ICICI Bank Ltd Q1 FY2026 Concall Summary

Key Takeaways

• NIMs are compressing, and more is coming: Domestic NIM fell to 4.34% from 4.41% QoQ, and management expects a little more compression next quarter before the trajectory depends on RBI actions and liquidity.
• Unsecured retail growth has stalled deliberately: Personal loan growth slowed to 1.4% YoY and credit cards to 1.5% YoY as the bank recalibrated credit norms; management now says asset quality has stabilised and volumes can pick up.
• Business banking is the growth engine: The portfolio grew ~30% YoY and now represents ~20% of the loan book; management expects it to keep growing faster than the overall book given market share opportunity and granular, tightly monitored asset quality.
• Provisions rose, but the underlying credit cost is stable at ~50 bps: Total provisions of ₹1,815 crore were up YoY partly because Q1 last year included a one-off AIF provision release; KCC seasonality added ~₹767 crore in slippages, a normal Q1 pattern.
• What to watch next quarter: Whether NIM compression moderates as the June repo cut flows through, whether personal loan and credit card volumes actually pick up, and whether the second-half economic recovery management expects materialises.

Margin Trajectory & NIM Mechanics

• NIM convention changed: From Q1 FY26, NIM is computed using equal months instead of actual days, eliminating quarter-to-quarter day-count volatility. Full-year NIM is unchanged, and the Q1 impact was negligible.
• Reported decline understates the real drop: On a like-to-like basis, Q4 FY25 NIM would have been a few bps lower than the reported 4.41%, so the sequential decline is smaller than the headline 7 bps suggests.
• Repo transmission is staggered: The February repo cut has largely flowed through; the April cut has substantially flowed through with a little more to come in Q2; the June 50 bps cut has barely flowed through and most will hit in Q2.
• Cost of deposits fell 15 bps to 4.85%: Driven by the April savings rate cut benefiting the full quarter, a cut on higher-value deposits in May, gradual retail term deposit repricing, and a reduction in the wholesale deposit book given strong CASA and retail term deposit growth. There was no unwinding of high-cost deposits.
• Q2 margin headwinds and tailwinds: The full impact of the 50 bps June repo cut will hit, partially offset by continuing term deposit repricing and the savings rate cut benefit from May and June. In Q3, the CRR cut benefit kicks in unless policy stance changes.
• The Q3-to-Q4 NIM spike will not repeat: Under the old method, NIM used to spike in Q4; with the equal-month convention, reported margins will spread more evenly through the year.

Banerjee: "In the first quarter, I think we had the upfront benefit of the savings deposit rate cut, and we also had 6-7 basis points of the benefit of interest on income tax refund. As we go into Q2, the full impact of the 50 bps repo cut of June will come into effect." [39–40]

Loan Growth & Portfolio Composition

• Domestic loan growth at 12% YoY outpaces the system: The banking system grew ~9.5%; ICICI's growth was led by business banking at ~30%, while retail grew ~7% and corporate ~7.5%.
• Retail growth slowed to 6.9% YoY: The bank keeps recalibrating credit norms, and there has been a general system slowdown. Management is comfortable growing within its market share framework rather than chasing volume.
• Personal loans and credit cards grew just over 1% YoY: Origination quality over the last 12–15 months is comfortable, so volumes can pick up; in cards, better customer acquisition is possible. It is not purely a demand issue: distribution and throughput also need more focus.
• Corporate book declined 1.4% QoQ: Competitive pricing and seasonal corporate requirements drove the decline; better-rated corporates optimise across funding sources including internal accruals, equity markets, and bond markets.
• Rural portfolio was flat: Growth slowed, partly due to tightening of norms on jewel loans. Management said there was "nothing specific to call out" when asked for reasons.
• Business banking now ~20% of the portfolio: An integrated approach covering coverage, credit delivery, and easy onboarding supports growth; management expects its proportion to gradually increase given visibility and market share opportunity.
• International book is small and stress-free: At ~₹32,900 crore (~2.4% of advances), the international loan book shows no sign of stress; the bank views the business from an NRI and trade transaction perspective, not by advances in isolation.

Batra: "The personal loan growth has moderated from about 25% in Q1 2025 to about 1.4% year-on-year during the current quarter, and has also declined sequentially."

Asset Quality & Provisions

• Gross NPA additions rose marginally to ₹6,245 crore: The increase from ₹5,916 crore in Q1 FY25 is in line with expectations on a very low base; as the loan book grows, absolute NPA additions will increase in the normal course. KCC contributed ~₹767 crore, a typical seasonal pattern in Q1 and Q3.
• Retail and rural drove slippages: Gross NPA additions from retail/rural were ₹5,193 crore, nearly flat YoY; net additions were ₹2,668 crore. Corporate and business banking additions were ₹1,052 crore versus ₹712 crore a year ago.
• Business banking asset quality is extremely benign: Gross NPA additions to corporate and business banking were about ₹1,000 crore on an aggregate portfolio of ~₹5.6 trillion; credit costs today are negligible, though some increase may be seen going forward.
• Provisions rose to ₹1,815 crore from ₹1,332 crore YoY: The difference is explained by a one-off release of AIF provisions of ₹389 crore in Q1 last year, plus the seasonal KCC provisioning that occurs only in Q1 and Q3. Adjusting for KCC, credit cost to advances would be ~50 bps.
• Underlying credit cost is stable at ~50 bps: It could inch up but no major movement is expected; the portfolio is granular and tightly monitored.
• Total provisions buffer remains strong: Provisions other than specific on fund-based NPAs stand at ₹22,664 crore or 1.7% of loans, including contingency provisions of ₹13,100 crore.
• Builder portfolio grew slightly to ₹62,833 crore: ~4.6% of total loans, largely well-established builders; ~1.9% was rated BB and below internally or classified as non-performing.

Banerjee: "I think we have always said that currently, the underlying level would be more like about 50 basis points. Can that inch up? It could, but I don't see any major movement."

Deposits, Liquidity & Capital

• Deposit growth was 12.8% YoY but flat sequentially: Average deposits grew 11.2% YoY and 3.1% sequentially; average CASA deposits grew 8.7% YoY and 3.9% sequentially. Average LCR was ~128%.
• Wholesale deposit book was trimmed: The reduction was a function of overall liquidity; what has gone down are deposits raised in the past at higher rates. If deposits are available at current quoted rates, the bank will take them.
• Deposit strategy is customer-led, not ratio-led: Management does not focus specifically on CASA or deposit ratios; the focus is on 360-degree customer relationships, and liability growth follows from that. The bank hopes to continue doing reasonably well on CASA market share.
• Capital adequacy is comfortable: Tier 1 capital adequacy is ~15.65% (~15.31% adjusted for profit); management does not see the need to raise equity capital at this point, and internal accruals are sufficient to support growth. Lower loan growth reduces capital needs.

Batra: "I do not think we focus specifically on CASA or deposit, we really want to focus on the customer. And as part of that, I think the liability growth does happen and that has been a consistent strategy that we have been doing."

Other Income, Subsidiaries & One-offs

• Other income spiked on higher subsidiary dividends: The YoY increase was primarily due to higher dividends from ICICI Securities, ICICI Prudential Asset Management, ICICI Lombard General Insurance, and receipt of dividend from ICICI Securities Primary Dealership in Q1 versus Q2 last year. Management gave no specific guidance on sustainability.
• Treasury gains rose to ₹1,241 crore from ₹613 crore YoY: Driven by realised and MTM gains in fixed income and equities.
• ICICI General combined ratio deteriorated to 102.9%: The deterioration from 102.3% YoY partly reflects long-term products now accounted on a 1/n basis from October 1, 2024 per IRDAI mandate, making Q1 numbers not fully comparable with prior periods.
• ICICI Securities PAT fell to ₹391 crore from ₹527 crore YoY.
• Pension subsidiary shifted to the Bank: The move was prompted by the belief that a 100% subsidiary will better synergise with the Bank's customer 360-degree approach, with specific focus on senior citizen and wealth segments; annuity portions will continue to work with the life company.
• Employee expenses rose 8.5% YoY: Reflecting annual increments and promotions that occur in Q1 every fiscal year.

Strategic Positioning & Demand Environment

• Core operating profit grew 13.6% YoY to ₹17,505 crore: Profit before tax excluding treasury grew 11.4% YoY to ₹15,690 crore; PAT grew 15.5% YoY to ₹12,768 crore.
• Second-half economic recovery is the base case: Management's current expectation is that the economy, given all the measures the government and RBI have taken, should be better in the second half of this fiscal year than the first. Policy measures take time to reach the last mile.
• Loan growth outlook is deliberately unguided: Management said it is too early to say and they need to wait another quarter to form a view; substantial monetary easing from Q4 FY25 through Q1 FY26 may have a positive impact.
• Corporate credit mix is shifting toward better risk-reward: The decline in very high-rated (AA-) corporate borrowers partly reflects the runoff of an earlier easy-liquidity portfolio as the funding environment tightened. The increase in BBB- proportion reflects a better risk-reward balance, though competition exists there too. Lower-rated origination has tight controls and limits.
• NBFC/HFC exposure declined: Outstanding to NBFCs/HFCs fell from ₹91,838 crore at March 31, 2025 to ₹87,417 crore at June 30, 2025, representing ~6.4% of advances.
• Loan purchases from NBFCs are opportunistic: The bank bought ~₹1,800 crore of loans from NBFCs, largely in the retail segment, as a complementary business opportunity done in the normal course when it makes commercial sense.

Banerjee: "I think it is too early to say. We will have to wait for another quarter to really form a view about how it is going to go."

Guidance & Commitments

Key Metrics