ICICIBANK Q4 Call Highlights: Stable Loan Growth, Margin Expansion, and Strong Capital Levels!

ICICI Bank Ltd, an Indian multinational bank and financial services company, in its Q4 earnings call discussed stable loan growth with no new credit tightening beyond previous adjustments to personal loans and cards. Management noted margin expansion due to day count conventions and improved liquidity deployments, while deposit growth has strengthened amid improving liquidity conditions following a 50 basis point central bank rate cut. Asset quality has stabilized across portfolios, with corporate and business banking performing particularly well, and unsecured retail products showing stability. The bank maintains strong capital levels and focuses on risk-adjusted PPOP rather than segment-specific growth. Business banking showed robust performance through expanded distribution, improved underwriting, and digital offerings, while retail growth has moderated. Management expects CASA ratio pressure to ease with monetary easing and improved system liquidity.

ICICI Bank delivered outstanding Q4 results with net profit jumping 16% year-on-year to INR13,502 crore, exceeding analyst expectations. Core operating profit rose 13.7% to INR17,425 crore while net interest income (NII) grew 11% to INR21,193 crore, with NIM improving to 4.41% from 4.25% quarter-on-quarter, aided by CRR reduction and tax refund interest. Asset quality strengthened significantly, with gross NPA ratio falling to 1.67% from 1.96%. On the flip side, profit margin decreased from 31% to 25% due to higher expenses, NIM for the full year declined to 4.32% from 4.53%, and management warned of potential margin pressure from RBI rate cuts. The business banking portfolio showed impressive 34% growth. Looking ahead, ICICI Bank’s revenue is projected to decline by 13% annually over the next three years, contrasting with the expected 8.3% industry growth.

Continue Reading: Unearth the Vital Insights from ICICI Bank Ltd’s Earnings Call!

Financial/Operational Metrics:

• Revenue: INR79,748 crore, up 19% YoY.
• Net Income: INR13,502 crore, up 16% YoY.
• EPS: INR19.11, up 15% YoY.
• NII: INR21,193 crore, up 11% YoY.
• Average Deposits: INR14,86,635 crore, up 11.4% YoY.

 

 Analyst Crossfire:

• Loan Growth and Credit Caution, Deposit Growth and Liquidity (Mahrukh Adajania – Nuvama): No incremental caution on credit underwriting except for tightened policies on personal loans and cards from prior quarters, reflecting in lower volumes. Loan growth aligns with system trends and disciplined pricing due to anticipated benchmark rate declines. Deposit growth remained strong in Q4, supported by improved liquidity from central bank measures. Deposit rates are adjusting following a 50 bps repo rate cut, with expectations of sustained growth (Sandeep Bakshi – CEO).

 

• Net Interest Margin Expansion & Margin Outlook in Rate Cut Cycle (Kunal Shah – Citigroup)? The 21 bps yield expansion in Q4 was primarily due to the reversal of day count impacts from Q1/Q2 FY2024 and the absence of KCC non-accrual, with minor contributions from interest on tax refunds (2 bps) and better liquidity deployment. The full-year NIM of 4.3% is a more representative metric. A deeper rate cut cycle (e.g., 100 bps) could pressure margins as loan repricing is immediate, while deposit repricing lags. The bank aims to optimize risk-adjusted pre-provision operating profit (PPOP) using growth and other levers, with the exact margin impact to be assessed over time (Anindya Banerjee – CFO).

 

• Business Banking Growth and Risk Profile (Anand Swaminathan – Bank of America)? Strong business banking growth is driven by investments in distribution, credit underwriting, and digital offerings. The portfolio is granular, geographically diversified, and not high-yield, with low credit costs similar to the corporate book. It benefits from holistic customer engagement, including transaction banking and liabilities, and has performed resiliently, even during the pandemic (Sandeep Bakshi – CEO).

 

• Loan Growth Strategy & PSL Compliance (Nitin Agarwal – Motilal Oswal Financial Services)? Retail loan growth has moderated, but the bank focuses on risk-adjusted PPOP, maintaining flexibility for tactical pricing. Business banking growth remains strong, with potential improvement in unsecured retail growth as pricing stabilizes. The bank meets overall and MSME PSL requirements with surplus, but has shortfalls in small farmer and weaker sections, addressed through buyouts or PSLC certificate purchases, consistent with past quarters (Sandeep Bakshi – CEO).

 

• CASA Outlook & Vehicle Loan Growth Slowdown (Param Subramaniam – Investec Capital)? The bank prioritizes total funding quantum and cost over CASA ratio, which is flat but lower than pre-COVID levels (48-49%). Improved liquidity suggests CASA pressures may ease, though no specific CASA growth outlook is provided. The slowdown in vehicle loan growth is driven by weaker underlying demand and marginal pricing adjustments, not asset quality concerns (Anindya Banerjee – CFO, Sandeep Bakshi – CEO).

 

• Term Deposit and Borrowing Maturity (Param Subramanian – Investec)? Term deposit maturity details are unavailable until the annual report, but ~₹0.5 trillion in legacy bond borrowings will mature in the next year, with 60–65% of borrowings hedged; the borrowing mix (14% of liabilities) aims to return to pre-merger 8–9% via cost-effective infrastructure borrowings (Srinivasan Vaidyanathan – CFO).