ICICI Bank Limited (NSE: ICICIBANK) Q2 2025 Earnings Call dated Oct. 26, 2024
Corporate Participants:
Sandeep Bakhshi — Managing Director and CEO
Anindya Banerjee — Group Chief Financial Officer
Analysts:
Mahrukh Adajania — Analyst
Rikin Shah — Analyst
Piran Engineer — Analyst
Saurabh Kumar — Analyst
Kunal Shah — Analyst
Nitin Aggarwal — Analyst
Param Subramanian — Analyst
Abhishek Murarka — Analyst
Rahul Jain — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to ICICI Bank’s Q2 FY 2025 Earnings Conference Call. On the call we have with us Mr. Sandeep Bakhshi, Managing Director and CEO, ICICI Bank; and Mr. Anindya Banerjee, Group Chief Financial Officer, ICICI Bank. 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. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Sandeep Bakhshi. Thank you. And over to you, sir.
Sandeep Bakhshi — Managing Director and CEO
Thank you. Good evening to all of you and welcome to the ICICI Bank earnings call to discuss the results for Q2 of financial year 2025. Joining us today on this call are Sandeep Batra, Rakesh, Ajay, Anindya and Abhinek.
The Indian economy remains resilient based on its long-term growth drivers and the actions and initiatives of the policymakers. The global and domestic inflation, liquidity and rate environment continue to evolve and we would continue to monitor the same. 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 micromarkets. We continue to operate within our strategic framework to strengthen our franchise. Maintaining high standards of governance, deepening coverage and enhancing delivery capabilities are focus areas for our risk calibrated profitable growth.
The profit before tax excluding treasury grew by 7.9% year-on-year and 5.2% quarter-on-quarter to INR148.10 billion in this quarter. The core operating profit increased by 12.1% year-on-year and 4.1% quarter-on-quarter to INR160.43 billion in this quarter. Excluding dividend income from subsidiaries and associates, the core operating profit increased by 13.4% year-on-year and 6.8% quarter-on-quarter to INR155.02 billion in this quarter. The profit after tax grew by 14.5% year-on-year and 6.2% quarter-on-quarter to INR117.46 billion in this quarter. Total deposits grew by 15.7% year-on-year and 5.0% sequentially at September 30, 2024. Term deposits increased by 15.9% year-on-year and 5.5% sequentially at September 30, 2024.
During the quarter, average deposits grew by 15.6% year-on-year and 3.6% sequentially and average current and savings account deposits grew by 10.4% year-on-year and 1.8% sequentially. The Bank’s average liquidity coverage ratio for the quarter was about 120%. The domestic loan portfolio grew by 15.7% year-on-year and 4.6% sequentially at September 30, 2024. The retail loan portfolio grew by 14.2% year-on-year and 2.9% sequentially. Including non-fund based outstanding, the retail portfolio was 44.9% of the total portfolio. The rural portfolio grew by 16.5% year-on-year and 1.7% sequentially. The business banking portfolio grew by 30.0% year-on-year and 10.7% sequentially.
The domestic corporate portfolio grew by 11.8% year-on-year and 4.9% sequentially. The overall loan portfolio including the international branches portfolio grew by 15.0% year-on-year and 4.4% sequentially at September 30, 2024. We have revised the presentation of loans to reflect a consolidated view of the business banking portfolio, which Anindya will explain later on the call. The net NPA ratio was 0.42% at September 30, 2024 compared to 0.43% at June 30, 2024 and 0.43% at September 30, 2023. The total provisions during the quarter were INR12.33 billion or 7.7% of core operating profit and 0.38% of average advances. The provisioning coverage ratio on non-performing loans was 78.5% at September 30, 2024.
In addition, the Bank continues to hold contingency provisions of INR131.00 billion or about 1.0% of total loans at September 30, 2024. The capital position of the Bank continued to be strong with a CET 1 ratio of 15.96% and total capital adequacy ratio of 16.66% at September 30, 2024, including profits for H1 2025. Looking ahead, we see many opportunities to drive risk calibrated profitable growth. We believe our focus on customer 360-degree, extensive franchise and collaboration within the organization, backed by our focus on enhancing delivery systems and simplifying processes will enable us to deliver holistic solutions to customers in a seamless manner and grow market share across key segments.
We will continue to make investments in technology, people, distribution and building our brand. We are laying strong emphasis on strengthening our operational resilience for seamless delivery of services to customers. We will remain focused on maintaining a strong balance sheet with prudent provisioning and healthy levels of capital. The principles of Return of Capital, Fair to Customer, Fair to Bank and One Bank, One Team will continue to guide our operations. We remain focused on delivering consistent and predictable returns to our shareholders.
I now hand the call over to Anindya.
Anindya Banerjee — Group Chief Financial Officer
Thank you, Sandeep. I will talk about loan growth, credit quality, P&L details, growth in digital offerings, portfolio trends and performance of subsidiaries. As Sandeep mentioned, we have revised the presentation of loans to reflect a consolidated view of the business banking portfolio. This comprises all borrowers with a turnover of up to INR7.5 billion, which was earlier reflected in the reported SME and business banking portfolios as well rural business credit forming part of the rural portfolio, dealer funding forming part of the retail portfolio and lending to mid-corporates forming part of the corporate portfolio. Over the past few years, the Bank has seen healthy loan growth in this category and has adopted an integrated approach to coverage, credit and delivery to these customers. Aligning with the same, we would be reporting the retail, rural, business banking and corporate portfolios on this revised basis. The comparable data for previous periods have been provided on slide 67 of the investor presentation.
Coming to the growth across retail products, the mortgage portfolio grew by 13.2% year-on-year and 3.2% sequentially. Auto loans grew by 9.6% year-on-year and 0.8%, sequentially. The commercial vehicles and equipment portfolio grew by 9.1% year-on-year and was flat sequentially. Personal loans grew by 17.3% year-on-year and 3.5% sequentially. The credit card portfolio grew by 27.9% year-on-year and 3.4% sequentially. The personal loans and credit card portfolio were 9.6% and 4.3% of the overall loan book, respectively at September 30, 2024. The overseas loan portfolio in U.S. dollar terms, declined by 6.9% year-on-year at September 30, 2024. The overseas loan portfolio was about 2.6% of the overall loan book at September 30, 2024. Of the overseas corporate portfolio, about 92% comprises Indian corporates.
Moving on to credit quality The gross NPA additions were INR50.73 billion in the current quarter compared to INR59.16 billion in the previous quarter. Recoveries and upgrades from gross NPAs, excluding write-offs and sale were INR33.19 billion in the current quarter compared to INR32.92 billion in the previous quarter. The net additions to gross NPAs were INR17.54 billion in the current quarter compared to INR26.24 billion in the previous quarter. The gross NPA additions from the retail and rural portfolios were INR43.41 billion in the current quarter compared to INR52.04 billion in the previous quarter. 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 INR25.92 billion compared to INR25.32 billion in the previous quarter. The net additions to gross NPAs in the retail and rural portfolios were INR17.49 billion compared to INR26.72 billion in the previous quarter. The gross NPA additions from the corporate and business banking portfolios were INR7.32 billion compared to INR7.12 billion in the previous quarter. Recoveries and upgrades from the corporate and business banking portfolios were INR7.27 billion compared to INR7.6 billion in the previous quarter. There were net additions to gross NPAs of INR0.05 billion in the corporate and business banking portfolios compared to net deletion of INR0.48 billion in the previous quarter. The gross NPAs written-off during the quarter were INR33.36 billion.
There was sale of NPAs of INR0.16 billion for cash in the current quarter compared to INR1.14 billion in the previous quarter. The non-fund based outstanding to borrowers classified as non-performing was INR33.82 billion as of September 30, 2024 compared to INR35.43 billion as of June 30, 2024. The Bank holds provisions amounting to INR19.11 billion against this non-fund based outstanding. The total fund based outstanding to all standard borrowers under resolution as per various guidelines declined to INR25.46 billion or about 0.2% of the total loan portfolio at September 30, 2024 from INR27.35 billion at June 30, 2024. Of the total fund based outstanding under resolution at September 30, 2024, INR21.29 billion was from the retail and rural portfolios and INR4.17 billion was from the corporate and business banking portfolios. The Bank holds provisions of INR8.12 billion against these borrowers, which is higher than the requirement as per RBI guidelines.
Moving on to the P&L details. The net interest income increased by 9.5% year-on-year to INR200.48 billion in this quarter. The net interest margin was 4.27% in this quarter compared to 4.36% in the previous quarter and 4.53% in Q2 of last year. The impact of interest on income tax refund on net interest margin was nil in the current, the previous quarter and Q2 of last year. The movement in net interest margin from Q1 to Q2 of the current year includes the impact of the higher number of days in the current quarter, which should seasonally reverse in Q4.
The domestic NIM was 4.34% in this quarter compared to 4.44% in the previous quarter and 4.61% in Q2 of last year. The cost of deposits was 4.88% in this quarter compared to 4.84% in the previous quarter. Of the total domestic loans, interest rates on 51% of the loans are linked to the repo rate, 1% to other external benchmarks and 16% to MCLR and other older benchmarks. The balance 32% of loans have fixed interest rates. Non-interest income, excluding treasury, grew by 10.8% year-on-year to INR64.96 billion in Q2 of 2025. Fee income increased by 13.3% year-on-year to INR58.94 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 INR5.41 billion in this quarter compared to INR6.48 billion in Q2 of last year. Dividend income from subsidiaries and associates was INR14.35 billion in H1 of current year compared to INR9.40 billion in H1 of last year. On Costs, the Bank’s operating expenses increased by 6.6% year-on-year in this quarter. Employee expenses increased by 11% year-on-year and non-employee expenses increased by 3.8% year-on-year in this quarter. The technology expenses were about 10% of our operating expenses in H1 of current year. Our branch count has increased by 90 in H1 of current year. We had 6,613 branches as of September 30, 2024.
The total provisions during the quarter were INR12.33 billion or 7.7% of core operating profit and 0.4% of average advances compared to the provisions of INR13.32 billion in Q1 of 2025. The provisions in Q1 of 2025 also included the impact of release of AIF provisions of INR3.89 billion, pursuant to clarity on the regulatory requirements. The provisioning coverage on non-performing loans was 78.5% as of September 30, 2024. In addition, we hold INR8.12 billion of provisions on borrowers under resolution. Further, the Bank continues to hold contingency provision of INR131 billion as of September 30, 2024. At the end of September, the total provisions, other than specific provisions on fund-based outstanding to borrowers classified as non-performing, were INR231.91 billion or 1.8% of loans.
The profit before tax excluding treasury grew by 7.9% year-on-year to INR148.10 billion in Q2 of this year. Treasury gains were INR6.80 billion in Q2 as compared to a treasury loss of INR0.85 billion in Q2 of the previous year, primarily reflecting realized and mark-to-market gains in equities and fixed income securities. The tax expense was INR37.44 billion in this quarter compared to INR33.85 billion in the corresponding quarter last year. The profit after tax grew by 14.5% year-on-year to INR117.46 billion in this quarter. Growth in digital offerings We continue to enhance the use of technology in our operations to provide simplified solutions to customers. About 72% of trade transactions were done digitally in Q2 of 2025. The volume of transactions done through Trade Online platform grew by 20% year-on-year in Q2 of 2025.
We had provided details on our retail, rural and business banking portfolios on slides 29 to 32 of the investor presentation. In line with the revised presentation of composition of the loan portfolio, we would be providing the BB and below corporate portfolio from the current quarter onwards. The loan and non-fund based outstanding to performing corporate borrowers rated BB and below was INR33.86 billion at September 30, 2024 compared to INR41.64 billion at June 30, 2024. This portfolio was about 0.3% of our advances at September 30, 2024. Other than two accounts, the maximum single borrower outstanding in the BB and below portfolio was less than INR5 billion at September 30, 2024. As of that date, we held provisions of INR6.26 billion on the BB and below portfolio compared to INR8.41 billion at June 30, 2024. While the SME portfolio has been carved out from this disclosure, the loan and non-fund based outstanding to performing SME borrowers rated BB and below also declined in the current quarter.
The total outstanding to NBFCs and HFCs was INR880.27 billion at September 30, 2024 compared to 854.12 billion at June 30, 2024. The total outstanding loans to NBFCs and HFCs were about 6.9% of our advances at September 30, 2024. The sequential increase in the outstanding to NBFCs and HFCs is mainly due to disbursement to entities having long vintage and owned by well-established corporate groups. The builder portfolio including construction finance, lease rental discounting, term loans and working capital was INR542.16 billion at September 30, 2024 compared to INR521.30 billion at June 30, 2024. The builder portfolio was about 4.2% 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 1.9% of the builder portfolio at September 30, 2024 was either rated BB and below internally or was classified as non-performing compared to 2.1% at June 30, 2024.
Moving on to the consolidated results. The consolidated profit after tax grew by 18.8% year-on-year to INR129.48 billion in this quarter. The details of the financial performance of key subsidiaries are covered in slides 40 to 42 and 61 to 66 in the investor presentation. The annualized premium equivalent of ICICI Life was INR44.67 billion in H1 of this year as compared to INR35.23 billion in H1 of last year. The value of new business was INR10.58 billion in H1 of this year compared to INR10.15 billion in H1 of last year. The value of new business margin was 23.7% in H1 of this year compared to 24.6% in FY 2024 and 28.8% in H1 of last year. The profit after tax of ICICI Life was INR4.77 billion in H1 of this year compared to INR4.51 billion in H1 of last year and INR2.52 billion in Q2 2025 compared to INR2.44 billion in Q2 2024.
Gross direct premium income of ICICI General was INR67.21 billion in Q2 of 2025 compared to INR60.86 billion in Q2 of 2024. The combined ratio stood at 104.5% in Q2 of 2025 compared to 103.9% in Q2 of 2024. Excluding the impact of CAT losses of INR0.94 billion in the current quarter and INR0.48 billion in the corresponding quarter previous year, the combined ratio was 102.6% and 102.8%, respectively. The profit after tax was INR6.94 billion in Q2 of 2025 compared to INR5.77 billion in Q2 of 2024. The profit after tax of ICICI AMC, as per Ind AS was INR6.94 billion in this quarter compared to INR5.01 billion in Q2 of last year. The profit after tax of ICICI Securities, as per Ind AS on a consolidated basis, was INR5.29 billion in this quarter compared to INR4.24 billion in Q2 of last year. ICICI Bank Canada had a profit after tax of CAD19.1 million in this quarter compared to CAD21.1 million in Q2 last year. ICICI Bank UK had a profit after tax of USD8 million in this quarter compared to USD3.3 million in Q2 of last year. As per Ind AS, ICICI Home Finance had a profit after tax of INR1.83 billion in the current quarter compared to INR1.12 billion in Q2 of last year.
With this, we conclude our opening remarks and we will now be happy to take your questions.
Questions and Answers:
Operator
Thank you very much. We’ll now begin with the question-and-answer session. [Operator Instructions] The first question is from the line of Mahrukh Adajania from Nuvama Wealth. Please go ahead.
Mahrukh Adajania
Yeah. Hi. Good evening, and congratulations on a very good set of numbers. My question is just related to general asset quality, so your slippages have done very well this quarter. And you’ve been growing your unsecured loans, though at a lower pace, but quite healthily. Right? So, your growth in mortgage and unsecured loans on a Q-o-Q basis is similar. And despite that, there’s no sign of stress on your books while every other lender is seeing some stress or the other on unsecured loans, either in credit cards or other unsecured loans. So, how do you think about your book going ahead? Will that divergent trend from the sector continue? And what is it that you think you’re doing right relative to others?
Anindya Banerjee
Mahrukh first of all, I think we have also seen an increase in the delinquencies and NPL formation in unsecured loans over the last, I would say three to four quarters, both in credit cards and in personal loans. During this period and even prior to that, we had been taking various steps to sort of improve the way we were underwriting and sourcing this portfolio in terms of customer segments and various pricing and various other filters. And therefore, as you would see on the personal loan side, the growth on a year-on-year basis has actually come off pretty significantly. Last year in the September quarter, the year-on-year growth was 40% and this year it is down to 17% or so. But in this portfolio, over a period of time, the slippages have gone up. I would say that in the current quarter we have not seen them go up further on a sequential basis, but we will continue to watch.
On the credit card side, I think it’s a little different from personal loans because that’s a very core product when you look at a bank customer relationship. And sort of a high touch product, so that’s definitely a business we would want to continue to grow. But there also over a period of time we have taken various steps in terms of the sourcing pattern. And while we have seen again there also the delinquencies and credit cost go up, it continues to be a very profitable business and a growth business. Overall, the unsecured piece these two products put together are about 14% of the loan book. So, some increase in delinquency or credit costs in these segments has contributed to the path towards some kind of normalization of credit cost. But even after that, if you look at it, we are still in the 40, 50 basis point range on an overall basis. So that’s how we would manage going forward.
Mahrukh Adajania
Okay, perfect. And just my second question is on funding cost. I know the deposit mix is also kind of changing, but would funding costs have bottomed out now? I mean, peaked out now? Just some outlook on margins in terms of cost.
Anindya Banerjee
So, if you look at the retail deposit rates, I think they have gone up in the current calendar year by about 15 bps or so. I think about 10 bps in Q4 and 5 bps earlier this year and that will feed into the increase in the cost of deposits by a basis point, 2 basis point over a period of time. But, yeah, I think the big increase in deposit rates had already, by and large, happened between the second half of fiscal 2023 and the second half of fiscal 2024. So, we would not expect retail deposit rates to go up too much from here.
On the wholesale side, I think the rates continue to be somewhat higher than what we would have otherwise expected. But as we had mentioned perhaps last time, the kind of decline in wholesale rates that we usually see during a first quarter did not really happen and rates have continued to be a little bit on the higher side if we look at one year plus kind of deposits. But I guess, with the liquidity situation having improved and the credit growth also coming off a little bit, that should hopefully, one hopes will be going forward, but we’ll have to wait and see. Overall, we may see, I guess, marginal increases in the cost of term deposits. I think this quarter, it went up by about — the overall cost of deposits went up by 4 basis points, which is a little bit of increase in the cost of term deposits and a little bit of reduction in the average CASA ratio and maybe to that extent, some small increases we could still see.
Mahrukh Adajania
Okay. Thanks a lot. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Rikin Shah from IIFL Securities. Please go ahead.
Rikin Shah
Thank you for the opportunity. Two questions. First one is on margin and more specifically on yield on advances. So, the yield on advances have been softening since a couple of quarters. Probably this quarter would be a function of exchange. But if you could allude to what’s driving slight pressure on the yields on advances and an outlook on that in the near term? And the second question is on the treasury gains. If you could just provide some color as to why the treasury gains have been high for the second quarter as well? 1Q you did mention a few reasons. If you could just provide more color on that for this quarter as well.
Anindya Banerjee
Yeah. So on the first one, I think, as I mentioned, There are certain portfolios where we account on the interest income on a 30 x 360 basis. So, in quarters which have a higher number of days the yield on advances just mathematically is reported a little lower. It evens out over the course of the year. Other than that, nothing specific on the yield on advances. I think in terms of market lending, we continue to see a fair amount of competitive intensity and we are trying to be as disciplined within that context as we can be. On the overall, I would say on the margins from — we would expect it to be broadly stable in H2 relative to H1 is what the way we would look at it until a rate cut cycle starts.
On the treasury, actually, as you know, from 1st of April, the revised investment guidelines came into course whereby a lot of the positions are mark-to-market now other than the HTM portfolio. And most of, other than the SLR book and subsidiaries and things like that, most of the portfolio is held either in AFS or fair values through P&L and the mark-to-market on the fair value through P&L portfolio reflects in the P&L for the quarter. So this quarter, if I look at kind of the INR6-odd billion, I would say a larger part did come from the treasury operations, the trading operations that we do across both fixed income equities and so on. But some component was there which reflected sort of the incremental mark-to-market positive over and above what the position was on June 30 on the fair value through P&L portfolio.
Rikin Shah
Okay, got it. Perfect, Anindya. Thank you very much.
Operator
Thank you. Next question is from the line of Piran Engineer from CLSA India. Please go ahead.
Piran Engineer
See you’ve done a good rolling opex.
Operator
Piran, sorry to interrupt you. Your audio is breaking.
Piran Engineer
Okay. Is it better now?
Operator
Yes. Little better. Go ahead.
Piran Engineer
Yeah. So, just talking about opex, you’ll have done a good job in controlling opex. Can you just give us some glimpse of where this is coming from? Where are we getting these benefits from and what should we expect in the coming, say FY 2025 to 2026?
Anindya Banerjee
I think we have been talking maybe for the last four quarters, that the kind of opex growth rate of 20-plus percent that we had been running in the four to six quarters or maybe a couple of years prior to that would moderate because now the cost base itself is fairly large. And we have opportunities to optimize within that. So that is basically what has driven the reduction in the cost growth. I think if I remember that for the fourth quarter, the adjusted cost growth was about 13% or so. For the first half this year, while the Q2 number is indeed year-on-year, growth is very low at 6.6% for the first half. This year it’s about 8.5% or so. And it could be slightly higher in the second half, given all the festive season related spends and other technology spends, etc., that we have planned out. But broadly around this level, give or take a couple of percentage points is where we should see it in the near term.
Piran Engineer
Got it. Okay. And your branch openings have also slowed down this year compared to the run rate that we are running at earlier. So, any particular reason and is this also a reason why opex growth has been trending a bit lower?
Anindya Banerjee
I don’t think that that’s a very big driver. Maybe that some contribution of that. So on branches, as we have said in the past, we are not really fixated on a particular number or that we have to open so many in such a period of time. It’s a very bottom up organic process based on the teams which are managing different markets. What is the branch addition that they need to do, and it’s always looked at within the overall current and potential PPoP kind of framework. So based on that, we have not consciously held back on opening any branches nor as we pushed any branch opening. It’s just an organic process, which happens. I would guess this number will be materially higher in H2. But it’s not like we have any particular number that we want to achieve.
Piran Engineer
Got it. And just lastly, if I can squeeze in your credit card delinquencies, any difference between the co-branded ones and the regular ones?
Anindya Banerjee
We don’t really give out this data.
Piran Engineer
Okay, fair enough. Fair enough. Thank you and wish you all the very best.
Operator
Thank you. Next question is from the line of Saurabh from JPMorgan. Please go ahead.
Saurabh Kumar
Just two questions. One is on your CASA growth, especially on your savings account growth, you’ve done much better than all other banks. So, could you just throw some as to why you are seeing a much better traction on CASA than others, especially on savings account? And the second is essentially on your slippages. How much would be coming from linked accounts? And will it be fair that in your cards and personal loan portfolio, the delinquency — I mean, the NPL increase will be higher in cards or the write-off will be higher in cards versus PL? The stress you’re seeing and it will be mostly in the outside to the bank channel. So, these are two ones. Thank you.
Anindya Banerjee
So, on the CASA side, I think the way we approach it is that we basically focus on what we call money in bank. So, we don’t really push the distribution on this much [Indecipherable] this much term. Basically what we are trying to achieve is that we should be having good customers and we should be the primary banker, having a good share of that customer’s wallet. And customer ranges across retail and business banking and corporate. And then it’s really up to the customer in what form they choose to keep the money. So, I think that is the way – -we are trying.
I think I dropped off.
Operator
No, sir. You are connected.
Anindya Banerjee
Yeah. I think this money and bank concept and focusing the team’s attention on the total wallet of the customer rather than driving any particular type of deposit at any point of time has helped, as well as the focus on, I would say, quality customer acquisition.
On the NPL part, finally, it doesn’t really matter whether it is linked or unlinked. RBI guidelines require NPLs to be identified and reported on what we call the common borrower basis at a borrower level and not a particular loan account level. So that is what we do and that’s been the inconsistent practice for a fair amount of time now. We’ve not really given the comparative delinquencies between personal loans and cards or between different components of either portfolio. I think, as I mentioned earlier, it is fair that to say that as was expected over the last one, 1.5 years, delinquencies in these portfolios and even in overall, the NPL formation in retail has gone up. And we keep taking corrective actions in terms of sourcing, so hopefully it is stabilizing. And we will see how we go on from here. But nothing really to call out between one or the other. Of course, the personal loan and credit card products are different. Again, as we mentioned earlier, the credit card is a much more core part of the bank customer relationship and a much more high touch product. And it has its own operational challenges as well as kind of opportunities to differentiate. So that’s the way we would look at both these businesses.
Saurabh Kumar
Okay. Thank you.
Operator
Thank you. Next question is from the line of Kunal Shah from Citigroup. Please go ahead.
Kunal Shah
Yeah. Congratulations for great set of numbers. Sorry, if you can just highlight in terms of within the retail, how would be the proportion between the secured and unsecured in terms of the incremental formation and any change in last couple of quarters vis-a-vis the last year?
Anindya Banerjee
No, we have not really given any breakup of that kind. At a broad level, as I said earlier, we have been saying for, I think, eight quarters that the retail NPL formation at a gross level and at net level will held up. Will normalize upwards. Within that there has been an increase, of course, in the credit card and personal side, but finally, for us to look at it in the context of the overall portfolio and the overall numbers at a credit cost of 40 to 50 bps of advances, how much more break-ups will one do.
Kunal Shah
Yeah. So, when we look at the overall credit cost, still maybe below 40-odd basis points Not yet the normalized one. We would have seen some kind of a catch up on the unsecured side as well. But are we comfortable that maybe 40 to 50 basis points would be the broad range for credit cost and it may be beyond 50 basis points doesn’t seem like any incremental data points would suggest? Or maybe the delinquency bucket suggests that it should cross 50 basis points of credit cost?
Anindya Banerjee
It’s very difficult to say with that kind of precision. We have consistently been saying that there will be a gradual normalization. But it is anyway much below historical level. And we will see it as it comes. I don’t think there is anything today which is alarming us in terms of causing us to believe that it will go up very substantially. But could it interrupt over a period of time? It could.
Kunal Shah
Yeah. Okay. And just last data point. LCR, you mentioned 120?
Anindya Banerjee
Yeah.
Kunal Shah
Okay, thanks. Thank you.
Operator
Thank you. Next question is from the line of Nitin Aggarwal from Motilal Oswal. Please go ahead.
Nitin Aggarwal
Hi. Good evening, everyone, and congratulations. Very strong performance yet again. One question I have is on the rating distribution. See the rating distribution of corporate portfolio has seen an improvement this quarter. So, unlike the trend that was there in the previous quarters. So, do you maintain any thresholds here and also benchmark yourself to peer on the mix of credit rating?
Anindya Banerjee
We have given this because we have carved out the SME portion into business banking. This is now the corporate portfolio, basically comprising corporates above INR7.5 billion in turnover. And that is the rating part that we have given. So, I think earlier there used to be some confusion, because we were including SME and other players were not and so on and so forth. So this hopefully is a more comparable cut. And the numbers for the previous periods also there on the same slide. It’s been a pretty stable trend. I guess we do have certain internal limits in terms of gaps on origination of loans in the lower rating buckets. Those are sort of internal blocks.
Nitin Aggarwal
Okay. Anindya. Thanks. That was my question. Thanks so much.
Operator
Thank you. Next question is from the line of Param Subramanian from Nomura. Please go ahead.
Param Subramanian
Yeah. Hi. Thanks for taking my question. Firstly, just data, what is the recovery from written-off accounts in the quarter or the first half of the year?
Anindya Banerjee
We don’t give that number separately. It’s already adjusted in the provisions line item.
Param Subramanian
Okay, sure. Anindya, what is driving the higher write-off in this quarter? It doesn’t seem to have come with any significant P&L impact. So, is this largely fully provided loans and technical?
Anindya Banerjee
Yeah. So, these were largely — these were all 100% provided loan. And the way we do write-offs is that on the retail, broadly retail portfolios, we have a days past due based write-off policy, whereas on the corporate and SME portfolio it’s more on a case by case basis and these were some relatively old, fully provided NPLs that we wrote off this quarter, a technical write-off. Of course, even in some of these, we would continue to pursue cash recovery efforts that will come when it will come. But these are fully provided corporate NPLs of past year.
Param Subramanian
Okay, perfect. And just one last question if I can. The NIM impact because of this longer quarter, any number you can highlight would be great? Yeah, that’s it from me. Congratulations on a great quarter. Yeah.
Anindya Banerjee
Thank you. See the total impact on yield or — our NIM is 7 basis points or so, so it’ll be something within that.
Param Subramanian
Okay. Thanks a lot. Thank you.
Operator
Thank you. Next question is from the line of Abhishek Murarka from HSBC. Please go ahead.
Abhishek Murarka
Yeah. Hi, everyone. Congratulations for a great quarter. So, two questions. One is on business, one is on fees. On business, I would request for some commentary around business banking, especially with regard to demand trends and yield. Is the growth coming at lower yields? And how do you see the sustainability of this growth? And on credit card and PL, you’ve taken a lot of tightening measures earlier, but now your sequential run rate, is this like a BAU or you expect more impact of the tightening measures taken earlier to still show up in the sequential run rate? So, those are the two questions on business.
One quick question on fees. So, if I look at fee to assets now that your loan mix is changing and your PLCC, PF, vehicle finance, all those are coming down in proportion, do you expect your 1.2% fee to core, fee to assets also coming down? So, some understanding around that. Thanks. Those were my two questions.
Anindya Banerjee
So, on the first one, on the business banking side, Abhishek, maybe till eight or nine years back, we were not very large players in this segment. And I think over this period of time we have invested a lot into building this business. I would say, in terms of the credit underwriting models and capability. Equipping many more, virtually our entire branch network to deal with this set of customers and thirdly, I think our digital offerings have also helped and this period has also coincided with greater digital adoption in this segment borne out of various government initiatives or just the evolution of the market. So that has been the basis on which we have grown this segment.
And this is one segment where we really focus a lot on the customer 360. Because in many cases we would be having a significant share of the wallet, not only across credit, but also across transaction banking, deposits, FX and so on. So, we look at really the portfolio, the profitability on an overall basis. In terms of pure lending, it is competitive because I think other particular couple of the other large private sector peers have, in fact a longer sort of presence and history in this segment. So, I wouldn’t characterize it as a high yield business by any stretch. But it is a profitable business because they are really looking at what all we are doing with the customer.
Abhishek Murarka
Anindya, if I may. Now, it’s been quite a few years that we’ve grown this business quite fast, gained quite a bit of market share. So even today, to be able to maintain a 10% sort of sequential run rate, that’s in itself a fairly difficult task. So, do you think it’s still because your market share is still low or this is going to slow down and this kind of sequential growth may not continue anymore?
Anindya Banerjee
So, I don’t want to talk about sequential growth numbers, but fundamentally, I don’t think that our market share is saturated at all. I think we have a long way to go in terms of entities we can tap and cover and reach. And there are lots of very large potential customer base out there, both in terms of people and their existing banking plus this is also a segment which is growing. I mean, the people are setting up new manufacturing units. They are setting up new service businesses, so there is enough and more to be done. I don’t see any challenge to the market opportunity for us in this segment at all.
What was your second question?
Abhishek Murarka
On cards and PL.
Anindya Banerjee
Yeah. So, as I said, cards, I think, continues to grow at a reasonably robust pace. PL, I don’t think the dispersal volumes may not, I don’t have a sense may not come down too much, but I think they are already down a fair amount from where they were three, four quarters ago and repayments also kick in. So, on a portfolio growth perspective, as we mentioned that it has come down from 40% to 17% and you will see it trend down further over the next couple of quarters, definitely. On the fees question, we don’t really manage to that metric. What we look at is kind of the overall PPoP and the credit card. So, it’s not that we have a particular fee to income number in mind or number in mind. I think on fees also there is more that we can do in terms of growth or in terms of increasing the fee income in areas like transaction banking and FX, in cards also and a couple of other places as well. So again, on fees, the growth opportunity is there. I don’t worry too much about PL coming down and that depleting the…
Abhishek Murarka
These activities you’re doing on the fee side to improve the fee growth, is it sort of showing up or it’s like a long duration project? And your fee to assets or fee to income will not be impacted in next few quarters because of it?
Anindya Banerjee
We don’t really look at fee to income, fee to assets at all. I mean, we have an overall PoP kind of aspiration, and fee is one element of that. It is probably an element where we have scored for some lift.
Abhishek Murarka
Got it. Okay. Thank you. Thank you and all the best for the future. Thanks.
Operator
Thank you. Next question is from the line of Rahul from Goldman Sachs. Please go ahead.
Rahul Jain
Yeah. Thank you. Hi, Anindya, just two questions. One is your slide number 31 talks about the mix of the customers in PL and CC, 60 being existing to bank, 40 would imply being new to bank customers. So, just wanted to understand, maybe qualitatively, how is the behavior in each of these buckets are you seeing on the delinquency side? And this is stemming from the fact that we’ve seen reasonably higher degree of delinquencies in the customer that may not necessarily be existing to bank or those who are open market customer for different entities. So, just wanted to get some color as to how you’re seeing the behavior in these two portfolios.
Anindya Banerjee
I think as we said earlier, overall in these portfolios, credit costs have normalized, upward delinquencies have gone up. We have taken measures, hopefully including in the case of PL bringing down the growth. Hopefully, we will see stability and some improvement down the line. Nothing more than that to call out. This is put together 14% of the loan book and whatever is happening within this book is getting absorbed within that 40 to 50 basis points of credit cost.
Rahul Jain
So the behavior would be similar, so let’s say argumentatively, if existing to bank is having x percent of delinquencies, would new to bank would also be at x percent or they would be 1.2 times, 1.5 times?
Anindya Banerjee
No, it can vary. An existing to bank customer which has been not so great quality account sourced in the past may exhibit worse outcome than, say, quality account that is sourced today. Same cards. Because as I mentioned, it is a high patch product. So, it could vary and vary from a, of course, we keep doing internal analyses on various cuts. I think most important is the sort of credit profile of the customer. And that can vary across these segments.
Rahul Jain
And in terms of growth of this portfolio, the growth is now going to be more driven by, I would imagine, existing to bank customers or we would continue to hunt for customer outside of the banking relationships also?
Anindya Banerjee
No, I think, say, for example, if you look at credit cards, we have a large untapped base within our own customer base of quality customers who don’t have a card or even if they have our card are not using it as much as he would like them to, but at the same time, it’s also a very good product to acquire a customer with. So, for example, if we are banking a large corporate or banking some MNC or something, I would be very happy to offer a credit card to their employees above, at a certain level or who passed the credit filter. So, I think it’s really about what is the quality of the customer that you’re issuing to rather than getting caught up in existing versus new because that may give some false sense of comfort actually.
Rahul Jain
I was asking just generally because the environment. Fair enough. The second quick question was on the outlook on margins. So, it’s been trending lower. You talked about cost of deposits being closer to bottoming and whatever repricing had to happen has happened. But there could be some mix exchange element as well. So, what’s the outlook on the margin that you envisage? I see you’ve got fair bit of comfort on the loan to deposit side as well, so would you pull that lever to manage the margins or you think it is kind of okay where it is right now?
Anindya Banerjee
So, I already said that we would expect margins to be broadly stable in the near term. And then when the rate cut cycle starts, of course, the lead lag will play out on the reverse side, with loans repricing faster than deposits. The general expectation is of a relatively shallow cycle, so we will have to manage through that as and when it happens.
Rahul Jain
Got it. Thank you so much and wish you all a festive greetings as well. Thank you so much.
Operator
Thank you very much. Ladies and gentlemen, we’ll take that as a last question. I now hand the conference back over to the Bank. Please go ahead.
Anindya Banerjee
Thank you for taking time on a Saturday afternoon and wish you all a very, very happy Diwali from ICICI Bank in advance. Thank you.
Operator
[Operator Closing Remarks]