settling in a similar level, or there are maybe cost containment levers which are available, and it should grow below the balance sheet growth?

Anindya, CFO/Senior Executive, ICICI Bank: We will see whatever is necessary to maximize kind of the overall PPOP. 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 labor code, cost would have actually come down marginally on an absolute basis. So I think we will work towards maximizing the PPOP and not really cutting cost per se, but definitely leveraging it as well as we can. Of course, one thing is that as far as the labor code is concerned, what we have accounted for is really the additional estimates of liability as they stand today. On an ongoing basis for all companies and banks, the code will marginally increase the recurring operating cost. But that’s something we’ll have to just absorb as we go forward.

Kunal Shah/M.B. Mahesh, Analyst, Citi/Kotak Securities: Sure. Okay. Okay. Got it. Yeah. Thanks, thanks, and congratulations, Bakhshi, for the reappointment. Yeah.

Anindya, CFO/Senior Executive, ICICI Bank: Thank you. Thank you.

Sandeep Bakhshi, Managing Director and Chief Executive Officer, ICICI Bank: Thank you. Next question is from Nitin Agarwal from Motilal Oswal. Please go ahead.

Nitin Agarwal, Analyst, Motilal Oswal: Yeah. Hi. Good evening, and thanks for the opportunity. I have a few questions. One is on the BBB segment, and if I look at the growth in the business banking, it has been moderating for quite some time now. We have earlier talked about that this is a conscious kind of a moderation that we are assuming while the quality overall remains strong. But how are we looking at this on an incremental basis? Do we now look to relax some figures? Has the growth rate now bottomed out, and so some color around this.

Anindya, CFO/Senior Executive, ICICI Bank: No, business banking, we are at it full steam, actually. I think the moderation in the growth rate is really just a function of the base. Even this quarter, on a year-on-year basis, we have grown at 22%. And even the accretion this quarter is close to the accretion we’ve seen on the corporate side, probably. The portfolio in itself now is actually larger than the corporate portfolio slightly. So I don’t think we are holding back. And we believe that there is enough untapped space for us to do. As the portfolio grows, the growth rate will normally moderate. But we don’t have any. The portfolio quality has also held up well. So we are quite happy with growing this portfolio.

Nitin Agarwal, Analyst, Motilal Oswal: Okay. Okay. And likewise, on the answer card, Anindya, when you say that growth rates and credit card and PL will get better, do you see this now moving above the overall loan growth, or it will just be a recovery from where we are? Because we are currently at very, very muted levels. So some color as to how.

Anindya, CFO/Senior Executive, ICICI Bank: I think that will take some time. When overall loan growth is 11.5% and personal loan is growing at 2%, it would be foolhardy to say that it will cross that level. But we definitely believe it should pick up from these levels.

Nitin Agarwal, Analyst, Motilal Oswal: Right. And on this standard provision that has happened earlier, also, we have seen this happening with another bank. So just curious to know, are large private banks more vulnerable to this RBI directive? I mean, whatever led to this directive from the RBI, are large private banks more vulnerable, or you can see something happening for PSU banks also?

Anindya, CFO/Senior Executive, ICICI Bank: I really can’t comment. I think we have to take the observation that has been given to us, comply with it, and resolve it as best as we can.

Nitin Agarwal, Analyst, Motilal Oswal: Okay. Great. Thank you so much.

Sandeep Bakhshi, Managing Director and Chief Executive Officer, ICICI Bank: Thank you. Next question is from M.B. Mahesh from Kotak Securities. Please go ahead.

Kunal Shah/M.B. Mahesh, Analyst, Citi/Kotak Securities: Anindya, just two questions. One is on this low growth in deposits on the savings account side. If you could just kind of comment what’s happening there.

Anindya, CFO/Senior Executive, ICICI Bank: Yeah. So actually, over the last two quarters, our growth in the retail savings account, the individual savings account, has continued to be quite strong, adjusted for seasonality. That growth typically is much better in the first and second quarters because the salary accounts see a pickup in terms of the year-end payments and so on. But we, even in this quarter, have seen a pretty strong growth in the retail savings account. Over the last two quarters, we have seen a reduction in balances in what we call the institutional banking savings accounts, which is essentially the government entities, the government schemes or departments that we bank. There, the amounts have come down in absolute terms, which has resulted in a lower growth or flat on the overall savings. But the retail savings continues to do quite well.

In fact, both the retail savings and the retail term, as well as the current account, all have done. We are quite happy with the way they are performing. On the institutional, CASA has proved a bit of a dampener on the overall numbers. That’s not that large a proportion of our deposit base, and hopefully, this impact will moderate going forward but it has been an issue in the last couple of quarters.

Kunal Shah/M.B. Mahesh, Analyst, Citi/Kotak Securities: Okay. And should we assume that when you say it’s not a large proportion, it comes into a double-digit number, or it’s lower than that?

Anindya, CFO/Senior Executive, ICICI Bank: I couldn’t get that clearly.

Kunal Shah/M.B. Mahesh, Analyst, Citi/Kotak Securities: When you say the corporate deposits are not a large number, it’s, let’s say, more than a double-digit number that we are talking about here?

Anindya, CFO/Senior Executive, ICICI Bank: Yeah. The institutional savings account would be 10-12% now of our or definitely around less than 15% of the average SAR base.

Kunal Shah/M.B. Mahesh, Analyst, Citi/Kotak Securities: Okay. The second question is, this share of this AA and, let’s say, the high investment grade, how much are you willing to take it lower as per your internal expectations?

Anindya, CFO/Senior Executive, ICICI Bank: See, I think that we are quite comfortable with the A family and above. I think that historically, those ratings have proved to be reasonably stable. And that is also where we find better risk-adjusted returns. So we are not hung up, particularly on the AA, AAA part of it. And as I said, on the BBB, we have to do it selective and really look at the counterparty carefully and operate within our limits framework.

Kunal Shah/M.B. Mahesh, Analyst, Citi/Kotak Securities: Okay. Thanks a lot.

Sandeep Bakhshi, Managing Director and Chief Executive Officer, ICICI Bank: Thank you. We’ll take our next question from the line of Param Subramanian from Investec. Please go ahead.

Param Subramanian, Analyst, Investec: Yeah. Hi. Thanks for taking my question. Congratulations to Mr. Bakhshi. But my first question is related to that. So what is the thought process behind the board seeking a two-year extension as opposed to a full three-year extension? Because there is nothing holding us back from a regulatory perspective. So how should stakeholders read into that? Yeah, that’s my first question.

Anindya, CFO/Senior Executive, ICICI Bank: So I think the board in consultation with the CEO have decided on a two-year appointment. As you know, the current term itself ends in October 2026. So from now till the end of the renewed term is almost three years. And nothing really further to add to that.

Kunal Shah/M.B. Mahesh, Analyst, Citi/Kotak Securities: Fair enough. So just if I can follow up on that. So one might read into it that this might be his last term. So that’s sort of the sort of signal that comes through. So yeah, anything you want to add to that?

Anindya, CFO/Senior Executive, ICICI Bank: So I think, as we said, we have three years to go. So on a lighter vein, we hopefully addressed the speculation around October 26. And I think it’s too early to speculate about October 28.

Kunal Shah/M.B. Mahesh, Analyst, Citi/Kotak Securities: Okay. Thank you, Anindya. Yeah, very helpful answer. Second question, this is on the results. So we saw quarter-on-quarter yield on advances decline of about 21 basis points. Is this almost entirely the KCC reversal impact? Because.

Anindya, CFO/Senior Executive, ICICI Bank: No, no, no, no.

Kunal Shah/M.B. Mahesh, Analyst, Citi/Kotak Securities: What if the impact would have been minimal? Yeah, yeah.

Anindya, CFO/Senior Executive, ICICI Bank: No, no. There would have been a multiple thing. So for example, if you look at the repo cut which happened in June, while all loans would have repriced some in July, some in August, and some in September, the portion which repriced in September would have seen only one month of impact in Q2 and two months of impact on the full impact in Q3. Similarly, our MCLRs have also come down. I think we are down by about 75 basis points in this rate cut cycle. So that would also have progressively impacted the portfolio as it repriced. So those would be equally relevant as far as the yield on advances is concerned.

Kunal Shah/M.B. Mahesh, Analyst, Citi/Kotak Securities: Fair enough. Thanks, Anindya. So it means the KCC impact is not as large.

Sandeep Bakhshi, Managing Director and Chief Executive Officer, ICICI Bank: I’m sorry. Your voice was muffled, Param.

Anindya, CFO/Senior Executive, ICICI Bank: No, no. As we said, just to be clear to avoid confusion, the RBI observation on standard asset provisioning has no impact on asset classification. On a regular basis, in Q1 and Q3 of every year, we see seasonally higher NPLs on the rural product, which is what leads to the non-accrual. And that has happened this year in Q3 as it happened in Q1 and as it happened in Q3 and Q1 of last year at the normal level. In addition, of course, we have had this whole repricing impact of the loan book, both the external benchmark link book and the MCLR link book.

Kunal Shah/M.B. Mahesh, Analyst, Citi/Kotak Securities: Got that. Got that, Anindya. Very clear. Last question, if I may, on the fees, right? So I mean, core fee has been sort of soft at 6% YoY. So how should we look at it? Will this pick up when the retail loan growth eventually starts picking up, or is unsecured or credit cards the number to track? Yeah.

Anindya, CFO/Senior Executive, ICICI Bank: So I think in this quarter, the cards and payments piece has been something which has been a bit of a drag in terms of year-on-year growth in this number that we hope will pick up. On the loan growth, also, should contribute, although a lot of the loan-related fees, the processing fees, and so on are under some competitive pressure. But it will hopefully we would want to grow this number from here on. One good thing is that it’s an extremely granular number. As we have said, 78% of the fees, even in this quarter, were from the retail, rural, and business banking portfolios. And even the corporate fees are very granular transaction banking-oriented fees.

Kunal Shah/M.B. Mahesh, Analyst, Citi/Kotak Securities: Fair enough. Thank you so much. Congrats on the quarter. Yeah.

Anindya, CFO/Senior Executive, ICICI Bank: Thank you.

Sandeep Bakhshi, Managing Director and Chief Executive Officer, ICICI Bank: Thank you. We’ll take our next question from the line of Suresh Ganapati from Macquarie Capital. Please go ahead.

Kunal Shah/M.B. Mahesh, Analyst, Citi/Kotak Securities: Yeah, Anindya, what is your LCR this quarter?

Anindya, CFO/Senior Executive, ICICI Bank: 126%.

Kunal Shah/M.B. Mahesh, Analyst, Citi/Kotak Securities: Okay, and post the new April 2026 guidelines, would it go up or go down?

Anindya, CFO/Senior Executive, ICICI Bank: It will be kind of similar.

Kunal Shah/M.B. Mahesh, Analyst, Citi/Kotak Securities: Okay. Flattish kind of level. So would you want to maintain around current level LCR, or what exactly do you guys consider? I mean, is there a normative level?

Anindya, CFO/Senior Executive, ICICI Bank: So I think that we kind of have a certain funding structure, and we maintain a certain amount of liquidity as a cushion. And that results in this number. So can it go up, down 2-3 percentage points? It could. This is, of course, the number that we report is the average for the quarter. So in every month, there would be periods when it, for example, goes down to 120 or something like that. But yeah, at an average level, this is probably an okay level, somewhere above 120 or higher. I mean, we don’t have a strict policy on that, but that’s where we’ve been operating.

Kunal Shah/M.B. Mahesh, Analyst, Citi/Kotak Securities: Okay. So my final question is related to this because if you look at it on a YoY basis, deposit growth has lagged loan growth. We have seen a rising LDR. So is LDR a constraint, or is this the mere outcome as long as we maintain all these ratios intact? Even if it goes up, it doesn’t matter for the management or the board. Is that the way we should look at it?

Anindya, CFO/Senior Executive, ICICI Bank: See, LDR is a function of what is the liability structure on the balance sheet. Banks with higher capital ratios, higher capital levels, higher net worth as a proportion of loans can afford a higher LDR. It’s also a function of the regulatory preemption. This quarter, I think, for the entire system and for us and most banks, the LDR would have gone up because of the CRR cut. I think 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. It can moderate marginally, but we are quite comfortable at this level. In terms of our funding side, as we always say, we maximize the retail deposits and including CASA.

And then we look at the different types of wholesale funding available, which could be refinance, bonds, wholesale deposits, and so on. And our reliance on wholesale deposits is pretty moderate.

Kunal Shah/M.B. Mahesh, Analyst, Citi/Kotak Securities: Okay. Thank you. Clear. Thank you so much.

Sandeep Bakhshi, Managing Director and Chief Executive Officer, ICICI Bank: Thank you. Ladies and gentlemen, we’ll take that as the last question for today. I now hand the conference back to management for closing comments. Over to you, sir.

Anindya, CFO/Senior Executive, ICICI Bank: Thank you very much for joining us on a Saturday evening, and we’ll be available to take other questions. Thank you.

Sandeep Bakhshi, Managing Director and Chief Executive Officer, ICICI Bank: Thank you. On behalf of ICICI Bank, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.