ICICI Bank Limited (NSE: ICICIBANK) Q4 2025 Earnings Call dated Apr. 19, 2025
Corporate Participants:
Sandeep Bakhshi — Managing Director & Chief Executive Officer
Anindya Banerjee — Group Chief Financial Officer
Analysts:
Mahrukh Adajania — Analyst
Kunal Shah — Analyst
Anand Swaminathan — Analyst
Nitin Aggarwal — Analyst
M B Mahesh — Analyst
Harsh Modi — Analyst
Param Subramanian — Analyst
Piran Engineer — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q4 FY ’25 Earnings Conference Call of ICICI Bank. As a reminder, all participant lines will be in 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 Bakshi, Managing Director and Chief Executive Officer of ICICI Bank. Thank you, and over to you.
Sandeep Bakhshi — Managing Director & Chief Executive Officer
Thank you. Good evening to all of you, and welcome to the ICICI Bank earnings call to discuss the results for Q4 of FY 2025. 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 a 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 13.2% year-on-year to INR165.34 billion in this quarter and by 11.4% year-on-year to INR607.13 billion in financial year 2025. The core operating profit increased by 13.7% year-on-year to INR174.25 billion in this quarter and by 12.5% year-on-year to INR653.96 billion in financial year 2025.
The profit after-tax grew by 18% year-on-year to INR126.30 billion in this quarter. For the fiscal year 2025, the profit after-tax grew by 15.5% year-on-year to INR472.27 billion. The consolidated profit after-tax grew by 15.7% year-on-year to INR135.02 billion in this quarter and by 15.3% year-on-year to INR510.29 billion in financial year 2025. The Board has recommended a dividend of INR11 per share for financial year 2025, subject to requisite approvals. Total deposits grew by 14% year-on-year and 5.9% sequentially at March 31, 2025. During the quarter, average deposits grew by 11.4% year-on-year and 1.9% sequentially and average current and savings accounts deposits grew by 10% year-on-year and 0.5% sequentially.
The bank’s average liquidity coverage ratio for the quarter was about 126%. The domestic loan portfolio grew by 13.9% year-on-year and 2.2% sequentially at March 31, 2025. The retail loan portfolio grew by 8.9% year-on-year and 2% sequentially. Including non-fund based outstanding, the retail portfolio was 43.8% of the total portfolio. The rural portfolio grew by 5.1% year-on-year and declined by 1.5% sequentially. The business banking portfolio grew by 33.7% year-on-year and 6.2% sequentially. The domestic corporate portfolio grew by 11.9% year-on-year and declined by 0.4% sequentially. The overall loan portfolio, including the international branches portfolio grew by 13.3% year-on-year and 2.1% sequentially at March 31, 2025. The net NPA ratio was 0.39% at March 31, 2025 compared to 0.42% at December 31, 2024 and 0.42% at March 31, 2024.
The total provisions during the quarter were INR8.91 billion or 5.1% of core operating profit and 0.27% of average advances. The provisioning coverage ratio on non-performing loans was 76.2% at March 31, 2025. In addition, the bank continues to hold contingency provision of INR131 billion or about 1% of total advances at March 31, 2025. The capital of the position of the bank continued to be strong with a CET1 ratio of 15.94% and total capital adequacy ratio of 16.55% at March 31, 2025, after reckoning the impact of proposed dividends.
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 brands. We are laying strong emphasis on strengthening our operational resilience seamless delivery of services to customers. We 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, technology initiatives, portfolio trends 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% year-on-year and 2.8% sequentially. Auto loan grew by 4.6% year-on-year and 0.4% sequentially. The commercial vehicles and equipment portfolio grew by 7% year-on-year and 2.9% sequentially. Personal loans grew by 4.2% year-on-year and 0.6% sequentially. The credit card portfolio grew by 11.7% year-on-year and 0.9% sequentially. The personal loans and credit card portfolio were 9.1% and 4.3% of the overall loan book, respectively at, March 31, 2025.
The overseas loan portfolio in US dollar terms declined 10.2% year-on-year at March 31, 2025. The overseas loan portfolio was about 2.3% of the overall loan book at March 31 March, 2025. Of the overseas corporate portfolio, above 91% comprises Indian corporates. On credit quality, the gross NPA additions were INR51.42 billion in the current quarter compared to INR60.85 billion in the previous quarter. Recoveries and upgrades from gross NPAs, excluding write-offs and sale were INR38.17 billion in the current quarter compared to INR33.92 billion in the previous quarter. The net additions to gross NPAs were INR13.25 billion in the current quarter compared to INR26.93 billion in the previous quarter. The gross NPA additions from the retail and rural portfolios were INR43.39 billion in the current quarter compared to INR53.04 billion in the previous quarter. Recoveries and upgrades from the retail and rural portfolios were INR30.39 billion compared to INR27.86 billion in the previous quarter.
The net additions to gross NPAs in the retail and rural portfolios were INR13 billion compared to INR25.18 billion in the previous quarter. The gross NPA additions from the corporate and business banking portfolios were INR8.03 billion in the current quarter compared to INR7.85 billion in the previous quarter. Recoveries and upgrades from the corporate and business banking portfolios were INR7.78 billion compared to INR6.06 billion in the previous quarter. There were net additions to gross NPAs of INR0.25 billion in the corporate and business banking portfolio compared to net additions of INR1.75 billion in the previous quarter.
The gross NPAs written-off during the quarter were INR21.18 billion. Further there were sale of NPAs of INR27.86 billion in the current quarter compared to INR0.58 billion in the previous quarter. These were fully provided NPAs and in view of sales, the bank received INR16.05 billion of security receipts and INR3.14 billion in cash with the balance INR8.67 billion being written-off, which is in addition to the write-offs mentioned earlier. The bank continues to hold 100% provision against the security receipt. The non-fund based outstanding to borrowers classified as non-performing was INR30.75 billion as of March 31, 2025, compared to INR31.60 billion as of December 31, 2024.
The provisions on this non-fund based outstanding was INR16.6 billion at, 31 March 2025 compared to INR17.12 billion at December 31, 2024. The total fund-based outstanding to all standard borrowers under resolution as per various guidelines declined to INR19.56 billion or about 0.1% of the total loan portfolio at March 31, 2025 from INR21.07 billion at December 31, 2024. Of the total fund base outstanding under resolution at March 31, 2025, INR17.55 billion was from the retail and rural portfolios and INR2.01 billion was from the corporate and business banking portfolios. The bank holds provisions of INR6.43 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 11% year-on-year to INR211.93 billion in this quarter. The net interest margin was 4.41% in this quarter compared to 4.25% in the previous quarter and 4.4% in Q4 of last year. The impact of interest on tax refund was about 2 basis points in the current quarter compared to about 1 basis point in the previous quarter and nil in Q4 of last year. The net interest margin for the full-year FY 2025 was 4.32%. The domestic NIM was 4.48% in this quarter compared to 4.32% in the previous quarter and 4.49% in Q4 of last year. The cost of deposits was 5% in this quarter compared to 4.91% in the previous quarter.
Of the total domestic loans, interest rates on about 53% of the loans are linked to the repo rate, 15% to NCLR and other older benchmarks and 1% to other external benchmarks. The balance 31% of loans have fixed interest rates. Non-interest income, excluding treasury grew by 18.4% year-on-year to INR70.21 billion in Q4 of 2025. Fee income increased by 16% year-on-year to INR63.06 billion in this quarter. Fees from retail, rural and business banking customers constituted about 80% of the total fees in this quarter. Dividend income from subsidiaries was INR6.75 billion in this quarter compared to INR4.84 billion in Q4 of last year. Dividend in subsidiaries was INR26.19 billion in FY 2025 compared to INR20.73 billion in FY 2024. A year-on-year increase in dividend income was primarily due to higher dividend from ICICI Bank Canada, ICICI Prudential Asset Management Company and ICICI Securities primary dealership.
On cost, the Bank’s operating expenses increased by 11.2% year-on-year in this quarter and 8.3% year-on-year in FY 2025. Employee expenses increased by 10.3% year-on-year and non-employee expenses increased by 11.7% year-on-year in this quarter. Our branch count has increased by 241 in Q4 and 460 in FY 2025. We had 6,983 branches as of March 31, 2025. Technology expenses were about 10.7% of our operating expenses in FY 2025. The total provisions during the quarter were INR8.91 billion or 5.1% of core operating profit and 0.27% of average advances compared to the provisions of INR12.27 billion in the previous quarter. The total provision during FY 2025 increased by 28.5% year-on-year to INR46.83 billion.
The bank on a prudent basis continues to hold provision against security receipts guaranteed by the government, which will be reversed on actual receipt of recoveries or approval of claims if any. The provisioning coverage on non-performing loans was 76.2% as of March 31, 2025. In addition, we hold INR6.43 billion of provisions on borrowers under resolution. Further, the bank continues to hold a contingency provision of INR131 billion as of, 31, 2025. At the end of March, the total provision other than specific provisions of fund-based outstanding to borrowers classified as nonperforming were INR226.51 billion or 1.7% of loans. The profit before tax excluding treasury grew by 13.2% year-on-year to INR165.34 billion in Q4 of this year and by 11.4% year-on-year to INR607.13 billion in FY 2025.
Treasury gains were INR2.39 billion in Q4 as compared to a treasury loss of INR2.81 million in Q4 of the previous year. The treasury loss in Q4 of the previous year includes the transfer of negative balance of INR3.4 billion in foreign currency translation reserves related to the bank’s offshore banking unit in Mumbai to the profit and loss account in view of the proposed closure of the unit. The tax expense was INR41.43 billion in this quarter compared to INR36.13 billion in the corresponding quarter last year. The profit after-tax grew by 18.0% year-on-year to INR126.3 billion in this quarter. The profit after-tax grew by 15.5% year-on-year to INR472.27 billion in FY 2025.
On technology, we continue to enhance the use of technology in our operations to provide simplified solutions to customers and make investments in our digital channels. We continue to further strengthen system resilience and simplify our process. We have provided details on our retail, rural and business banking portfolios on slides 25 to 28 of the investor presentation. The loans and non-fund based outstanding to performing corporate borrowers rated BB and below were INR28.54 billion at March 31, 2025 compared to INR21.93 billion at December 31, 2024. This portfolio was about 0.2% of our advances at March 31, 2025. Other than two accounts, the maximum single borrower outstanding in the BB and below portfolio was less than INR5 billion at March 31, 2025. The bank holds provision of INR4.38 billion against this portfolio at March 31, 2025. The total outstanding through NBFCs and HFCs was INR118.38 billion at March 31, 2025 compared to INR893.6 billion at December 31, 2024. The total outstanding to NBFCs and HFCs were about 6.8% of our advances at March 31, 2025.
The builder portfolio, including construction finance, lease rental discounting, term loans and working capital was INR606.24 billion at March 31, 2025, compared to INR586.36 billion at December 31, 2024. The builder portfolio was about 4.6% 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 1.7% of the builder portfolio at March 31, 2025 was either rated BB and below internally or was classified as non-performing compared to 1.7% at December 31, 2024.
Moving on to the consolidated results. The consolidated profit-after-tax grew by 15.7% year-on-year to INR135.02 billion in this quarter. The consolidated profit-after-tax grew by 15.3% year-on-year to INR510.29 billion in FY 2025. The details of the financial performance of key subsidiaries are covered in slides 36 to 38 and 57 to 62 in the investor presentation. The annualized premium equivalent of ICICI Life was INR104.07 billion in FY 2025 compared to INR90.46 billion in FY 2024. The value of new business was INR23.7 billion in FY 2025 compared to INR22.27 billion in FY 2024. The value of new business margin was 22.8% in FY 2025 compared to 24.6% in FY 2024. The profit-after-tax of ICICI Life was INR11.89 billion in FY 2025 compared to INR8.52 billion in FY 2024 and was INR3.86 billion in the current quarter compared to INR1.74 billion in Q4 of last year.
The gross direct premium income of ICICI General was INR247.76 billion in FY 2024 compared to INR268.33 billion in FY 2025. The combined ratio stood at 102.8% in FY 2025 compared to 103.3% in FY 2024. Excluding the impact of cat losses of INR0.94 billion in FY 2025 and INR1.37 billion in FY 2024, the combined ratio was 102.4% and 102.5% respectively. The profit-after-tax was INR25.08 billion in FY 2025 compared to INR19.19 billion in FY 2024. The profit-after-tax was INR5.1 billion in this quarter compared to INR5.19 billion in Q4 of last year.
The profit-after-tax of ICICI AMC as per Ind AS was INR6.92 billion in this quarter compared to INR5.29 billion in Q4 of last year. So profit-after-tax of ICICI Securities as per Ind AS on a consolidated basis was INR3.81 billion in this quarter compared to INR5.37 billion in Q4 of last year. Pursuant to the scheme of arrangement among ICICI Bank Limited and ICICI Securities Limited and their respective shareholders, ICICI Securities Limited has been delisted from stock exchanges on March 24, 2025 and become a wholly-owned subsidiary of the bank. ICICI Bank Canada had a profit-after-tax of CAD12.5 million in this quarter compared to CAD19.9 million in Q4 of last year. ICICI Bank UK had a profit-after-tax of USD6 million in this quarter compared to USD9.5 million in Q4 of last year. As per Ind AS, ICICI Home Finance had a profit-after-tax of INR2.41 billion in the current quarter compared to INR1.69 billion in Q4 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 will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Mahrukh Adajania from Nuvama Wealth Management. Please go-ahead.
Mahrukh Adajania
Yeah, hello. First of all, congratulations on a very strong set. I just had a few questions. Firstly, on loan growth. So have you tightened or have you been cautious on some segments, especially CL, PCC, overall retail, corporate growth because while the loan growth is good, it’s a tad lower than your last few quarters. So is there any cautious approach? And if there is why? Or is this the general demand that you know the bank is presented with? So that’s my first question. And then I have another question on deposits.
Anindya Banerjee
So as far as the loan growth is concerned, I don’t think anything specific incrementally in terms of caution on the credit side. I think we are pretty comfortable with what we are underwriting. Of course, on personal loans and cards, as you know, we had tightened a few quarters ago and that is showing up in the volumes over the last couple of quarters and the loan growth. But other than that, no specific caution on the credit side. I would say it’s largely a function of what is happening in the system. And also, I guess on the pricing side, some consciousness given that during this quarter, we were at the sort of cusp of the downward movement in benchmark rates. So we had to be, I think a little more I would say, disciplined in terms of the spreads, etc., that we were charging over the benchmark. But other than that, no specific caution on the credit side.
On — yeah.
Mahrukh Adajania
Okay, thanks. And on deposit growth, my question was that obviously banks are cutting deposit rates to transmit policy rates. But there has been a lot of tightness in deposits not recently, but over the last 1.5 years. So with the liquidity situation improving, is there confidence that a sustained deposit growth will now flow-through?
Anindya Banerjee
I guess that’s reflected in what is happening. We have seen liquidity improve substantially over the last couple of months with all the measures that the Central Bank has taken and deposit growth for us has continued to be quite strong. You would have seen the numbers for the fourth-quarter have also been pretty strong for us. So you know — and as the rate — now, of course, if you look at it, the repo rate has fallen by 50 bps. So that we’ll start to see a transmission into deposit rates, which is what has started. So I think that’s in the natural course of this.
Mahrukh Adajania
Okay. Thanks a lot. Thank you.
Operator
Thank you. The next question is from the line of Kunal Shah from Citigroup. Please go-ahead.
Kunal Shah
Yeah, sir. Yeah. So the question was on margin. When we look at it in terms of the yields, particularly, there has been 21 basis-points expansion. So firstly, obviously, there could be some element of lower reversals on PCC. But besides that, anything else to look into this or was there maybe in the recovery if there was any one-off interest or something which was there besides the interest on income tax refund, was there any other one-offs in the yield on advances?
Anindya Banerjee
So there was no one-off in the yield on advances. I think probably the largest component driving up the yield was what we had spoken of in I think Q2 and Q3 last year, which is the benefit of the day count, which brought down the yield in Q2 vis-a-vis Q1 and we had mentioned at that time that this would reverse out largely in Q4, which has happened. So that is one factor. The second factor is what you alluded to, the absence of the KCC non-accrual in Q4 relative to Q3. We did speak about the 2 bps of interest on tax refund. Other than that, I think nothing one-off in that sense, there would be maybe some a better returns on liquidity deployment, a little better interest collection on NPA, things like that, but no single item that requires to be called out, I would say.
Kunal Shah
Yeah. So this derecognition would be the significant component of it because it was thoughtfully like earlier when you indicated it seems like there is a benefit of 3 to-4 odd basis-points, which is coming in margin, but then it seems like that component was quite high.
Anindya Banerjee
I’m sorry, what component?
Kunal Shah
This derecognition.
Anindya Banerjee
Yeah, that would be some number, but I think the larger number is really on account of the day count convention. So as we had said, I think we would really — the number — margin number to focus on in our mind is really the 4.3% for the full-year that would be a more representative number.
Kunal Shah
Yeah. And in terms of — so going-forward, in fact, you have always been indicating that maybe if it’s a shallow rate cut cycle, we should be able to manage the margins. But now if we expect like say 100 bps kind of a repo rate cut over, say, four MPCs, would you still believe it to be shallow rate and maybe from here on in terms of the margin trajectory. If we have to look at it, how do we see it on the repricing of the yield? Do we follow like a monthly reset and business banking happens immediately and maybe that will entirely flow-through? And are there any levers available to improve margins or maybe to take care of the EBLR repricing impact.
Anindya Banerjee
So I don’t think — so whether the rate cut was relatively less or more, there would be some impact on margins because the deposit rates would — or the deposit repricing would occur with a lag while the loan repricing would be immediate. Indeed, the expectations of the rate cut have gone up compared to where they were, say, a couple of months ago and a higher-level of rate cuts is now expected. At the same time, as we spoke earlier, the deposit rates have also started falling. So we will have to see as we go along how we manage through this, but there would be an impact on margins definitely. What that will be, we’ll have to see as we go through the year because there are a number of factors that will come into play. I think overall, we have to look at — the way we look at it is we have to look at kind of the overall risk-adjusted PPOP and what are all the levers starting with growth, margins and other aspects of that we have to optimize and that’s what we’ll keep continuing to do.
Kunal Shah
Okay. Okay. Yeah. Thanks and all the best. Yeah.
Operator
Thank you. The next question is from the line of Anand Swaminathan from Bank of America. Please go-ahead.
Anand Swaminathan
Thank you. I have a couple of questions. One is on the sort of elasticity of savings rate cut.
Operator
Sorry, please use your handset.
Anand Swaminathan
Yeah, sure. Can you hear me better now?
Operator
Yes. Yes, sir.
Anand Swaminathan
Okay. Thank you. I had a couple of questions. One is on the elasticity of savings rate cuts. What according to you kind of is the kind of modeling you’ve done in-kind of going ahead with concerted, all banks have done a 25 bps rate cut? And is there theoretically a base limit that we should think about for savings rate cuts or can it kind of continue to mirror the rate cuts over the next few quarters? That’s my first question.
Anindya Banerjee
So we’ll have to see as we go along. I don’t think we can say that there is a sort of any kind of direct relationship. We are at the — I would say the repo rate has fallen by 25 bps and significant actions have also happened on liquidity in the system. And we will have to see how it goes on from here. I don’t think that there is any direct relation in that sense, which is quantifiable at this case.
Anand Swaminathan
Okay. But theoretically, there is no limit to how much the exchange rates can go down from here.
Anindya Banerjee
It’s a rate which each bank can set for itself in that sense. So it can move as per what a bank thinks is optimal.
Anand Swaminathan
Okay. And second question is on the business banking side. The loan growth has been exceptionally good, especially it seems to have accelerated in the last few quarters. So can you help us understand what is the risk in this business? How are you assessing the incremental risk, like how much riskier is it versus your corporate book? If you can give us something in terms of how much is the self-funded nature of the business, is it kind of going to contribute to a slightly higher average credit cost-down the line? Some color on this to get a better understanding would be good. Thank you.
Anindya Banerjee
I think last quarter we had a fairly extensive commentary on this in the earnings call. So the way we have built this business over the last several years, I think we have invested in, I would say, three aspects. One, certainly in the distribution. So expecting more-and-more of our branches to deal with the business banking or self-employed segment customers. Second, investing in our credit underwriting models and processes for this segment to be able to understand and assess the credit and deliver credit in a timely manner. And third, I think on the digital side, because our technology offerings, digital offerings and transaction banking capabilities for this segment have been pretty good and that has driven growth in the business, I would say holistically both on the lending side as well as on the fee and current account side.
And you know, in terms of I would say the risk profile of this business, it is a fairly granular, pardon me, fairly granular portfolio and pretty well-diversified geographically and industry-wise and so on. Secondly, I think it’s not in that sense a particularly high-yield business. So this is not the sort of mid-teens lending rate you know kind of business. It’s a pretty — it’s at the higher-end of the quality spectrum and pretty much competed for amongst the banks. But it’s also a business where we have a very — a much better scope to do the customer 360 because you are really doing a lot of things for the business and the owners.
So in terms of the credit performance, it has actually been quite good. In fact, if we look back five years, I think at the onset of the pandemic when of course, we were also the portfolio was relatively more recently built for us. I mean, this would have been one of the portfolios that we would have been most concerned about, but it is probably the portfolio which surprised significantly on the upside. Even if you look at a systemic level, you see ECLGS utilization and so on relative to this portfolio has been marginal. So it has behaved well. Currently, credit costs are pretty low, I would say, almost mirroring what we are seeing on the corporate side. But of course, it is something that has to be tightly monitored as we go along. So we will keep monitoring it and managing the portfolio dynamically.
Anand Swaminathan
So anyway, what will be the average yield on this business versus your corporate business, just to understand how much more profitable this is.
Anindya Banerjee
So we don’t really give you the segment-wise yield, it will be somewhat higher. But I think more importantly, it is the holistic P&L of the business in terms of the full customer 360, the liability side and the transaction banking and the ability to manage delivery costs and credit costs, which yields the bigger benefit and of course, the granularity of it.
Anand Swaminathan
Sure. Thank you. Sure. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Nitin Agrawal from Motilal Oswal Financial Services. Please go-ahead.
Nitin Aggarwal
Yeah, hi. Good evening, everyone, and congratulations on a very strong performance. A few questions. Anindya, one is around…
Operator
Request you to please use your handset.
Nitin Aggarwal
Hi, is it any better?
Operator
Yes, sir.
Nitin Aggarwal
Sorry about that. So first question is around asset quality. So like if I look-back like that normalization trend that started at the beginning of the year has reached a fair degree of stability. So just wanted to know your views like how comfortable you feel about asset quality now versus how, say, the situation was six months back and how is that trending now in unsecured retail products?
Anindya Banerjee
Actually, we were always quite comfortable because we were never too varied. But I would say that what we have been saying holds true. I think the corporate portfolio continues to behave extremely well as does business banking. On the retail side, the secured products, I think are behaving quite well. On unsecured, I think that generally, the NPL formation has broadly stabilized, I would say. We would hope for it to come down, but let us wait for that to happen, maybe it will take another couple of quarters. And all of that is getting absorbed in the credit costs that we are reporting.
This quarter, of course, we had a very low-credit cost of some 30 basis-points. But even if we kind of were to try and adjust out the fact that there were KCC provisions in the previous quarter and we had some write-back this quarter and so on, it will still be just about 40 odd bps or so. So things are quite stable. Of course, as you know, we go into the year, I think what happens to the overall economy globally and in India and this whole trade-related issues is something we’ll have to watch out for. But as of today, we are very comfortable with the portfolio.
Nitin Aggarwal
Right. And my second question is around growth again. So we have seen a very healthy growth or continued growth across business banking, but the retail growth has moderated if you compare over the prior years. Now looking-forward with other banks becoming more-and-more aggressive in lending in certain products where ICICI Bank is. So how do you see the trend about the overall loan growth? Will it remain skewed in favor of select products, which are PPOP and the profitability thresholds or one can expect more about this growth?
Anindya Banerjee
So we are really focused on the risk-adjusted PPOP. And of course, I think as we focus on that, should we want to make tactical calls on pricing, etc., in a particular customer or segment or product for a particular period of time, I think our funding franchise gives us the flexibility to do that. But overall, we are quite focused on the overall PPOP. I think that if we look — we would — I would say, continue to see a pretty healthy growth on the business banking side as things currently stand. Retail, we will see how the market evolves. And I think as the rate environment stabilizes during the year, pricing may also stabilize. So kind of that’s where I would look at it. On the unsecured side, probably you know the growth has bottomed-out and we may see some improved growth from here is what we see.
Nitin Aggarwal
All right. And lastly, on the PSL frontline, I see the stronger growth in business banking, but slightly toned down growth in retail and rural, how is the bank faring on the PSL front?
Anindya Banerjee
So I think it’s pretty similar to what we have seen in past quarters. We meet our overall PSL requirement. We also meet our MSME requirement impact overall and MSME we have some surplus. In the — some of the categories like the small farmer and weaker section, etc., we do have shortfall, which we try and address through either buyouts or through purchase of the PSLC certificate, so pretty much the same continues.
Nitin Aggarwal
Okay, sure. Thanks so much and wish you all the best.
Operator
Thank you. The next question is from the line of MB Mahesh from Kotak Securities. Please go-ahead.
M B Mahesh
Hey, hi. Just a couple of questions. First one is on the income, if any, which moves on the interest income line on the recovery of bad loans. Loans, right, on — let’s say, MSR receipts have come in on cash basis, does anything of it move to the interest income line as well?
Anindya Banerjee
So that the cash — the cash portion of the NPA sale is a — would be reflected as a write-back in provisions, not as interest income.
M B Mahesh
And there is nothing there in the interest income line from bank.
Anindya Banerjee
There will always be some interest recovery on NPLs in any quarter, it may vary a little quarter-to-quarter, but it will always be there.
M B Mahesh
Okay. So second one is on the current differential that exists on, let’s say, some of the benchmark loans between, let’s say, private sector banks and public sector banks. How much — does it — how much does it — how much does it hurt you right now? Some color on — because the transmission seems to be a bit later from the bank side in comparison to public banks at least.
Anindya Banerjee
Are you talking about competition? I mean the lending rate or…
M B Mahesh
Yes. So when I look at some of the housing loan products…
Anindya Banerjee
Yeah, yeah, clearly, it is an issue. I don’t — I think in retail, it’s not just about pricing because you really need the distribution scale, processing capacity to back up your pricing. So I wouldn’t say it’s just about pricing, but certainly, there are very large capable competitors who are also priced meaningfully below us. So it does create some challenges in terms of growth, but I guess that’s part of life. So we will have to keep dealing with it as we go along and look at how we can drive other levers to contribute and maintain profitable growth?
M B Mahesh
And one clarification, unsecured loans today, you would say that we are well past the peak in terms of specialty business or is there amount of uncertainty?
Anindya Banerjee
So I would say it has — you know it’s broadly stable. You know we would — we are yet to — we would — we are yet to see it coming down meaningfully. But I think more importantly, the behavior of the portfolios originated more recently, say what we originated post taking some of the credit changes in the last — which we did maybe 18 months ago. The behavior of those portfolios gives us a fair degree of comfort on building the portfolio incrementally.
M B Mahesh
Perfect. Thank you.
Operator
Thanks. The next question is from the line of Harsh Modi from JPMorgan. Please go-ahead.
Harsh Modi
Hi, thanks for the opportunity to ask question. I just want to understand on RWA growth, it’s 17% year-on-year for growth of around 13%. Could you please explain what drove the faster growth in risk-weighted assets? I have a follow-up question after that. Thank you.
Anindya Banerjee
So you know it’s evolving mix of the different categories of loans and how one classifies them because what can get what you can justify which risk rate category. In the year end, I think market risk also went up because we did some larger position as the interest-rate environment turned favorable for taking trading positions?
Harsh Modi
Got it. Thanks. The follow-up is on just the use of capital. You have significant capital generation. CET-1 is at 15.94 and the way it seems, your incremental RWA of INR2.4 trillion growth versus profit of INR4.5 trillion. So let’s say over next two to three years, how do you see the use of capital at the bank? Assuming given your competitive position and the moat, you may be able to generate significant amount of capital over next two to three years. Thank you.
Anindya Banerjee
So we are — I think one — two, three things. One, clearly, I think that there is a certain expectation among stakeholders, market, etc. of the level of capital that a large private sector bank should be maintaining. And I think we are — our capital levels are not out of line with most of our peers in that context. And as far as the capital generation that will happen in future and how much of that is absorbed by growth, we will see as we as we go along. But I think that capital — maintaining a certain level of capital is important from a strategic perspective and a market confidence perspective.
Harsh Modi
Right. So thanks, sir. That was exactly my question that organically seems growth would be — we are already doing quite well, focus on, as you said, risk-adjusted PPOP. And given the excess capital generation, because right now, your RWA growth is just 5 times of your net profit. So is there any possibility of — for strategic purposes, what are the places where you may incrementally allocate capital over next two to three years.
Anindya Banerjee
So we will, I think believe that our franchise gives us sufficient opportunity to grow and leverage the capital with at a stage we feel that we are — we can always look at other things like maybe increasing payouts or things like that. But for the time-being, I think we believe that given the franchise that we have, we have a lot of runway for growth.
Harsh Modi
Got it. Thank you.
Operator
Thank you. The next question is from the line of Param Subramanian from Investec Capital. Please go-ahead.
Param Subramanian
Yeah, hi. Thanks for taking my question. Firstly, on the net-worth movement in the quarter, so it’s up INR20,000 crores quarter-on-quarter, which is higher than the PAT. So what — because — is that the AFS mark-to-market that’s happened?
Anindya Banerjee
So the main item this quarter would be the issue of shares, the recording of the additional investment in Isec. So we would have issued shares shareholders of Isec. That while it’s capex neutral, it could have increased the net-worth by a substantial amount. That would be the biggest item.
Param Subramanian
Okay, not as much Isec. Got it. Secondly, on your — so broadly the outlook on CASA, right? So over the last year, the CASA ratio for the bank is almost flat Y-o-Y, which is a great outcome given the context. But if you compare with, say, the pre-COVID period when CASA used to be 48%, 49%, we are lower and we are looking at, like you pointed out, a very accommodative RBI on liquidity. Do you think this has led to go up going ahead seeing the scenario as it is building up, say, from a macro perspective?
Anindya Banerjee
Yeah, I think that we basically have to look at the total quantum of and cost of funding that is available to us and that should be superior to our competitors because CASA trends will not win very widely across the large banks. So we would not — that is the right way to look at it rather than, think too much about what is going to be the CASA growth for us. I think we have to really look at what is the total quantum of funding and the cost of that funding and its deployability, you know, because very volatile CASA may not help also and its deployability and really look at it from that perspective, which is what we do. And not really we wouldn’t have a specific outlook on CASA per se.
Param Subramanian
Okay. Okay. Would you think that the worst of the CASA pressures for yourself and the sector are largely behind.
Anindya Banerjee
Logically that should be so. Logically that should be so.
Param Subramanian
Okay, perfect. Thanks, Anindya. All the best. Thank you.
Operator
Thank you. The next question is from the line of Piran from CLSA. Please go-ahead.
Piran Engineer
Yeah, hi. Hi, team. Congrats on the quarter. Firstly, just on the previous question of Param, why do you say that the CASA pressure is over? Yes, sorry, I missed that.
Anindya Banerjee
I said logically that should be so given the monetary easing, the improvement in system liquidity and to the extent that it was a factor, the sort of some calm in capital markets, but it’s something we’ll have to see as we go-ahead.
Piran Engineer
Okay. Okay, that’s the reason. Fair enough. Just moving on to my questions. Firstly on vehicle growth slowdown, how do we really interpret this? Is this just a function of more competition at the counter or are you all intentionally scaling back due to asset quality or pricing or is it just something else?
Anindya Banerjee
I think it’s more the underlying demand and maybe at the margin a little bit on the pricing side, nothing on asset quality per se.
Piran Engineer
Okay. And Anindya, just on cost of deposits, you all were — it was inching up 2, 3 bps a quarter, which was understandable. This quarter it’s up almost 10 bps and the CASA ratio probably or the drop-in CASA ratio explains maybe 2, 3 bps of that. What explains the rest?
Anindya Banerjee
Similar to…
Piran Engineer
Or is it the number of days thing?
Anindya Banerjee
Yeah, it would be partly a number of days.
Piran Engineer
Okay, okay. And just my last question, out of your builder portfolio of INR60,000 crores, how much would be LRD?
Anindya Banerjee
So we have not given that breakup, there will be some component of LRD there.
Piran Engineer
But would it be significant or more minor?
Anindya Banerjee
I don’t think it will be minor, but really we have not given the breakup. I mean, it will be a reasonable number.
Piran Engineer
Okay. Okay, fair enough. That’s all from my end. And if I could just squeeze in one humble suggestion, if we could move our calls and our results releases to either a weekday or a Saturday morning, it would be great. You know, times like this when it’s literally clashing and in a minute we’ve got an HDFC Bank call, it doesn’t do justice to either of the banks. So if you could take that suggestion would be great. Yeah, I’m done that my end. Yeah. Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.
Anindya Banerjee
Thank you, everyone, and we’ll be happy to take any other questions offline. Thank you.
Operator
[Operator Closing Remarks]