ICICI Bank Q3 24/25 Earnings Report

ICICI Bank EPS Results

• Actual EPS: $0.39
• Consensus EPS: $0.36
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: N/A

ICICI Bank Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $3.32 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

ICICI Bank Announcement Details

• Quarter: Q3 24/25
• Date: 1/25/2025
• Time: Before Market Opens
• Conference Call Date: Saturday, January 25, 2025
• Conference Call Time: 5:30AM ET

ICICI Bank (NYSE:IBN) is a leading private-sector bank in India. The bank was founded in 1955 under the guidance of The World Bank, the government of India, and India’s leading businessmen. The purpose of the bank was to provide financing for industrial projects and it held to that mission until the 1990s. Reforms of India’s financial sector allowed the bank to pursue other avenues including but not limited to consumer banking and loans.

Since then, the maturing of India’s market has allowed the company to expand even further. The company was incorporated as ICICI Bank as part of ICICI Group in 1994 and went on to become the first Asian bank outside of Japan to be listed on the NYSE. Over the years, the bank has merged with several subsidiaries of ICICI Group and with ICICI Group itself as it consolidated its position as a leading bank in India.

Today, ICICI Bank provides a broad array of banking products and financial services in India and internationally including personal and business banking as well as NRI, insurance products, and corporate services. The firm is headquartered in Mumbai and is the 5th largest bank in India with operations in 17 countries including the US, UK, Singapore, and Bahrain.

The company operates its Retail Banking, Wholesale Banking, Treasury, Other Banking, Life Insurance, General Insurance, and Other segments through a network of branches, ATMs, and websites. The company listed 5,418 branches in 2022 and more than 13,340 ATMs as well. The company’s services can all be accessed by phone or through the network of nine websites as well as on mobile devices.

The company offers consumer products ranging from savings to checking as well as retirement and insurance products. The company’s loan products run from home, car, personal, and commercial business loans to loans for gold, loans against securities, collateral-free loans, and financing for importers/exporters, start-up businesses, and education. The bank is particularly strong with its Agri and rural business, farmer finance, and tractor loans.

Among the Other services the company provides are portfolio management, brokerage, foreign exchange, NRI banking (non-resident of India), and family wealth accounts. Business services include commercial and investment banking, access to capital markets, and an array of business finance products. In regard to the bank's health, its senior secured notes carry investment grade ratings from both major rating agencies.

ICICI Bank is committed to aiding India’s economic growth and development. The company operates the ICICI Foundation which works hard at improving financial literacy in an all-inclusive manner.

ICICI Bank Q3 24/25 Earnings Call Transcript

Presentation

[Sandeep Bakhshi, Managing Director & CEO at ICICI Bank]

Good evening to all of you and welcome to the ICICI Bank earnings call to discuss the results for Q3 of FY 'twenty five. Joining us today on this call are Sandeep Batra, Rakesh, Ajay, Anantya and Abhinik. The operating environment for the banking system continues to be dynamic based on evolving global and domestic economic factors. We would continue to monitor domestic inflation, liquidity, rates and uncertainties in the global environment. At ICA Bank, our strategic focus continues to be on growing profit before tax excluding treasury through the 3 60 degree customer centric approach and by serving opportunities across ecosystems and micro markets.

[Sandeep Bakhshi, Managing Director & CEO at ICICI Bank]

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 12.8% year on year and 3.2% quarter on quarter to INR152.89 billion in this quarter. The core operating profit increased by 13.1% year on year and 2.9% quarter on quarter to INR165.16 billion in this quarter. Excluding dividend income from subsidiaries, the core operating profit increased by 14.7% year on year and 3.3 percent quarter on quarter to INR160.07 billion in this quarter.

[Sandeep Bakhshi, Managing Director & CEO at ICICI Bank]

The profit after tax grew by 14.8% year on year to INR117.92 billion in this quarter. Grew by 14.1% year on year and 1.5% sequentially at December 31, 2024. During the quarter, average deposits grew by 13.7% year on year and 2.1% sequentially, and average current and savings account deposits grew by 12.6% year on year and 2.3% sequentially. The Bank's average liquidity coverage ratio for the quarter was about 123%. The domestic loan portfolio grew by 15.1% year on year and 3.2% sequentially at December 31, 2024.

[Sandeep Bakhshi, Managing Director & CEO at ICICI Bank]

The retail loan portfolio grew by 10.5% year on year and 1.4% sequentially. Including non fund based outstanding, the retail portfolio was 43.9% of the total portfolio. The rural portfolio grew by 12.2% year on year and 0.9% sequentially. The Business Banking portfolio grew by 31.9% year on year and 6.4% sequentially. The domestic corporate portfolio grew by 13.2% year on year and 4.3% sequentially.

[Sandeep Bakhshi, Managing Director & CEO at ICICI Bank]

The overall loan portfolio including the international branches portfolio grew by 13.9% year on year and 2.9% sequentially at December 31, 2024. The net NPA ratio was 0.42% at December 31, 2024 compared to 0.42% at September 30, 2024 and 0.44% at December 31, 2023. The total provisions during the quarter were INR 12,270,000,000 or 7.4 percent of core operating profit and 0.37 percent of average advances. The provisioning coverage ratio on non performing loans was 78.2% at December 31, 2024. In addition, the Bank continues to hold contingency provisions of INR131 1,000,000,000 or about 1% of total loans at December 31, 2024.

[Sandeep Bakhshi, Managing Director & CEO at ICICI Bank]

The capital position of the Bank continued to be strong with the CET1 ratio at 15.93 percent and total capital adequacy ratio at 16.6% at December 31, 2024, including profits for 9 months 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.

[Sandeep Bakhshi, Managing Director & CEO at ICICI Bank]

We'll 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 1 bank, 1 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 Anandya.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Thank you, Sandeep. I will talk about loan growth, credit quality, P and L details, technology initiatives, portfolio trends and the performance of subsidies. Sandeep covered the loan growth across various segments. Coming to the growth across retail products, the mortgage portfolio grew by 11.4% year on year and 2.1% sequentially. Auto loans grew by 6.6% year on year and 1.7% sequentially.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

The Commercial Vehicles and Equipment portfolio grew by 7.4% year on year and 1.7% sequentially. Personal loans grew by 8.8% year on year and declined 1.3% sequentially. The credit card portfolio grew by 17.9% year on year and 2.8% sequentially. The personal loans and credit card portfolio were 9.2% and 4.3% of the overall loan book, respectively, at December 31, 2024. The overseas loan portfolio in U.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

S. Dollar terms declined 21.2% year on year at December 31, 2024. The overseas loan portfolio was about 2.4% of the overall loan book at December 31, 2024. Of the overseas corporate portfolio, about 90% comprises Indian corporates. Moving on to credit quality.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

The gross NPA additions were INR60.85 billion in the current quarter compared to INR59.16 billion in the Q1 of the current fiscal year and INR50.73 billion in the previous quarter, I. E, the 2nd quarter. Recoveries and upgrades from gross NPAs, excluding write offs and sales, were INR33.92 billion in the current quarter compared to INR32.92 billion in the Q1 of the current fiscal year and INR33.19 billion in the previous quarter. The net additions to gross NPAs were that INR26.93 billion in the current quarter compared to INR26.24 billion in the Q1 of the current fiscal year and INR17.54 billion in the previous quarter. The gross NPE additions from the retail and rural portfolios were INR53.04 billion in the current quarter compared to INR52.04 billion in the Q1 of the current fiscal year and INR43.41 billion in the previous quarter.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

We typically see higher NPA additions from the Kysan credit card portfolio in the 1st and third quarter of our fiscal year. There were gross NPA additions of about INR7.14 billion from the Kysan credit card portfolio in the current quarter compared to INR7.21 billion in the Q1 of the current fiscal year. Recoveries and upgrades from the retail and rural portfolios were INR27.86 billion compared to INR 25,320,000,000 in the Q1 of the current fiscal year and INR 25,92,000,000 in the previous quarter. The net additions to gross NPAs in the retail and rural portfolios were INR25.18 billion compared to INR26.72 billion in the Q1 of the current fiscal year and INR17.49 billion in the previous quarter. The gross NPE additions from the Corporate and Business Banking portfolios were INR7.81 billion compared to INR7.32 billion in the previous quarter.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Recoveries and upgrades from the Corporate and Business Banking portfolios were INR6.06 billion compared to INR7.27 billion in the previous quarter. There were net additions to gross NPAs of INR1.75 billion in the Corporate and Business Banking Portfolio compared to net addition of INR0.05 billion in the previous quarter. The gross NPAs written off during the quarter were INR20.11 billion. There were sale of NPAs of INR0.58 billion for cash in the current quarter compared to INR0.16 billion in the previous quarter. The non fund based outstanding to borrowers classified as non performing was INR31.6 billion as of December 31, 2024, compared to INR33.82 billion as of September 30, 2024.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

The provisions on this non fund based outstanding declined to INR17.12 billion at December 31, 2024, from INR19.11 billion at September 30, 2024, reflecting the decline in the outstanding itself. The total fund based outstanding to all standard borrowers under resolution as per various guidelines declined to INR21.07 billion or about 0.2 percent of the total loan portfolio at December 31, 2024, or from INR25.46 billion at September 30, 2024. Of the total fund based outstanding under resolution at December 31, 2024, INR19.36 billion was from the retail and rural portfolios and INR1.71 billion was from the corporate and business banking portfolios. The bank holds provision of INR6.91 billion against these borrowers, which is higher than the requirement as per our SBI guidelines. Moving on to the P and L details.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Net interest income increased by 9.1 percent year on year to INR203.71 billion in this quarter. The net interest margin was 4.25 percent in this quarter compared to 4.27% in the previous quarter and 4.43% in Q3 of last year. The impact of interest on income tax refund on net interest margin was 1 basis point in the current quarter, mainly in the previous quarter and 4 basis points in Q3 of last year. The domestic NIM was 4.32% in this quarter compared to 4.34% in the previous quarter and 4.52% in Q3 of last year. The cost of deposits was 4.91% in this quarter compared to 4.88% in the previous quarter.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Of the total domestic loans, interest rates on 52% of the loans are linked to the repo rate, 16% to MCLR 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 12.1 percent year on year to INR66.97 billion in Q3 of 2025. Fee income increased by 16.3% year on year to INR61.8 billion in this quarter. Fees from retail, rural and business banking customers constituted about 78% of the total fees in this quarter.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Dividend income from subsidies was INR5.09 billion in this

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

quarter compared to INR6.5 billion in Q3

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

of last year. Compared to INR6.5 billion in Q3 of last year. Dividend income from subsidiaries was INR19.44 billion in 9 months of the current year compared to INR15.89 billion in 9 months of last year. On costs, the bank's operating expenses increased by 5% year on year in this quarter. Employee expenses increased by 3.1% year on year and non employee expenses increased by 6.2% year on year in this quarter.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Our branch count has increased by 129 in Q3 and 219 in 9 months of the current year. We had 6,742 branches as of December 31, 2024. The technology expenses were about 10.5% of our operating expenses in 9 months of the current year. The total provision during the quarter were INR12.27 billion or 7.4 percent of core operating profit and 0.37 percent of average advances compared to the provision of INR12.33 billion in the previous quarter. The provisioning coverage on non performing loans was 78.2 percent as of December 31, 2024.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

In addition, we hold INR6.91 billion of provisions on borrowers under resolution. Further, the bank continues to hold contingency provision of INR131 1,000,000,000 as of December 31, 2024. At the end of December, the total provisions other than specific provisions on fund based outstanding to borrowers classified as non performing were INR225.69 billion or 1.7 percent of loans. The profit before tax excluding treasury grew by 12.8% year on year to INR152.89 billion in Q3 of this year. Treasury gains were INR3.71 billion in Q3 as compared to a treasury gain of INR1.23 billion in Q3 of the previous year.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

As you are aware, the treasury gains for the current quarter vis a vis the same quarter last year would not be comparable due to the implementation of the revised investment accounting guidelines from the 1st April of the current year. The tax expense was INR38.68 billion in this quarter compared to INR34.02 billion in the corresponding quarter last year. The profit after tax by 14 grew by 14.8 percent year on year to INR117.92 billion in this quarter. We continue to enhance the use of technology in our operations to provide simplified solutions to customers. The bank has introduced DigiEase, a digital platform designed to streamline the customer onboarding process for business banking.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

This enhances operational efficiency and the customer experience by integrating multiple digital services into a single seamless workflow. ILend, the retail lending platform, is being upgraded on an ongoing basis with retail credit cards now integrated in the platform along with mortgages, personal loans and education loans. We continue to make investments in the computing infrastructure and upgrade digital channels to further strengthen system resilience and simplify processes for enhancing customer experience. We have provided details on our retail rural and business banking portfolios on Slides 25 to 28 of the investor presentation. The loan and non fund based outstanding to performing corporate borrowers rated BB and below was INR21.93 billion at December 31, 2024, compared to INR33.86 billion at September 30, 2024.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

This portfolio was about 0.2% of our advances at December 31, 2024. Other than one account, the maximum single borrower outstanding in the BB and below portfolio was less than INR5 1,000,000,000 at December 31, 2024. The bank holds provisions of INR0.92 billion against this portfolio at December 31, 2024. The total outstanding to NBFCs and HFCs was INR893.6 billion at December 31, 2024 compared to INR880 point 27,000,000,000 at September 30, 2024. The total outstanding loans to NBFCs and HFCs were about 6.8% of our advances at December 31, 2024.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

The builder portfolio including construction finance, lease rental discounting, term loans and working capital was INR586.36 billion at December 31, 2024 compared to INR 542.16 billion at September 30, 2024. The builder portfolio was about 4.5% 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 portfolio at December 31, 2024 was either rated BB and below internally or was classified as nonperforming compared to 1.9% at September 30, 2024. Finally, the consolidated results.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

The consolidated Socket After tax grew by 16.6% year on year to INR 128,830,000,000 in this quarter. 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 69.0 5,000,000,000 in the 9 months ended December 31, 2024 compared to INR54.3 billion in the 9 months of last year. The value of new business was INR15.75 billion in the 9 months ended December 31, 2024 compared to INR14.51 billion in 9 months of last year. The value of new business margin was 22.8% in these 9 months compared to 26.7% in the 9 months of last year and 24.6 percent in FY 2024.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

The profit after tax of ICICI Life was INR8.03 billion in 9 months ended December 31, 2024 compared to INR6.79 billion in 9 months of last year and INR3.26 billion in the current quarter compared to INR2.27 billion in Q3 of last year. Gross direct premium income of ICICI General was INR62.14 billion in the current quarter compared to INR62.3 billion in Q3 of last year. The combined ratio stood at 102.7 percent in the current quarter compared to 103.6% in Q3 of last year. The profit after tax was INR7.24 billion in the current quarter compared to INR4.31 billion in Q3 of last year. With effect from October 1, 2024, long term products are accounted on a 1 by end basis as mandated by IRDiI.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Hence, the Q3 numbers are not fully comparable. The profit after tax of ICICI AMC as AMC as per Ind AS was INR6.32 billion in this quarter compared to INR5.46 billion in Q3 of last year. The profit after tax of ICICI Securities as per Ind AS on a consolidated basis was INR5.04 billion in this quarter compared to INR4.66 billion in Q3 of last year. ICICI Bank Canada had a profit after tax of INR19.6 million in this quarter compared to C15.9 million dollars in Q3 of last year. ICICI Bank U.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

K. Had a profit after tax of US5.1 million dollars in this quarter compared to US6.7 million dollars in Q3 of last year. As per India's, ICSI Home Finance had a profit after tax of INR2.03 billion in the current quarter compared to INR1.86 billion in Q3 of last year. With this, we conclude our opening remarks, and we will now be happy to take your questions.

[Operator]

Thank you very much. We'll now begin with the question and answer session. The first question is from the line of Maruka Janya from Nomawell. Please go ahead.

[Mahrukh Adajania, Senior Equity Research Analyst at Nuvama]

Yes, hi. My first question is on provisioning. So what was the utilization or reversal of provisions this quarter? Because provisions on non fund have gone down, you explained that that's because the exposure has only gone down and then restructuring or resolution provisions have also gone down. So what would be the number?

[Mahrukh Adajania, Senior Equity Research Analyst at Nuvama]

Or it's just the 2 of

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

the No, we don't give the number of buybacks separately. I think what we are seeing overall on the credit cost side is that on the retail business banking portfolios, it continues to be quite stable. On the corporate portfolio, incrementally, there is practically no credit cost or NPL provisioning, but we are seeing continuous improvement in the quality of the portfolios that we have been calling out over the years, such as the non fund outstanding to NPLs or restructured assets or the BB and below portfolio. We also continue to see some recoveries from accounts written off in the past. So I think that's contributing to the provision line.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Overall, as we've been saying, the provisions do vary a little bit from quarter to quarter, both because of the loan book and because of other factors. For example, over the last maybe not the last quarter, but previous 2, 3 quarters, we had ups and downs in, for example, the AIF related provisioning. But I think overall, we continue to be within sort of the 50 bps that we have been talking of in previous calls, the reported number for this quarter being 37 bps.

[Mahrukh Adajania, Senior Equity Research Analyst at Nuvama]

Got it. Fair enough. And just on deposit growth. So the sequential run rate is a bit softer this time. That's just because of the liquidity environment or any comments there?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

I think it's because of the funding requirement. So

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

if

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

you see system loan growth did slow down a little bit, which is to a lesser extent reflected in our portfolio as well. There was a CRR cut effective the middle of December. And we also saw some reduction if you look at our investor presentation in our RIDF portfolio and so on. So it's really a function of the requirement. We also were able to take in some very cost effective refinance borrowing.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So it's really that we continue to maintain very strong liquidity. Our LCR actually went up slightly this quarter. Average for the quarter was 123%. So it's more driven by the requirement than anything

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

else.

[Mahrukh Adajania, Senior Equity Research Analyst at Nuvama]

Okay. And I just wanted one last clarification. So you have called out gross farm slippages. I mean, you always do call out, so thank you for that.

[Mahrukh Adajania, Senior Equity Research Analyst at Nuvama]

But would there be a comparable number for 2nd quarter or it's just 1st and third only? Like if you want to

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Largely, it comes in the 1st and third only.

[Mahrukh Adajania, Senior Equity Research Analyst at Nuvama]

Okay. Okay. Thanks a lot.

[Operator]

Thank you. Next question is from the line of Rick Kansha from IIFL. Please go ahead.

[Rikin Shah, Vice President at IIFL Securities Limited]

Hi. Am I audible? Yes. Hi. Okay.

[Rikin Shah, Vice President at IIFL Securities Limited]

Thank you for the opportunity. Just one question and it's on operating cost, operating expenses. So they have been flattish for the last three quarters and this is despite the tech expenses that you have been incurring. Just wanted to understand how much further flex do we have to manage the OpEx at the current levels? Or alternatively, when do you see that kind of picking up in line with your business growth?

[Rikin Shah, Vice President at IIFL Securities Limited]

And data keeping question would be what would be the outstanding employed headcount as of end of December? Thank

[Rikin Shah, Vice President at IIFL Securities Limited]

you.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

The headcount does keep evolving in line with our requirements of how we want to staff the bank and what is the requirement at any point in time. We continue to invest in branches. As you would have seen, we've added 129 in the current quarter. Overall, when we look at costs, I think, we feel that we do have a large cost base and there are always opportunities for bringing in efficiencies in that cost base by streamlining our internal processes, integrating workflows and removing redundancies, which are not required.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So I think that's an ongoing journey, both in terms of how do we sort of leverage the cost base much better. And

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

at

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

the same time, we continue to invest in the growth requirements of the business as well as in things like IT security and reliability. So that's a process which goes on. I would think that our aim would be to, as I said, leverage the cost base continue to leverage the cost base better. And we don't think that there needs to be it needs to go to a sort of linear relationship with the top line.

[Rikin Shah, Vice President at IIFL Securities Limited]

Perfect. Very helpful. And would you be able to quantify the outstanding headcount as of December?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

We give that number on an annual basis now. So, we have not been giving it.

[Rikin Shah, Vice President at IIFL Securities Limited]

Okay. Fine. Perfect. Thank you.

[Operator]

Thank you very much. Next question is from the line of Kunal Shah from Citigroup. Please go ahead.

[Kunal Shah, Director - India Banks & Financials at Citigroup]

Yes. Firstly, on the yield side. So last time you indicated the impact of number of days also being there. So this time when we look at the over decline in yields of 8 order basis points, is it primarily on account of KCC or there has been an impact of the days? And would it be fair to assume that this day count would entirely unwind in 4Q and there should be a positive bias towards the fields?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

We will so as far as the movement from Q2 to Q3 is concerned, you're right. It's largely the impact of the KCC because there a longer period of interest accrual gets reversed in that one quarter. As far as the day count impact, etcetera, for going forward, wouldn't really want to we had said, I think, last quarter that Q4 has a lesser number of days. So just mathematically, we would see some unwinding.

[Kunal Shah, Director - India Banks & Financials at Citigroup]

Okay. So that should be there. And secondly, on the corporate banking side, generally, maybe we are more focused in terms of the risk return approach. This quarter, we have seen a decent level of growth on the corporate side, while retail there is some slowdown because of the unsecured lending. But otherwise, maybe is the price pricing intensity easing over there?

[Kunal Shah, Director - India Banks & Financials at Citigroup]

Would it be slightly margin dilutive? We have not seen the impact this quarter. So how should we look at the overall corporate banking growth?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

I think that it's not I wouldn't say it is going to be margin dilutive and so on. We have to look at the way we look at it is we look at the overall relationship with the corporate. I think we don't want to take very chunky, finely priced long term exposure just for the

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

sake

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

of loan growth. That's not our approach at all. But we do have an ongoing relationship with corporate where there could be periodic working capital requirements or short term lending requirements or longer term requirements where indeed it does meet our overall sort of P and L aspirations. So we keep looking. I think we have a very active franchise and engagement with corporate clients across the spectrum and we keep taking advantage of those opportunities to work with them as and when they come up and fit our sort of approach.

[Kunal Shah, Director - India Banks & Financials at Citigroup]

And there was increase also in BBB and above, okay, by almost like 210 odd basis points. So this is maybe incremental growth coming in from there or maybe Business Banking, how should we read that here?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Yes? I think that I think it's it would largely be an upgrade from the BBs because as you can see, the BB portfolio has reduced and that reflects that.

[Kunal Shah, Director - India Banks & Financials at Citigroup]

Yes, that's 60 basis points. Yes.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

That will reflect partly in the increase in the BBB. Of course, we could be doing incremental BBB lending also. I mean, it's investment grade. Okay. But we have limits on how much of that we would do.

[Kunal Shah, Director - India Banks & Financials at Citigroup]

Okay. Got it. Thank you. Thank you and all the best. Yes.

[Operator]

Thank you. A request Next question is from the line of Piran Enginier from CLSA.

[Piran Engineer, Investment Analyst at CLSA india]

Just firstly on retail products, a couple of ones mortgages, we were growing at 16%, 17% now down to 11%. Is that more a function of pricing in the industry or just overall slowdown? And same for vehicle loans, we understand that this year was a slowdown, but what's your house outlook for next year?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So mortgages, of course, I think there is an element of price competition which is there and which has been there so over a period of time. But there has been, I would say, the incremental disbursements have not been growing as much. They continue to hold up. As you are aware, overall, there seems to be continued momentum in the up made and higher segments of the market and maybe some softening in the more affordable type of segment. On vehicle loans, I think it's more a function of the underlying sort of asset class itself because we are primarily in new cars financing.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

And there, I think we had if you look at actually last year or early part of this year, we had a pretty good run maybe from more recently the market has slowed. I think it will go through its ups and downs as customers replace or as new models come, which typically create their sort of wave of excitement in the market. I guess, it will you will see it go from a good quarter to bad quarter over the next that's the way it will it will work.

[Piran Engineer, Investment Analyst at CLSA india]

Okay. Okay. Fair enough. Secondly, just on Business Banking. Now, this has been a product that you all as well as your peers have gone really strong on.

[Piran Engineer, Investment Analyst at CLSA india]

What really can go wrong for the industry 2 years later? Because today, everything looks hunky dory, but is there some part which we are missing here because it seems like almost a fairytale business?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So I think if you look at the bigger picture of the way this business has evolved over the last few years, I think at the customer level, I think that there's been a great deal of formalization and the introduction of GST and the digitization of the business and a fairly high degree of digital adoption by this customer segment itself and a reasonable level of credit discipline. I think in India, we are one of the countries where you have the commercial bureau as well. So that certainly helps. So I think that there is a fair degree of formalization, digitization and credit discipline. That helps banks like us for whom this segment becomes much more underwrite a bit.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Also, we look at this segment as a from a holistic perspective. This is we have a very strong Customer 360 focus in this segment. And we really look at not just the lending piece, but also the all the transaction banking and the liability piece as well. So in that sense, it's a segment which is we want to focus on. From a credit perspective, there's 2, 3 things, I think.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

One is that it's a reasonably well secured segment. So you do get particularly in the more granular sections of the portfolio, you do have collateral as well. 2nd, the portfolio itself is quite granular and quite diversified. So, it will hopefully behave more like a retail portfolio rather than a corporate portfolio where a single borrower or a couple of borrowers can create more damage. But and of course, it's a portfolio where you have to keep monitoring and you have to have a very close eye on what is happening with the bond work.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

It's a lot of it is working capital, which also helps because you see the way that the account is being operated and how it is behaving. So it has to be tightly managed in terms of not just the initial underwriting, but also keeping a close eye on borrower behavior through the appropriate portfolio monitoring mechanism. I think as of now, we are very, very comfortable with the quality of the portfolio.

[Piran Engineer, Investment Analyst at CLSA india]

Got it. And it's fair to say that the credit costs in this business are lower than your retail book, right?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

Currently, that would be the case, yes.

[Piran Engineer, Investment Analyst at CLSA india]

Got it. Okay. That's it from my end. Thank you and wish you all the best.

[Operator]

Thank you. I request all the participants kindly restrict to 2 questions per participant. Next question is from the line of Nitin Agarwal from Moti and Luspater. Please go ahead.

[Nitin Aggarwal, Head of BFSI Research at Motilal Oswal]

Yes. Hi. Am I audible?

[Sandeep Bakhshi, Managing Director & CEO at ICICI Bank]

Yes.

[Nitin Aggarwal, Head of BFSI Research at Motilal Oswal]

Yes. Thanks for the opportunity. And good evening. So I have a few questions. First is on the fee income.

[Nitin Aggarwal, Head of BFSI Research at Motilal Oswal]

We have seen a good traction in fee income this quarter. So now with margins being constantly like under pressure and likely to remain so as the cycle turns, Is it fair to say that fee income will continue to gain share as a percentage of total income? And what kind of opportunities in particular are we looking at in respect to transaction banking over the years?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So, we don't really get into the proportion piece. I think we have overall OPOP objective and we look at what is the way to sort of maximize that. I think specifically on fees, as we have said, we believe that our transacting platform are pretty strong. And the whole objective is to get more and more adoption of those by our existing customers and acquire more and more new customers on the strength of those platforms across the entire spectrum from large corporates to small businesses. Cards and payments is also a focus area, which is doing well for us.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So I would say we have seen a pretty decent growth across cards and payments, transaction banking, the FX and derivatives part of transaction banking as well as the pure lending linked fees that are related to loan disbursals or renewals or sanctions and so on. So it's really so I think we will continue to look at that and try to drive adoption of our platforms and as much as possible.

[Nitin Aggarwal, Head of BFSI Research at Motilal Oswal]

Right. And the second question is on the trade off between, say, growth and the focus around asset quality. Because if I see while bank has done a very good job in navigating through this environment and yet delivering one of the better growth amongst the larger banks. But if I look at in context to that, the slippages have also been just 6% YOY growth in slippages. And the slippage rate has actually come down.

[Nitin Aggarwal, Head of BFSI Research at Motilal Oswal]

So how are we like assessing this asset quality situation and strategizing on growth? Because it's a very sort of fine need to maintain between the 2. So are we tightening too much? Or how are we actually reading that? So

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

As I spoke, I don't think concerns on asset quality are really holding us back from growth. I mean, we definitely see growth a good growth opportunity. As I mentioned, the corporate sector continues to do which is 20% of our portfolio continues to do very well. And as the margin, we are actually continuing to see some clawbacks of past provisioning or losses that we may have taken. Again, now close to 20%, 70% to 18% of the portfolio now is the whole business banking space, which we talked about in some details.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So we certainly see very good growth opportunity there. On the retail side, I would say that on the secured side, I think the slippages have been quite stable. They will keep going up in absolute terms as the portfolio grows in seasons. But I think our credit experience has been pretty stable. Unsecured, as we have commented in the past, we have seen as has the whole system, some increase in delinquencies and NPL additions over the last maybe 6 quarters.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

And we have taken corrective actions on that because of which, for example, you see the personal loan portfolio flattening out this quarter. But I think there also, the trend has stabilized. And hopefully, as these actions feed through more maybe a couple of quarters down the line, we should start seeing some improvement. But even for the moment, I think they are quite stable and all of these are anyway getting absorbed in a very healthy credit cost number. So as of today, I don't think we see that trade off.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

And to the extent we needed to make that trade off, particularly on the PL side, I think we've made it.

[Nitin Aggarwal, Head of BFSI Research at Motilal Oswal]

Right. Got it. This is very useful. Thanks so much.

[Operator]

Next question is from Nana Paramsabran from Nomura.

[Param Subramanian, Vice President at Nomura]

Firstly, on Casa. So, if I look at both your daily average Casa, which you report and the period end, for the last three quarters, both these numbers have actually been in

[Param Subramanian, Vice President at Nomura]

a bank, which is not

[Param Subramanian, Vice President at Nomura]

the case for the rest of the system. And especially your SAAR growth is pretty healthy at 13%. I think most of your peer group would be at a low single digit sort of number. So what is driving this outperformance?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So, I guess, the way we approach this is that we don't really pursue any particular type of deposit. I think what we want to achieve is that we should increase our share of business with existing customers and acquire new good customers. And they should do as much of their banking as possible through us. And whatever shape that takes, it could be car, car or a fixed deposit, we would want a bigger portion of that share. So, we don't really therefore drive any particular number in this regard.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

I think this approach has worked well because I think probably the conversation with the customer is really about doing more banking with us rather than getting a particular deposit or type of deposit. I think our digital platforms do help because once the customer becomes digitally active and starts using those platforms, the stickiness and therefore the balances tend to go up.

[Param Subramanian, Vice President at Nomura]

Okay. Got it, Anindya.

[Param Subramanian, Vice President at Nomura]

But it's not any change in the product offering or pricing or any such thing at all, right?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

No, no, no. None at all.

[Param Subramanian, Vice President at Nomura]

Okay. Fair enough. Secondly, Anindya, I don't know

[Param Subramanian, Vice President at Nomura]

if you mentioned this earlier, but just on the employee cost, the absolute number is down for 2 quarters in a row now. So what is driving that?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So that there are many variables, for example, provision for the titers and things like that, which do impact it on a sequential basis.

[Param Subramanian, Vice President at Nomura]

Okay. And headcount reduction as well, the gross number?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

That is something, as I said, that's a moving number. There could be in a quarter some reduction and then it will come back up later as and when we hire to meet our requirements.

[Operator]

Next question is from the line of Chintan Joshi from Autonomous.

[Chintan Joshi, Indian Financials Analyst at Autonomous Research]

Two questions. If I can pick up your comment about kind of the provisioning cost, indicating that the underlying level is comfortable around 50 basis points. Should we think about this also in the context of the next year? And the reason to ask the question is mainly because you recycled about 30 basis points of provisions. Actually, that's incorrect.

[Chintan Joshi, Indian Financials Analyst at Autonomous Research]

Your provisions to loan somewhere has come down from 2% to 1.7%, and we are not sure how much of that is recycled to the P and L. So just trying to understand what could be a sustainable level as we look into the next 12, 18 months?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

No, there is nothing called recycling. I mean, we give that absolute number. As you are aware, and part of that number is the INR131,000,000,000 of contingency provision, which is really a sort of a fixed number that we, I think, reached that level by March of 2023. And thereafter, we have not been making further contingency provisions. As I said, apart from the detailed provisioning and so on, on the corporate side, there are always some releases which come which are really reflective of improvement in the quality of the portfolio or recoveries that we have made.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So that's the way it works. The numbers are all there. I don't want to we don't really give an outlook for next year, but as we have always been saying, these numbers could inch up, but we don't see anything which worries us particularly or where we see any dramatic increase.

[Chintan Joshi, Indian Financials Analyst at Autonomous Research]

Okay. And then the second question was on the RIDF. Your requirements your RIDF number has been coming down for a while now. I'm just wondering, are there any shortfalls building up on the balance sheet that RBI may ask you to increase this balance down the line or take on some more PSLC? Or are you very comfortably placed even in the more difficult segments of the PSL?

[Chintan Joshi, Indian Financials Analyst at Autonomous Research]

Just wondering how much of this is sustainable or if we should factor some increase down the line?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

So the number is so small now that even if you factor some increase, I don't think it will have too much of an impact. We of course do significant PSLC purchases, particularly for the small farmer category, while on most other categories, we are in a surplus position. And we have been so that's the cost that has been getting reflected in the P and L over the years. Hopefully, we will be able to still meet the compliance targets, but that 17,000 crore portfolio on this balance sheet now sorry, 15,000 crores, pardon me, portfolio on this balance sheet now, it's not too relevant a number even if it goes up somewhat.

[Chintan Joshi, Indian Financials Analyst at Autonomous Research]

Okay. And a quick data question. How much of the business banking book is unsecured?

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

We don't split that out.

[Chintan Joshi, Indian Financials Analyst at Autonomous Research]

No worries. Thank you.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

It will

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

be largely unsecured book.

[Chintan Joshi, Indian Financials Analyst at Autonomous Research]

Thank you.

[Operator]

Thank you very much. Ladies and gentlemen, we'll take that as

[Operator]

the last question. I'll now hand the conference over to management for closing comments.

[Anindya Banerjee, Group CFO & Head of Investor Relations at ICICI Bank]

As always, thank you for taking time out on a Saturday evening, and we can take any other questions you have offline. Thank you very much.

[Operator]

Thank you very much. On behalf of ICICI Bank Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Participants

Executives

• Sandeep Bakhshi, Managing Director & CEO
• Anindya Banerjee, Group CFO & Head of Investor Relations

Analysts

• Mahrukh Adajania, Senior Equity Research Analyst at Nuvama
• Rikin Shah, Vice President at IIFL Securities Limited
• Kunal Shah, Director - India Banks & Financials at Citigroup
• Piran Engineer, Investment Analyst at CLSA india
• Nitin Aggarwal, Head of BFSI Research at Motilal Oswal
• Param Subramanian, Vice President at Nomura
• Chintan Joshi, Indian Financials Analyst at Autonomous Research