ICICI Bank Limited Sponsored ADR Stock

Ladies and gentlemen, good day, and welcome to ICICI Bank Limited Q1 FY '27 Earnings Conference Call.

[Operator Instructions]

Please note that this conference is being recorded. I now hand the conference over to Mr. Sandeep Bakhshi, Managing Director and Chief Executive Officer of ICICI Bank. Thank you, and over to you, sir.

Thank you. Good evening to all of you, and welcome to the ICICI Bank earnings call to discuss the results for Q1 of financial year '27. 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.

The profit before tax, excluding treasury, grew by 20.9% year-on-year to INR 189.75 billion in this quarter. The core operating profit increased by 15.6% year-on-year to INR 202.35 billion in this quarter. The core operating profit, excluding dividend from subsidiaries increased by 18.3% year-on-year to INR 191.25 billion in this quarter. The profit after tax grew by 15.9% year-on-year to INR 148.05 billion in this quarter.

Total deposits grew by 14% year-on-year and 2.2% sequentially at June 30, '26. Average deposits grew by 14% year-on-year and 6.1% sequentially and average current and savings account deposits grew by 12.1% year-on-year and 4.7% sequentially during this quarter. The bank's average liquidity coverage ratio, LCR for the quarter was about 124%. The overall loan portfolio, including the international branches portfolio, grew by 19.6% year-on-year and 5% sequentially at June 30, '26.

The retail loan portfolio grew by 12% year-on-year and 2.7% sequentially. Including non-fund-based outstanding, the retail portfolio was 41.1% of the total portfolio. The rural portfolio, including gold loan grew by 35.4% year-on-year and 6.2% sequentially. The business banking portfolio grew by 28.2% year-on-year and 6.9% sequentially. The domestic corporate portfolio grew by 18.5% year-on-year and 6.9% sequentially. The domestic loan portfolio grew by 18.8% year-on-year and 4.6% sequentially at June 30, '26. The overseas portfolio was 3.1% of the overall loan book at June 30, '26.

The net NPA ratio was 0.35% at June 30, '26, compared to 0.33% at March 31, '26 and 0.41% at June 30, '25. During the quarter, there were net additions of INR 27.07 billion to gross NPAs, excluding write-offs and sale. The total provisions during the quarter were INR 12.60 billion or 6.2% of the core operating profit and 0.32% of average advances. The provisioning coverage ratio on nonperforming loans was 74.7% at June 30, '26.

In addition, the bank continues to hold contingency provision of INR 131 billion or about 0.8% of total advances at June 30, '26. The capital position of the bank continued to be strong with a CET1 ratio of 16.19% and total capital adequacy ratio of 16.84% at June 30, '26.

Looking ahead, we see many opportunities to drive risk-calibrated profitable growth and grow market share across key segments. We remain focused on maintaining a strong balance sheet, prudent provisioning and healthy levels of capital while delivering sustainable and predictable returns to our shareholders.

I now hand the call over to Anindya.

Thank you, Sandeep. I will talk about loan growth, credit quality, P&L details 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 14.6% year-on-year and 3.2% sequentially. Auto loans grew by 3.6% year-on-year and 1.2% sequentially. The commercial vehicles and equipment portfolio grew by 12.8% year-on-year and 2.2% sequentially. Personal loans grew by 12.9% year-on-year and 4% sequentially. The credit card portfolio declined by 1.9% year-on-year and 1.7% sequentially.

Within the corporate portfolio, the total outstanding to NBFCs and HFCs was INR 920.52 billion at June 30, 2026, compared to INR 859.04 billion at March 31, 2026. The total outstanding loans to NBFCs and HFCs were about 4.5% of our advances at June 30, 2026. The builder portfolio, including construction finance, lease rental discounting, term loans and working capital was INR 747.21 billion at June 30, 2026, compared to INR 714.21 billion at March 31, 2026. The builder portfolio was 4.3% 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 0.7% of the builder portfolio at June 30, 2026, was either rated BB and below internally or was classified as nonperforming. The gross NPA additions were INR 55.52 billion in the current quarter compared to INR 62.45 billion in Q1 of last year. There were gross NPA additions of INR 7.06 billion from the Kisan credit card portfolio in the current quarter. We typically see higher NPA additions from the Kisan credit card portfolio in the first and third quarter of a fiscal year.

Recoveries and upgrades from gross NPAs, excluding write-offs and sale were INR 28.45 billion in the current quarter compared to INR 32.11 billion in Q1 of last year. The net additions to gross NPAs were INR 27.07 billion in the current quarter compared to INR 30.34 billion in Q1 of last year. The gross NPA additions from the retail and rural portfolios were INR 43.31 billion in the current quarter compared to INR 51.93 billion in Q1 of last year. These include the KCC NPAs mentioned earlier.

Recoveries and upgrades from the retail and rural portfolios were INR 22.10 billion in the current quarter compared to INR 25.25 billion in Q1 of last year. The net additions to gross NPAs in the retail and rural portfolios were INR 21.21 billion in the current quarter compared to INR 26.68 billion in Q1 of last year. The gross NPA additions from the corporate and business banking portfolios were INR 12.21 billion in the current quarter compared to INR 10.52 billion in Q1 of last year.

Recoveries and upgrades from the corporate and business banking portfolios were INR 6.35 billion in the current quarter compared to INR 6.86 billion in Q1 of last year. There were net additions to gross NPAs of INR 5.86 billion in the current quarter in the corporate and business banking portfolios compared to INR 3.66 billion in Q1 of last year. The gross NPAs written off during the quarter were INR 16.73 billion. Further, there was sale of NPAs of INR 2.39 billion for cash in the current quarter. The non-fund-based outstanding to borrowers classified as nonperforming was INR 22.07 billion as of June 30, 2026, as compared to INR 21.74 billion as of March 31, 2026, and INR 32.98 billion as of June 30, 2025.

The loans and non-fund-based outstanding to performing corporate borrowers rated BB and below was INR 34.85 billion at June 30, 2026, as compared to INR 35.19 billion at March 31, 2026, and INR 29.95 billion at June 30, 2025. This portfolio was about 0.2% of our advances at June 30, 2026. The total fund-based outstanding to all standard borrowers under resolution as per various guidelines declined to INR 13.63 billion at June 30, 2026, from INR 14.96 billion at March 31, 2026, and INR 17.88 billion at June 30, 2025.

At the end of June, the total provisions other than specific provisions on fund-based outstanding to borrowers classified as nonperforming, were INR 229.63 billion or 1.4% of loans. This includes the contingency provisions of INR 131 billion as well as general provision on standard assets, provisions held for non-fund-based outstanding to borrowers classified as nonperforming, fund and non-fund-based outstanding to standard borrowers under resolution and BB and below portfolio. The bank also continues to hold additional standard asset provision of INR 12.83 billion made in Q3 of FY 2026 as directed by RBI in respect of the agricultural priority sector portfolio.

Moving on to the P&L details. Net interest income increased by 12.7% year-on-year and 6.1% sequentially to INR 243.84 billion in this quarter. The net interest margin was 4.36% in this quarter compared to 4.32% in the previous quarter and 4.34% in Q1 of last year. The cost of deposits was 4.41% in this quarter compared to 4.43% in the previous quarter and 4.85% in Q1 of last year. The benefit of interest on income tax refund was 8 basis points in the current quarter compared to 5 basis points in the previous quarter and 7 basis points in Q1 of last year.

Excluding the benefit of interest on tax refund, the net interest margin would have been 4.28% in this quarter, 4.27% in the previous quarter and 4.27% in Q1 of last year. Of the total domestic loans, interest rates on about 57% of the loans are linked to the repo rate and other external benchmarks, 13% to MCLR and other older benchmarks, and the remaining 30% of loans have fixed interest rates. Noninterest income, excluding treasury, grew by 16% year-on-year to INR 84.25 billion in Q1 of FY 2027.

Fee income increased by 23.5% year-on-year to INR 72.86 billion in this quarter off a low base of Q1 of last year. Fees from retail, rural and business banking customers constituted about 72% of the total fees in this quarter. Dividend income from subsidiaries was INR 11.1 billion in this quarter compared to INR 13.36 billion in Q1 of last year. On costs, the bank's operating expenses increased by 10.4% year-on-year in this quarter compared to 11.5% year-on-year in FY 2026. Employee expenses increased by 5.5% year-on-year in this quarter, reflecting mainly the impact of annual increments and promotions that take place during the first quarter of every fiscal year. Non-employee expenses increased by 13.8% year-on-year in this quarter.

Our branch count has increased by 97 in the first quarter. We had 7,608 branches as of June 30, 2026. The technology expenses were about 11.4% of our operating expenses this quarter. The total provisions during the quarter were INR 12.6 billion or 6.2% of core operating profit and 0.32% of average advances compared to the provisions of INR 18.15 billion in Q1 of last year.

The profit before tax, excluding treasury, grew by 20.9% year-on-year to INR 189.75 billion in Q1 of this year. There was a treasury gain of INR 1.51 billion in this quarter as compared to a loss of INR 1.06 billion in the previous quarter and a gain of INR 12.41 billion in Q1 of last year. The tax expense was INR 43.21 billion in this quarter compared to INR 41.63 billion in the corresponding quarter last year. The bank has written back tax provision of INR 4.46 billion pursuant to favorable tax orders. The profit after tax grew by 15.9% year-on-year to INR 148.05 billion in this quarter.

The consolidated profit after tax grew by 13.9% year-on-year to INR 154.4 billion in this quarter. The details of the financial performance of key subsidiaries are covered in Slides 33 to 35 and 54 to 59 in the investor presentation. The annualized premium equivalent of ICICI Life increased to INR 21.36 billion in Q1 2027 from INR 18.64 billion in Q1 2026. The value of new business increased to INR 5.71 billion in Q1 2027 from INR 4.57 billion in Q1 2026. The value of new business margin was 26.7% in Q1 2027 compared to 24.7% in FY 2026.

The profit after tax of ICICI Life increased to INR 3.86 billion in Q1 2027 from INR 3.02 billion in Q1 2026. Gross direct premium income of ICICI General increased to INR 83.18 billion in Q1 2027 from INR 77.35 billion in Q1 2026. The combined ratio stood at 107.2% in Q1 2027 compared to 102.9% in Q1 2026. The profit after tax was INR 4.03 billion in Q1 2027 compared to INR 7.47 billion in Q1 2026. The results for the quarter include the impact of an increase in reserve pursuant to a recent judicial pronouncement.

The profit after tax of ICICI AMC as per Ind AS increased to INR 9.65 billion in this quarter from INR 7.84 billion in Q1 of last year. The profit after tax of ICICI Securities as per Ind AS on a consolidated basis was INR 4.19 billion in this quarter compared to INR 3.91 billion in Q1 of last year.

ICICI Bank Canada had a profit after tax of CAD 5.3 million in this quarter compared to CAD 7.8 million in Q1 of last year. ICICI Bank U.K. had a profit after tax of USD 7.2 million in this quarter compared to USD 5.9 million in Q1 of last year. As per Ind AS, ICICI Home Finance had a profit after tax of INR 2 billion in the current quarter compared to INR 2.14 billion in Q1 of last year.

With this, we conclude our opening remarks, and we will now be happy to take your questions.

[Operator Instructions]

We'll take our first question from the line of Mahrukh Adajania from Tara Capital.

Congratulations. I had a question on your loan growth outlook, given that you already achieved such good loan growth in a seasonally weak quarter. Do you find this sustaining as in would you be able to do, say, a high-teen loan growth through the year? Is there enough visible demand across your segments? So that's my first question.

And then on FCNRB, if you have a target in mind and how much you've already mobilized? And what is the cost effectiveness of FCNRB relative to your domestic term deposits?

And also just one more question. The foreign loans, they've grown quite aggressively this quarter. So any comments on that?

Yes. So on the first one, I think it's partly really reflective of what has happened in the system where loan growth has picked up over the last 2, 3 quarters as the various policy measures, both on the fiscal side and the monetary side have taken effect. And I think not just loan growth, but a range of other high-frequency indicators are showing positive momentum. So we are sort of participating in that, and we will keep looking at opportunities as they come. And I think the momentum continues to be pretty good as far as we can see it.

On the second question on FCNRB, we don't really have any target or so on that we put out. I think we think it's a good scheme, and we will look to mobilize as much as we can, but it is very early days yet. This is something that will really play out over the next maybe 8 weeks, 10 weeks or so. So nothing that can be said on that just now.

From a cost effectiveness perspective, 6%. And then if you look at kind of the all-in cost after hedging the coupon, et cetera, it will be somewhere maybe 6.30%, 6.40%, which is, of course, lower than the wholesale lending rates. And it will, therefore, be competitive compared to the wholesale lending rates. And of course, there will be an incremental loan growth opportunity also as these funds start getting deployed.

Lastly, on the international branches growth, I guess, again, over the -- even if you look at the previous quarter, we had a decent momentum. So we did see some amount -- we have been seeing both increase in the trade-related book as well as some borrowing by the overseas operations of Indian companies, well-rated companies, and we have been participating in that. And as we go forward, of course, there will be some amount of loans against FCNR deposits that will also keep adding to the loan book overseas.

Next question is from the line of Kunal Shah from Citigroup.

So firstly, just a clarification on the NIMs. The overall yields have held on steady despite the reversals on agri. So was there any offsetting recoveries also during the quarter, which has helped that in terms of sustaining the yields?

So that's something that keeps happening on an ongoing basis. I think overall, the NIM reflects, I think, the healthy funding franchise, our disciplined approach consistently on both deposit and loan pricing as well as our management of the government securities book. So I think that is what really causes the yield. That is what really held the NIM up. And as for other factors, there is always some amount of collection less or more in each quarter. There was, of course, this interest on income tax refund, which we have as always specifically called out. But even if adjusting for that, the NIM is stable both on a year-on-year and on a quarter-on-quarter basis.

Yes. So question was more on yield because the growth is also coming in from the corporate and all, okay? So to that extent, yields are still sustained. So that was the question. And secondly, on the agri, so now maybe larger part of the regularization, we have been working all through and would have been interacting with the regulator as well. So -- and how is the approach? And when do we see the recoveries coming through or maybe the reversals of the provision? Is it expected to come through in the second quarter? Or maybe it might take some time and we should see it more towards the end of the fiscal year?

I wouldn't really be able to comment on the timing. But yes, of course, we have been working on the required remediation of the portfolio. And we just want to make sure that whatever we have done is correct and signed off and validated before we discuss a write-back of the provision. So I think we are in the process, and we will hopefully work it out over the next few months, but I don't want to give a time line.

Okay. So that process is already on in terms of the validation and getting the sign-off on?

Yes, very much so. It's a granular portfolio. And as I said, we want to make sure that we are getting it right, and then we want to get it appropriately validated the work that the field teams have done and that process is on.

Next question is from the line of Rikin Shah from IIFL Capital.

I had five questions. First one is on fee income. It has accelerated significantly from 8% Y-o-Y last year to 23% Y-o-Y this quarter. If you could just throw some color on what is driving this? And should one expect it to remain closer to the overall balance sheet growth here onwards?

So as I briefly mentioned in our opening remarks, there is some amount of a base effect. Last year, the fee income growth in Q1 was, in fact, sequentially lower over the preceding quarter -- sorry, the absolute fee income in Q1 was actually sequentially lower over the preceding quarter. So there is some amount of base effect as well. And I think other than that, it really reflects the underlying business momentum. We've seen growth pick up across all business segments, retail and corporate, while business banking has sustained. So we would continue to focus on the fee income line item as we go forward.

Got it. The second question on margins, you've managed it extremely well in this cycle. And now with loan growth accelerating meaningfully for you, would you continue to maintain your guidance on range-bound margins even going ahead?

So there are a lot of moving parts to it because it really depends to some extent on systemic liquidity and interest rates where, for example, in the month of May, we had seen a lot of hardening of wholesale rates. That has come off substantially. So assume -- based on current conditions and assuming no real policy rate movements, I would say it should be range bound. We'll also have to, as we go along, factor in sort of the impact of the FCNR deposit mobilization and the related leverage where there could be some impact on margins, but that is something that will happen over a period of time. In any case, the program itself has significant advantages. So that's something we'll see. But other things being equal, I would still say a range bound.

That exactly was my third question. So could you talk a bit more about potential NIM and profitability profile for FCNR raised via self-leverage and versus via tie-ups with the foreign banks? Is it materially different in terms of the implications on margins and profitability?

I think we have just about started that whole process. So we'll have to wait and see. It will be a combination of unleveraged deposits, the deposits that -- where we are providing leverage. And for that, there may be some fundraising requirement at our end as well. And there will be, of course, other banks providing leverage for deposits into us.

So as I said, the best guess we have now is that there could be some impact on the NIM, particularly because, as I mentioned in response to Mahrukh's question, the balance sheet of the international branches will expand materially as this -- if we indeed are able to mobilize significant amount. So that will happen. So we'll see it as it comes. But of course, from an earnings perspective, it is quite positive.

Got it. The fourth one is on recoveries. Was there any one-off recovery in this quarter from any accounts?

So I think most -- you would all be aware that in one particular case, there was an NCLT judgment, where the company was taken over. So that recovery did come through this quarter. This is an asset that had been previously sold to NARCL. And that is there. And then there are some other things in the regular course. But from a credit cost perspective, the reported of 32 basis points, I guess, as we always say, in a more normalized level, adjusting for chunky recoveries would be around 50 bps, and that is where it stays.

Got it. And the last question is on ECL. If you could just talk about the impact on transition from next year, both on onetime basis on net worth and also on the recurring credit cost, please?

So on the net worth, we will not really have any impact. I mean, our assessment based on whatever pro forma estimates we have done based on the existing position of the balance sheet of the portfolio is that whatever impact is there will be well absorbed by our provisioning buffers. Of course, always depends on what is the situation of the portfolio at that point in time. On an ongoing basis, the fact that we will be providing for Stage 2 will -- obviously, that is a provision that is currently not made by any bank. So that will result in higher provisions, which will be partly offset by lower provisions on the Stage 3, where currently we follow this percentage-based approach and there it will be much more on a predicted loss kind of approach.

Pro forma estimate that you may want to call out, like is it 5 bps, 10 bps or meaningfully higher?

No, very difficult to make that estimate because we then actually have to run it based on the new ECL guidelines. So I think we are all -- so I think we have some assessment of the transition impact. The ongoing impact is something that will come, but it will be a uniform impact across the sector adjusted for portfolio composition.

Congrats on a very strong quarter.

Thank you very much.

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

We have seen some very strong loan growth, particularly business banking. I'm just wondering, is this the right time to accelerate given we are going through the energy shock and El Niño is upon us. We are costing a little bit on the kind of macro tailwinds from last year. But I'm just wondering how you think about the growth opportunity and the evolving environment over the next kind of year or 2?

So we are, of course, monitoring this portfolio very closely, and we are factoring in some of these West Asia, et cetera, into our customer selection and onboarding. But I think fundamentally, we feel quite comfortable with the portfolio and with growing it. There is -- you would see the NPL performance is also pretty good and stable. And we will keep adjusting it as we go along. But it is a granular portfolio, reasonably secured portfolio, and we are quite comfortable growing it. The pace.

Are you leaning on these credit guarantee funds, like are you leaning on these government schemes to help you grow better or there is no need?

No. So when applications come under that, we are assessing and going ahead, I mean, it is some -- it is a scheme that has been created for the benefit of the customers. So we are quite open to it. There is -- but we are also adding new customers and growing with existing customers in line with their business.

Okay. What would the average loan yield on a year-on-year basis? I'm just wondering if there's any lumpiness that will run off in this 19.6% number?

Average loan growth on a year-on-year basis.

14%.

It will be somewhat lower, but I mean, the fact -- as I mentioned earlier, what this higher loan growth this quarter is reflective of the increase in loan growth in the system and both the banks and the systems is off the base of Q1 last year. So it will -- there could be some base effect, but I think incremental momentum continues to be pretty strong.

Okay. And the final question is just on competitive dynamics. Have you seen any easing off of competitive dynamics from the PSU banks? Or does it remain intense as ever? They've used up their LCR and LDR buffer substantially. Just wondering if there's been any change in recent months?

The way we like to look at it is what is our existing market share and what is the franchise capable of delivering. So our belief is that our franchise should deliver more. And these competitive -- there is always some set of competition that you have to deal with. But I think there is enough business for us to do within our frameworks, and we keep calibrating based on sort of the interest rate environment and the competitive environment. But I think we don't -- we will keep looking at that as we go along, but that is not sort of something that is holding us back currently.

I appreciate looking at yourself and not at others. But the asset pricing kind of gets impacted by those things, right? That's why I was asking that question. So are you seeing asset pricing improve?

I think it's a large market, and there is enough for us to do. So we are, for example, some of the rates that get quoted, we are not doing that kind of business, but there is enough other business where we are comfortable with risk-adjusted returns on a customer basis, which we do.

Next question is from the line of Abhishek Murarka from HSBC.

Congratulations on a strong quarter. So I just wanted to go back to the fee income question. And you mentioned that it is largely disbursement linked and disbursements have gone up. But if I just look at the overall growth of 23%, assuming card fees is also a chunk of your fee and card balances are lower. Is the rest of it just disbursement linked? Or is there any other fee line item that has picked up significantly? So that's my first question.

No. I did not say that it is disbursement linked. I just said that overall business volumes and business growth has gone up. So that will partly reflect in it, particularly the increase, for example, on the corporate side, continued increase -- continued growth on the business banking side and the pickup in retail. So -- but we have -- our fee income has a range of components, cards, as you mentioned, the loan processing fees, transaction banking and trade, ForEx and derivatives.

So there is all those elements, the deposit-linked fees, all those have seen a growth. And at different times, there may be more opportunity in one segment than the other, which we have to keep making sure that we are there across the opportunity spectrum within our kind of risk framework, which is what we do. And also, as I said, there is some base effect last year because last year, the Q1 was indeed not a good quarter from a fee perspective.

Right. So in these...

If you look at it sequentially, the increase in the fee line June quarter over March quarter is about INR 5 billion or so.

Yes, yes. But I'm just looking at -- because sequential seasonality would be there, but I'm just trying to wonder in these 5 or 6 buckets that you have highlighted, which are the ones where you see significant opportunity or pickup right now? Are there any 1 or 2 buckets which are contributing...

I think opportunity is there across the Board. As you said, maybe cards is one area where fee growth has -- is less than what we would want it to be, although at a PBT level, the business has done very well because of the reduction in credit costs. But there is opportunity across the Board.

Right. Okay. And I wanted to check on cards and PL. How do you -- I mean, we've been saying that overall, we are comfortable with the environment, but growth has not picked up a whole lot, right? So -- and I think in cards, you were also trying to sort of clean up the portfolio a bit, if I remember correctly. So can you give an update on how you see the growth in these 2 businesses, let's say, from a next 12 months, 15-month perspective?

PL has picked up quite a bit actually, 12% year-on-year and 4% sequential growth. I think it's after a long time that we are seeing those kinds of numbers. Cards, there is -- I think the revolver rates are lower. So that is impacting the book growth. But we'll see how to optimize that as we go along.

PL, the growth is sustainable, this 4% kind of 3%, 4% Q-o-Q.

I don't want to really give an outlook per se. I think we had gone down to a declining portfolio from that, we are at 4% sequential growth. We are not -- I don't see any need to -- I don't see anything today that will reduce growth but we will take it as it comes.

Got it. And just finally, on ECLGS, how is the offtake? How much disbursements have you done? Can you just give some sort of an update on what kind of uptake you're seeing on that product?

No, I think I answered that. We are getting some inquiries, and we are doing some of that. It's part of the increase in the business banking book. But so that is something that has been done for the benefit of the customer. And as wherever it is appropriate, we are doing it.

Next question is from the line of M.B. Mahesh from Kotak Securities.

Anindya, just a couple of questions. First is on this corporate loans. This recovery in growth that we are seeing in your bank and also in some of the other banks as well. If you could just kind of give us some color as to how much of it is a demand-led growth that one is seeing because of CapEx versus probably a credit substitution or a short-term working capital demand that has come through?

See, the corporates were always doing what they were doing. So they are doing CapEx to the extent that they were doing CapEx. But I think the -- certainly, bond markets this quarter have not favored the corporate sector. If you see we have a reasonable increase in our NBFC portfolio as well. So part of it is a shift from bond markets. Part of it is, I would say, working capital utilization. Part of it may be corporates taking on some borrowings and just maintaining some liquidity buffers as they also want to be sort of have greater resilience in this -- in the uncertainties of the environment. And to the extent that they are investing or were investing, that also continues, maybe the source of financing has shifted a little.

But you don't see any meaningful increase in, let's say, loan proposals relating to fresh CapEx over what you've seen earlier? Would that be fair?

No, I'm hesitant to make a comment which can get extrapolated at a system level. We are dealing with our customer base and catering to their needs. I think we -- the customers are doing a range of things, and they were doing and are doing CapEx and new investments as well. But obviously, some shift -- in addition to that, some shift in funding mix is also there. And I think this quarter, in particular, we saw a healthy pipeline at reasonable rates. So that is what has led to this growth.

Perfect. Second question, this pertains to retail side. I know you've done well on loan growth on that part of the market. Just if you can just kind of comment on this entire IT corridor, both on the asset side as well as on the liability side. How is the demand for retail assets? And have you seen any change on the liability side?

No, we have not seen any change actually. So I think in terms of inflows into the savings, et cetera, they are quite stable. We've not seen any change. And as you can see, the loan -- the retail -- the performance of the retail portfolio has only improved. In fact, additions have come off. And in particular, if you look at it on a year-on-year basis, unsecured additions have come off. So I think things are quite stable from that perspective.

Ladies and gentlemen, we'll take that as the last question for today. I would now like to hand the conference back to management for closing comments. Over to you, sir.

Thank you very much for making time for the call, and we'll take any other questions that you have as we interact going forward. Thank you.

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

Ladies and gentlemen, we welcome you all to ICICI Bank's Results Conference Call with Mr. Sandeep Batra, Executive Director, ICICI Bank; and Mr. Anindya Banerjee, Group Chief Financial Officer, ICICI Bank. Mr. Batra will now give you an overview of the results, which will be followed by a Q&A session. Thank you, and over to you, sir.

Thank you. Good evening, everyone, and thank you all for joining us today. I know it's going to be a busy afternoon for all of you. Amidst the global uncertainties, the Indian economy continues to be resilient as reflected in high frequency indicators backed by various initiatives taken by policymakers. We continue to monitor the developments closely and remain focused on our long-term strategy aligned with India's evolving economic landscape.

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 the framework of our values to strengthen our franchise. Maintaining high standards of governance, deepening coverage and enhancing delivery capabilities with a focus on simplicity and operational resilience are key drivers for our risk-calibrated profitable growth.

Our Board has approved the financial results of ICICI Bank for the quarter ended June 30, 2026. I would like to highlight some of the key numbers. So first, moving on to profit and capital. One, the net interest income grew by 12.7% year-on-year to INR 24,384 crores in Q1 2027. Net interest margin was 4.36% in Q1 2027 compared to 4.32% in Q4 2026.

Fee income grew by 23.5% year-on-year to INR 7,286 crores in Q1 2024. Operating expenses grew by 10.4% year-on-year to INR 12,574 crores in Q1 2027. Core operating profit grew by 15.6% year-on-year to INR 20,235 crores in Q1 2027. Core operating profit, excluding dividend from subsidiaries, grew by 18.3% year-on-year to INR 19,125 crores in Q1 2027. Provisions, excluding provision for tax, were INR 1,260 crores in Q1 2027.

Profit before tax, excluding treasury, grew by 20.9% year-on-year to INR 18,975 crores in Q1 2027. Profit after tax grew by 15.9% year-on-year to INR 14,805 crores in Q1 2027. Stand-alone ROE was 17.1% in Q1 2027. At June 30, 2026, the bank had a net worth of about INR 3.5 lakh crores. CET1 ratio was 16.19% and capital adequacy ratio was 16.84% at June 30, 2026.

Moving on to deposit growth. The total period end deposits increased by 14% year-on-year to 2.2% quarter-on-quarter at June 30, 2026. Average deposits increased by 14% year-on-year and 6.1% sequentially during Q1 2027. Average current and savings account deposits increased by 12.1% year-on-year. Bank opened 97 branches during Q1 2027 and a network of 7,608 branches and 12,190 ATMs and cash recycling machines at June 30, 2026.

Moving on to loan growth. The total loan portfolio grew by 19.6% year-on-year and 5% quarter-on-quarter at June 30, 2026. The retail loan portfolio grew by 12% year-on-year. Including non-fund outstanding, the retail portfolio was 41.1% of the total portfolio. The mortgage portfolio grew by 14.6% year-on-year. The personal loan portfolio grew by 12.9% year-on-year. The credit card portfolio declined by 1.9% year-on-year. The rural portfolio grew by 35.4% year-on-year. The business banking portfolio grew by 28.2% year-on-year. Growth in the domestic corporate portfolio was 18.5% year-on-year at June 30, 2026. About 71.9% of the corporate loan portfolio was rated A- and above as at June 30, 2026.

Now moving to asset quality. Net NPA ratio was 0.35% at June 30, 2026 compared to 0.33% at March 31, 2026, and 0.41% at June 30, 2025. During Q1 2027, there were net additions to gross NPAs of INR 2,707 crores. Gross NPA additions were INR 5,552 crores in Q1 2027. Recoveries and upgrades of NPAs, excluding write-offs and sale, were INR 2,845 crores in Q1 2027. Gross NPAs written off were INR 1,673 crores in Q1 2027. There was sale of NPAs of INR 239 crores for cash in the current quarter. Provision coverage ratio on nonperforming loans was 74.7% at June 30, 2026.

Total fund-based outstanding to all borrowers under resolution as per various extant regulations was INR 1,363 crores. Loans and non-fund-based outstanding to performing corporate borrowers rated BB and below were INR 3,485 crores at June 30, 2026. The total provisions during Q1 2027 were INR 1,260 crores or 6.2% of core operating profit and 0.32% of average advances. The bank continues to hold contingency provisions of INR 13,100 crores at June 30, 2026.

At ICICI Bank, customers continue to remain at the heart of every initiative. I would like to share some of the latest updates on AI that we are making to make banking simpler, safer and more convenient. ICICI Bank has established a structured and disciplined approach to scale AI with a focus on long-term value creation, risk management and enterprise-wide adoption. The bank has invested in enterprise AI platform, which serves as a secure environment for development, hosting and development of AI and generative AI use cases.

The bank continues to invest in AI and generative AI use cases across areas such as portfolio monitoring, customer onboarding, fraud detection, document extraction and summarization and customer servicing amongst others. These capabilities empower the bank to enhance customer communication, improve efficiencies, achieve faster turnaround time, support decision-making across functions and deliver seamless customer experience.

Our approach places emphasis on information security, data privacy and responsible AI. We have implemented a comprehensive framework of guardrails, including defining ringfenced areas for AI usage, human-in-the-loop oversight, stringent data access control and effective model governance protocols. Parallelly, the bank continues to invest in internal capability building, with focused upskilling initiatives across businesses, digital and technology teams intended to strengthen enterprise-wide readiness and support sustainable scaling of AI capabilities across the organization.

Going forward, we will continue to operate within our strategic framework while focusing on micro markets and ecosystems, the principles of fair to customer, fair to bank, one bank, one team and return on capital will guide our operations. We focus on building a culture where every employee of the bank serves customers with humility and upholds the values of brand ICICI. We aim to be a trusted financial services provider of choice for our customers and deliver sustainable returns to our shareholders.

With this, I conclude my opening remarks, and I would be happy to take on your questions. Thank you.

[Operator Instructions] We'll take our first question from Ritu Singh from CNBC-TV18.

First, I wanted to start by asking about your margins that really stood out, especially compared to almost all other banks that have reported numbers today. This further expansion you've been able to achieve now at almost 4.36%. Is this the normalized rate we should look at? How sustainable are these levels? Do you have levers to further expand? That is the first part.

Second is rise in slippages that we've seen substantially in the quarter from about INR 4,200-odd crores to about INR 5,500 crores. How much of this is seasonal? And are you seeing any stress on account of what's happening in West Asia because this is the first quarter when we see some of that impact come through? And if I may add a question on loan growth as well, which has been pretty strong. Corporate also seems to be doing well. What are the segments, of course, within your risk calibrated view, that you think are seeing higher credit demand that you believe will drive incremental credit growth for the bank?

Thank you, Ritu. That's lots of questions. I think, first of all, I'll start with the NIM question that you asked. As you are aware, as we have reported, the NIM increased by about 12.7% year-on-year and about 6.1% sequentially. This quarter, we had the benefit of income tax refunds, which helped in the margin improvement compared -- this was about 8 basis points compared to about 5 basis points in the previous quarter and 7 bps in the Q1 of last year.

The margins in Q1 are also reflective of the benefits due to repricing of term deposits, impact of higher interest refunds, offset partially by higher interest on reversal of KCC portfolio. To your point on outlook, I think the NIM trajectory would depend on a number of factors, which includes, of course, the geopolitical development, monetary policy, liquidity, loan growth and loan pricing.

Our expectations of NIM is that in FY '27, it should be range bound, assuming no rate movements. Of course, there will be some impact on account of FCNR(B) deposit program and loans against FCNR deposits, which could be sort of slightly NIM dilutive. But overall, as a bank, we would continue to look at leveraging growth and as you rightly pointed out, risk calibrated profits through optimizing various levers where NIM is clearly one of them.

Coming to your point on slippage, I think it will be better if you look at the -- compare that number over Q1 '26 over Q1 '27. I think there are seasonality impacts. If you look at that number in Q1 2026, it was about INR 62 billion, which is now down to INR 55 billion.

Moving on to loan growth. As you are aware, you're seeing loan growth across all the segments. In particular, corporate loans, we have seen some amount of sequentially pickup, which has been largely due to -- I mean, from our point of view, we continue to have active engagements with our corporate clients, and we continue to seek opportunities whichever meet within our risk and reward thresholds.

During the current quarter, in particular, I think there was a little more demand on account of working capital. And also, we have seen some kind of a moderation in the bond markets and equity markets, which has been an opportunity for us to capitalize. I presume I have answered all your...

Mr. Batra, if you could also answer, the reason why there was a sequential rise in slippages. And even on FCNR since you bring it up, what's the target you think? How much would the bank raise and what kind of leverage...

So that is seasonal. The first one is seasonal. So I don't think so I would like to call out anything specific on the quarter. So it's just a question of seasonality. If you have to -- actually, you have to look at -- and most of it is -- I mean, the difference is because of Kisan credit cards. So on FCNR(B), since we are talking about the subject, I think we are -- I mean, it's a great measure from a government point of view. And of course, it is early stages yet, and this will evolve over the couple of months. And as you are aware, we are going to continue to focus -- sorry, we will be tapping on the Indian diaspora. You are aware that we have got a large international presence, and we will leverage all our international branches, especially those in West Asia. We have also tied up with various partners for providing leverages. We will be raising bonds. This amount will -- I mean, we do expect the momentum to pick up as we go along. And of course, we are committed for this -- committed to make this initiative of RBI a success.

But no amount, Mr. Batra, you could share?

We can't. It's very difficult to say at this point of time.

Next question is from Siddhi Nayak from Bloomberg.

I just wanted to take some of Ritu's questions forward. The 20% loan growth that we have seen for you, I think it's among the highest in the last few quarters. I wanted to understand how sustainable is that? And if you could -- are you foreseeing any risks that could hamper this kind of credit growth for ICICI and for the banking sector as well?

No, this -- I think the growth is reflective of the continuous momentum of economic activity and also the impact of various policy initiatives which have been taken by the policymakers. From our point of view, we continue to see growth across segments, whether it is mortgages, rural portfolio, personal loans. We have also seen healthy growth in business banking. And for this quarter, as I really -- as I already mentioned, there has been a good sequential pickup in corporate loans.

So we continue to engage with the entire spectrum and wherever we get opportunities which meet our risk thresholds and meet the pricing framework that we have, we are happy to lend. And from our perspective, it's not only about the loan growth. We look at customers on a 360 basis and the overall relationship with the customer. And within that framework, we take various calls. So this is -- so we do have a strong balance sheet, and we will continue to look at various opportunities as they come along.

On the FCNR part, if I may ask, sir, what is the kind of leverage that you're offering? And what is the indicative demand looking like? I mean there are some conflicting reports about inflows being very slow. Some say we have received a lot of inflows. You being the second largest private bank in the country, what is the demand on ground that you're seeing for FCNR flows? And if you could also share the leverage that you're offering, sir, through this product?

So we will offer leverage based on the customer profile and whatever leverage our partners are willing to offer. So we're not giving any specific numbers at this point of time. But rest assured, I think the customers will get a reasonable return. And from our point of view, we are -- as I did mention, we are committed to making -- I mean, making this scheme of the government and RBI a success, and we will continue to remain focused on it. I think there is -- and the rates will evolve over a period of time. I mean there is -- I mean, you are reading various newspaper reports of various competitive activities.

From our point of view, we will -- we look at -- as I mentioned, we are looking both as leverage from our partner banks as well as raising bonds from our side and which will help our customers. And we do expect a decent pickup to happen over the next couple of weeks and months.

Sir, lastly, is there scope for you to raise? Do you see the need to raise these FCNR deposit rates because -- beyond 6% that's on...

At this point of time, I don't think so there is any need. I mean we will see how it goes along.

Next question is from Sangita Mehta from Economic Times.

Sir, I wanted to know what is the estimated provision for ECL? And other thing is that what is the corporate pipeline looking like because you've already had 20% in first quarter. So specifically corporate pipeline? And third is that what is the max leverage that ICICI would be willing to provide to the best rated customer?

ECL is effective from 1st of April next year. So I don't think there is anything specific -- no, we are -- I mean, those are the numbers that we will start sharing from a next year basis. At this point of time, we do not see a material impact on an ongoing basis. As we mentioned in the last call, there would be some marginal impact during the transition period, which -- for which we have got adequate -- I mean, adequate provisions are already in place. We will see. That is as far as ECL is concerned. Sorry, the second question was on?

Corporate pipeline.

As I mentioned, we have been engaging with our corporate customers over a long period of time. And whenever we get opportunities which meet our risk and reward threshold, we are happy to lend to them. So there are enough -- there are adequate opportunities which are there. And this quarter did open up a fairly good number of opportunities. So we will continue to engage with our corporate customers. And as I have always mentioned, it is not necessarily about the loan pipeline. We look at the overall 360 relationship with all customers and in particular, corporate customers and look at the whole ecosystems and take a decision based on that.

And sir, what is the max leverage that you would be willing to offer?

We have not called that out that at present.

Well, it will be quite calibrated, and it will be at calibrated levels, and we will look at whether it -- what is the leverage that we will provide, as Sandeep mentioned, what partner banks may provide. And there will, of course, be some unleveraged inflows as well.

Have you tied up any line of credit or bilateral loans in the recent -- in the last 1 month?

So these are all evolving things, and this is an activity which has started effectively only towards the end of June once all the FAQs, et cetera, have come out. So it will evolve over the second quarter. And of course, when we do the second quarter results, we will have a full picture.

Okay. Just one last thing. Can you share how much you've raised so far in the last 1 month FCNR(B)?

As I said, these details would be shared in the second quarter, maybe at some point of time during the quarter as this evolves because it is still very early days, maybe some systemic numbers will start getting published. But from our perspective, it's a quarterly result angle.

We'll take our next question from Shivam Khilar from NDTV Profit.

My question is on the...

Shivam, can you use your handset mode, please?

Corporate loan book growth target going forward...

Shivam, sorry to interrupt you. Can you use your handset mode, please? Your audio is very feeble.

Working capital requirement. So what would be the growth rate that the bank is targeting?

Shivam, as we have always said that we do not have any targets across any segment and in particular, corporate loan as well. We look at opportunities at the cost of repeating, whenever we find opportunities which meet our risk thresholds and risk and reward and pricing thresholds, we are happy to lend, and we are focused on customer 360 and try to access the overall ecosystem.

And sir, my second question is regarding the margin trajectory going forward. As management was expecting that the margins will be in range bound level. But recently, the margins have been -- seen a slight improvement. So what would be the margin trajectory going forward from here on?

See, as I mentioned earlier, this is going to be range bound. And I think I've already responded to that question. So at the cost of repeating, I mentioned, we do expect it to be range bound. And of course, it's going to get impacted by many things like monetary policy, liquidity, et cetera. It could well be a little bit dilutive given the FCNR borrowing and deposits, which -- because of the FCNR deposits that we are going to be raising. But we will continue to leverage -- I mean, as far as we are concerned, we are looking at increasing the risk calibrated profit and using all the levers which go into it. And in particular, NIM is an important part of that.

Yes, sir. And sir, if I could squeeze one more question in regarding the cost of funds, do you see the cost of fund trajectory declining going forward?

It's very difficult to make that statement. It is, again, depends on all the things that I really talked about. At this point of time, we expect this to be range bound.

Next question is from Mayur Shetty from Times of India.

I had a question on gold loans. Could you share the size of your gold loan book and also the year-on-year growth rate?

Mayur, we do not give specifically, but this is part of our rural portfolio. I mean a substantial part of our rural portfolio is actually gold loan. This gold loan portfolio -- the overall rural portfolio has grown by 35% year-on-year. And I mean -- and from our perspective, loan is -- the loan product is just a product -- gold loan is just a product. We are focused more on the customer. And whenever we get opportunities to give loans to good customers, there are various products and options which are available. So this is part of that overall customer-centric approach that we have been talking about.

So it's not part of the personal loans?

No, it is part of the rural portfolio that we are giving. And a substantial portion of that you can attribute to gold.

Next question is from Hamsini Karthik from Moneycontrol.

Two questions. One, for almost 4 quarters in a row, ICICI Bank's corporate loan growth has sort of exceeded the retail book's performance. Would it be fair to say that at a bank level, you are more comfortable today with the corporate portfolio versus retail that is also where the strategy is largely getting headed to? Would that be a reasonable assumption to make?

Okay. Hamsini, I think just -- as we have been talking about for a bank, we look at cash flows. We -- our objective is to look at good quality customers, whether they come from corporate, business banking and retail is not so important. Whichever segment gives results in -- which meets the credit parameters, which meets the return parameters, we are happy to grow. What you are seeing is more an outcome of working with good quality customers. We do not have any particular target what portion of our book should be corporate or retail or business banking. I mean these numbers can well be varied.

Corporate loans have not been growing in the past for various reasons, which we have talked about. Recently, of course, there has been -- I mean, there have been opportunities, which is a function of the increased working capital requirement by the corporate books as well as moderation, which we have seen in the equity markets as well as in the bond markets. So the -- we keep on -- I mean further, I think the corporate book also, we have to get a reasonable pricing and it has to meet our credit threshold. As long as these 2 things are met, we are happy to lend to that segment.

So you're comfortable on the pricing side as well in the corporate segment?

We will not lend if we are not comfortable.

Fair point. Fair point. My next question pertains to FCNR(B). I've heard of whatever you said, but let me try asking it a little differently. Most of the banks currently are offering leverage between 9% to 11%, 12%. The kind of leverage that ICICI Bank offers, would it be at par with what your competitors are offering? Or are you a little more cautious than what the current run rate is?

And as an add-on to that particular question, do you expect your cost of funds to get -- to come down maybe 2 quarters or 3 quarters down the line because there's a possibility of you to replenish some high-cost bulky deposits with these FCNR(B)s?

No, Hamsini, in a way we answered it when I was looking -- when I was responding to the NIM question. Overall, FCNR deposit program would be marginally NIM dilutive. So that's about it. But sorry...

On the leverage question, it will be calibrated. We are not giving a particular number because it is also early days yet. We will see how this thing evolves. But as in all our businesses, we will be calibrated and reasonable about it. And on the NIM, et cetera, as Sandeep explained in detail, we expect it to be range bound. And to what -- what the impact of the FCNR(B) program is, we will have to see. Of course, it will be an earnings accretive program because of the growth in the offshore balance sheet, et cetera, there may be some marginal impact on NIM.

Next question is from Subrata Panda from Business Standard.

I had a couple of questions. First is on your plans to tap the overseas bond market. You've guided for a $2.5 billion borrowing program. So how much of it would be under the RBI concession swap window? Also, why haven't you tapped the market as of now? Because I think most of your competitors have already. Is there some -- I mean, is the spread more right now? That's why you're not tapping it? Also, what is your strategy on the acquisition financing front?

So on the first question, I think each bank has its own timing and its own approach. And -- so we are looking at various options, and we have taken this enabling approval. So we will see how it goes. But there is nothing specific to the timing as such. It's just a normal process of planning and decision-making that would happen in any organization.

And on the acquisition financing, Sandeep, there's nothing specific to say. I mean, again, as in all our businesses, we would be focused on the counterparty risk. And for counterparties with whom we are fine to do business, we would be trying to do this product as well.

So there's no specific number as to how much you will raise under the RBI concessions swap window?

No. All these things will evolve over the next 2 months.

We have a next question from Ashish Agashe from PTI.

Sir, just from the loan growth for FY '27 perspective, you mentioned in the context of corporate loans that there is adequate demand which is being seen. So is this about 20% overall loan growth, how sustainable is it from a fiscal standpoint? And also, where is this demand really coming up from? Is there any bit of greenfield, brownfield there? And given your calibrated approach to lending, what are the segments you are staying away from right now?

We look at good quality customers. I don't think so it's coming from any particular segment. As long as we are able to find good quality customers across segments, we are able to lend. We really do not give a guidance on how it will shape out in the future. This quarter, there were opportunities. We have been able to seize them. And we will see how it goes along in the future. So there is nothing specific to call out. There is no change of strategy. We continue to scan the markets. We continue to calibrate our risk and wherever we see opportunities, we are happy to lend.

Okay, sir. And earlier you spoke in your initial comments, you spoke about a bank-wide upskilling program on AI, especially and how you have invested on the AI front. So what sort of impact would it have on hiring -- replacement of retiring employees going forward, sir? And are we -- should we look at a leaner organization going ahead? And how expensive is this entire AI bit such that, okay, even the leaner aspect does not really accrue in cost-to-income gains?

No, we will -- because these are early days in AI. As I did mention, we have calibrated our approach. We look at the cost, we look at the risk and we look at the benefits. The final objective is to make the journeys of our customers simpler. And I think there are enough opportunities out there. I don't think so there's going to be a material -- there's going to be any material impact on employees per se on this. This is still early days. We are focused on more on the governance side at this point of time. We are looking at long-term value creation. But we do see a fair bit of opportunities coming across, and I did mention about various areas that we are focused on.

Finally, the numbers will have to get reflected in the PBT number. And that's essentially that we are focused on. The rest are actually inputs. It's just one of the levers that we are using. As you are aware, over decades, we have used technology largely to benefit our customers and improve our efficiencies across, that approach will continue to remain there. I don't think so anyone can take away the importance of a human relationship and more particular in a banking kind of a relationship. So we continue to invest in our human capital as well as technology capital. And it is a section of both of it. We do expect we will be able to deliver a decent value to our customers.

Sir, just a quick follow-up, sir. There are these worries over the expensiveness of tokenization and other things coming in from the tech front. And probably the naysayers would also be questioning the entire efficacy from a spend perspective on AI. Early days, I agree, but okay, how do you look at this right now?

So whenever new technology comes, you have to look at the cost, you have to look at the risk and you have to look at the benefits, and continue to make investments in these and calibrate your way across. So we don't really have to be in a hurry or being a pioneer here. But I mean, over the reasonable period of time, we have -- we think we have been able to make -- I mean, we have been looking to assess areas where we can actually benefit over a longer-term perspective. We have remained invested in it. If the costs become too high, we will recalibrate our strategy. This is a continuous exercise which happens with any technology deployment, and that includes for AI itself.

Next question is from Aaryan Khanna from Informist.

Sir, so congratulations on a great quarter. Do you see any levers that you can tap for better profitability in the rest of the financial year, including maybe some high-yielding loan portfolio this thing considering that there is a risk to NIM from the FCNR deposits that are going to be coming in?

Aaryan, I think we are focused on increasing our PBT number per se. And for that, there are multiple levers, which includes NIM, fees, expenses, provisions, et cetera. So we look at all the levers. And finally, we would really like to add value to our customers. So that is the overall framework that we have been working on, and we hope to continue to work on that frame -- remain focused on that framework. Within that, wherever opportunities do come, we would capitalize on the same.

Okay, sir. Perfect. And my second question being, if you could lend some color to the NPA trajectory for the rest of the financial year, especially as the West Asia situation has continued to flare up and remain uncertain. So the last 2 quarters have been very good, both in the March quarter and June. We've seen -- in the June quarter, we saw a Y-o-Y fall in recoveries and then the net NPA ratio has sort of inched up sequentially. So have we bottomed out on NPAs? And like do you see an expansion in the rest of the FY?

It's difficult to make that assessment. I know because the geopolitical developments, as you have said, is uncertain. In terms of outlook, we have been -- I mean, if you see, we have gone through a fair bit of challenges over the last year as well. I mean it's not that -- this has been the first time that we have got through these challenges. But we continue to monitor our asset quality, and we will continue to closely look at all the developments which have been happening over this period of time and work closely with our customers. So there's very much more that -- I don't think I can add much more to that. Anindya, in case, you want to add?

Yes. So first of all, there is really no inching up of NPLs or anything in the ratio. seasonally in Q1 and Q3 of every year, we do see higher NPLs from the agri-related lending. And then that -- and the credit costs are slightly higher, but they even out over the rest of the year. And even in this quarter, our net credit cost is just about 30, 32 basis points of average loans.

I think as far as the outlook is concerned, I think if you look at the government, RBI, et cetera, have taken a number of measures to make sure that the Indian economy stays resilient, which is reflected in all the high-frequency indicators as well as the NPL performance across banks, I mean all the results which have come so far.

How it will evolve, we will have to see. But as of today, I don't think we have -- based on the current set of information or borrower behavior, we have any specific concern. And these things are very difficult to predict. So the only way to handle them is to maintain a strong balance sheet, which we have.

Next question is from Manju AB from Financial Express.

I wanted to ask you how will you bridge the gap between the deposit and credit growth? And how sustainable is the credit growth?

So Manju, credit and deposit growth will have to go hand in hand. I mean there could be a quarter or so where there is a gap. But finally, credit and deposit grow hand in hand. Of course, I mean, advances also get supported by the increase in net worth and there could well be some amount of opportunities on borrowings, which we can take out. But over a period of time, they have to balance. It's mathematically impossible for the 2 not to go hand in hand.

And how much of your -- I'm not asking about the target that you have for the FCNR(B) deposits, but how much of those deposits will help you to reduce your wholesale deposits? And can you give us color on your deposit base, how much is term deposit wholesale and CASA?

Manju, we do not look at -- we just look at money in the bank and wherever we can -- I mean, whether this is CASA or FDs and clearly, the preference is within getting CASA and retail deposits, in case we need more funding that gets topped up by wholesale deposits. That's the approach that we have been following for some time, and we will continue to remain focused on that.

And the INR 5,500 crores of NPAs, the fresh addition, from where is it coming from which segment, more retail or?

This is a pretty normal trend. So if we look at on a year-on-year basis, the retail NPL formation has actually come down principally in the unsecured segment. Other segments are anyway quite stable. And business banking is at -- business banking and rural are at the kind of similar levels as they were. Corporate, there is virtually no new NPL formation.

Next question is from Falaknaaz Syed from Deccan Chronicle.

Bank you have tied up with international banks you have tied up for FCNR mobilization?

So as we said, these are all evolving issues, and we will report the outcomes at the appropriate time. Nothing really to announce as of now.

And recovery pipeline, what is it like?

I'm sorry?

Recovery pipeline.

So that is an ongoing process from the retail and SME portfolios, there is always an inflow and outflow of NPLs. On the corporate side, there are some recoveries that also keep coming through out of the older portfolio whenever there is a settlement or some NCLT judgment and so on. So that is there. No specific pipeline that we can talk about.

I see. And this INR 5,500 crores NPAs, so there's no -- on the corporate side, mostly largely they come from the retail sector?

Yes, it would and that has been the case for the last, I would say, 4, 5 years also.

So can you give a breakup? Is it from home loans?

No, we don't give that breakup.

Next question is from Ram Kumar from Hindu Businessline.

Sir, how much surplus SLR are you having right now? And what was it in the year ago period actually?

I'm sorry?

SLR. Surplus SLR.

No, we don't really give any surplus SLR. I think the LCR for the quarter, which is really the operative liquidity metric was at 124%.

Okay. How much is the LCR, if you could share that?

124%.

And what was it in the year ago period, sir?

128%.

Okay. And given -- how much of your total deposits is on account of non-resident Indians actually? And whether that portion is going to change?

We have not given that breakup. And yes, I mean, I guess as the FCNR(B) flows start and pick up, that number will go up, yes.

Thank you. This brings the conference call to an end. On behalf of ICICI Bank, we thank you all for joining us. You may now disconnect your lines. Thank you again.

Ladies and gentlemen, good day, and welcome to ICICI Bank Limited Q4 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sandeep Bakhshi, Managing Director and Chief Executive Officer of ICICI Bank. Thank you, and over to you, sir.

Thank you. Good evening to all of you, and welcome to the ICICI Bank earnings call to discuss the results for Q4 of FY 2026.

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 the framework of our values to strengthen our franchise. Maintaining high standards of governance, deepening coverage and enhancing delivery capabilities with a focus on simplicity and operational resilience are key drivers for our risk-calibrated profitable growth.

The profit before tax, excluding treasury, grew by 10.1% year-on-year to INR 182.09 billion in this quarter and by 7.1% year-on-year to INR 650.21 billion in FY 2026. The core operating profit increased by 5.1% year-on-year to INR 183.05 billion in this quarter and by 7.7% year-on-year to INR 704.01 billion in FY 2026. The profit after tax grew by 8.5% year-on-year to INR 137.02 billion in this quarter and by 6.2% year-on-year to INR 501.47 billion in financial year 2026.

The consolidated profit after tax grew by 9% year-on-year to INR 147.55 billion in this quarter and by 6.2% year-on-year to INR 542.08 billion in FY 2026. The Board has recommended a dividend of INR 12 per share for FY 2026, subject to requisite approvals. Total deposits grew by 11.4% year-on-year and 8.1% sequentially at March 31, 2026. Average current and savings account deposits grew by 11.3% year-on-year and 2.7% sequentially during this quarter. The bank's average LCR for the quarter was about 126%.

The overall loan portfolio, including the international branches portfolio, grew by 15.8% year-on-year and 6% sequentially at March 31, 2026. The retail loan portfolio grew by 9.5% year-on-year and 4.2% sequentially. Including non-fund-based outstanding, the retail portfolio was 41.7% of the total portfolio. The rural portfolio, including gold loan, grew by 25.6% year-on-year and 18% sequentially. The business banking portfolio grew by 24.4% year-on-year and 7.6% sequentially.

The domestic corporate portfolio grew by 9% year-on-year and 3.1% sequentially. The domestic loan portfolio grew by 15.3% year-on-year and 5.6% sequentially at March 31, 2026. The overseas loan portfolio was 2.7% of the overall loan book at March 31, 2026. The net NPA ratio was 0.33% at March 31, 2026, compared to 0.37% at December 31, '25, and 0.39% at March 31, 2025. The total provisions during the quarter were INR 0.96 billion or 0.5% of core operating profit and 0.03% of average advances.

The provisioning coverage ratio on nonperforming loans was 75.8% at March 31, 2026. In addition, the bank continues to hold contingency provisions of INR 131 billion or about 0.9% of total advances at March 31, 2026. The capital position of the bank continued to be strong with a CET1 ratio of 16.35% and total capital adequacy of 17.18% at March 31, '26, after reckoning the impact of proposed dividend.

Looking ahead, we see many profit opportunities to drive risk-calibrated profitable growth and grow market share across key segments. We remain focused on maintaining a strong balance sheet, prudent provisioning and healthy levels of capital while delivering sustainable and predictable returns to our shareholders.

I now hand the call over to Anindya.

Thank you, Sandeep. I will talk about loan growth, credit quality, P&L details, 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 13.2% year-on-year and 4.7% sequentially. Auto loans grew by 1.7% year-on-year and 1.4% sequentially. The commercial vehicles and equipment portfolio grew by 11.6% year-on-year and 6.4% sequentially.

Personal loans grew by 7.2% year-on-year and 5.2% sequentially. The credit card portfolio declined by 5.6% year-on-year and 1.3% sequentially. Within the corporate portfolio, the total outstanding to NBFCs and HFCs was INR 859.04 billion at March 31, 2026, compared to INR 791.18 billion at December 31, 2025. The total outstanding loans to NBFCs and HFCs were about 4.6% of our advances at March 31, 2026. The builder portfolio, including construction finance, lease rental discounting, term loans and working capital was INR 714.21 billion at March 31, 2026, compared to INR 680.83 billion at December 31, 2025.

The builder loan portfolio was 4.2% of our total loan portfolio. Our portfolio largely comprises well-established builders and this is also reflected in the sequential increase in the portfolio. About 0.9% of the builder portfolio at March 31, 2026, was either rated BB and below internally or was classified as nonperforming.

On credit quality, the gross NPA additions were INR 42.42 billion in the current quarter compared to INR 51.42 billion in Q4 of last year. Recoveries and upgrades from gross NPAs, excluding write-offs and sales were INR 30.68 billion in the current quarter compared to INR 38.17 billion in Q4 of last year. The net additions to gross NPAs were INR 11.74 billion in the current quarter compared to INR 13.25 billion in Q4 of last year.

The gross NPA additions from the retail and rural portfolios were INR 31.45 billion in the current quarter compared to INR 43.39 billion in Q4 of last year. Recoveries and upgrades from the retail and rural portfolios were INR 22.93 billion in the current quarter compared to INR 30.39 billion in Q4 of last year. The net additions to gross NPAs in the retail and rural portfolios were INR 8.52 billion in the current quarter compared to INR 13 billion in Q4 of last year.

The gross NPA additions from the corporate and business banking portfolios were INR 10.97 billion in the current quarter compared to INR 8.03 billion in Q4 of last year. Recoveries and upgrades from the corporate and business banking portfolios were INR 7.75 billion in the current quarter compared to INR 7.78 billion in Q4 of last year. There were net additions to gross NPAs of INR 3.22 billion in the current quarter in the corporate and business banking portfolios compared to INR 0.25 billion in Q4 of last year.

The gross NPAs written off during the quarter was INR 17.68 billion. Further, there was sale of NPAs of INR 1.12 billion for cash in the current quarter. The nonfund outstanding to borrowers classified as nonperforming was INR 21.74 billion as of March 31, 2026, as compared to INR 22.29 billion as of December 31, 2025. The loans and nonfund outstanding to performing corporate borrowers rated BB and below was INR 35.19 billion at March 31, 2026, as compared to INR 33.92 billion at December 31, 2025. This portfolio was about 0.2% of our advances at March 31, 2026.

The total fund-based outstanding to all standard borrowers under resolution as per various guidelines declined to INR 14.96 billion at March 31, 2026, from INR 16.66 billion at December 31, 2025. At the end of March, the total provisions other than specific provisions on fund-based outstanding to borrowers classified as nonperforming were INR 227.1 billion or 1.5% of loans. This includes the contingency provisions of INR 131 billion as well as general provision on standard assets, provisions held for non-fund-based outstanding to borrowers classified as nonperforming, fund and nonfund-based outstanding to standard borrowers under resolution and the BB and below portfolio. The bank also continues to hold additional standard asset provision of INR 12.83 billion made in Q3 as directed by RBI in respect of the agricultural priority sector portfolio.

Moving on to the P&L details. Net interest income increased by 8.4% year-on-year and 4.8% sequentially to INR 229.79 billion in this quarter. The net interest margin was 4.32% in this quarter compared to 4.30% in the previous quarter. The cost of deposits was 4.43% in this quarter compared to 4.55% in the previous quarter. The benefit of interest on tax refund was 5 basis points in the current quarter compared to 1 basis point in the previous quarter. The margins for the quarter reflect the impact of external benchmark-linked loans repricing, repricing of term deposits and seasonally lower interest reversal on the KCC portfolio. The net interest margin in FY 2026 was 4.32%, similar to FY 2025.

Of the total domestic loans, interest rates and about 56% of the loans are linked to the repo rate and other external benchmarks, 13% to MCLR and other older benchmarks and the remaining 31% of loans have fixed interest rates. Noninterest income, excluding treasury, grew by 5.6% year-on-year to INR 74.15 billion in Q4 of fiscal 2026. Fee income increased by 7.5% year-on-year to INR 67.79 billion in this quarter. Fees from retail, rural and business banking customers constituted about 78% of the total fees in this quarter.

Dividend income from subsidiaries was INR 6.31 billion in this quarter compared to INR 6.75 billion in Q4 of last year. On costs, the bank's operating expenses increased by 12% year-on-year in this quarter and 11.5% year-on-year in FY 2026. Employee expenses increased by 8.8% year-on-year and nonemployee expenses increased by 14% year-on-year in this quarter. Our branch count has increased by 126 in Q4 and 528 in FY 2026. We had 7,511 branches as of March 31, 2026.

The sequential increase in operating expenses primarily reflects the impact of market movements resulting in higher provisions for retiral benefits. The technology expenses were about 11% of our operating expenses in FY 2026. The total provisions during the quarter were INR 0.96 billion or 0.5% of core operating profit and 0.03% of average advances compared to the provisions of INR 8.91 billion in Q4 of last year reflecting healthy asset quality and higher recoveries and write-backs.

The credit cost was 38 basis points in FY 2026. Adjusted for the additional standard asset provision in respect of the agricultural priority sector portfolio and the corporate recoveries, the credit cost was under 50 basis points in fiscal 2026.

The profit before tax, excluding treasury grew by 10.1% year-on-year to INR 182.09 billion in Q4 and by 7.1% year-on-year to INR 650.21 billion in FY 2026. There was a treasury loss of INR 1.06 billion in this quarter as compared to a loss of INR 1.57 billion in the previous quarter and a gain of INR 2.99 billion in Q4 of last year, primarily reflecting market movements and including the impact of capping of FX net open positions in the onshore market as per recent RBI guidelines.

The tax expense was INR 44.01 billion in this quarter compared to INR 41.43 billion in the corresponding quarter last year. The profit after tax grew by 8.5% year-on-year to INR 137.02 billion in this quarter. The profit after tax grew by 6.2% year-on-year to INR 501.47 billion in FY 2026. The consolidated profit after tax grew by 9.3% year-on-year to INR 147.55 billion in this quarter. The consolidated profit after tax grew by 6.2% year-on-year to INR 542.08 billion in 2026.

The details of the financial performance of key subsidiaries are covered in Slides 33 to 35 and 54 to 59 in the investor presentation. The annualized premium equivalent of ICICI Life increased to INR 106.41 billion in FY 2026 from INR 104.07 billion in FY 2025. The value of new business increased to INR 26.29 billion in FY 2026 from INR 23.70 billion in FY 2025. The value of new business margin was 24.7% in FY 2026 compared to 22.8% in FY 2025.

The profit after tax of ICICI Life increased to INR 16 billion in FY 2026 from INR 11.89 billion in FY 2025 and INR 6.09 billion in this quarter from INR 3.86 billion in Q4 of last year. The gross direct premium income of ICICI General increased to INR 287.12 billion in FY 2026 from INR 268.33 billion in FY 2025, the combined ratio stood at 103.4% in FY 2026 compared to 102.8% in FY 2025. The profit after tax increased to INR 27.72 billion in FY 2026 from INR 25.08 billion in FY 2025. The profit after tax increased to INR 5.47 billion in this quarter from INR 5.1 billion in Q4 of last year.

The profit after tax of ICICI AMC as per Ind AS increased to INR 7.63 billion in this quarter from INR 6.92 billion in Q4 of last year. The profit after tax of ICICI Securities as per Ind AS on a consolidated basis was INR 4.22 billion in this quarter compared to INR 3.81 billion in Q4 of last year. ICICI Bank Canada had a profit after tax of CAD 4.4 million in this quarter compared to CAD 12.5 million in Q4 of last year, primarily reflecting the impact of reduction in benchmark interest rates and lower business volumes.

ICICI Bank U.K. had a profit after tax of USD 8 million in this quarter compared to USD 6 million in Q4 of last year. As per Ind AS, ICICI Home Finance had a profit after tax of INR 2.49 billion in the current quarter compared to INR 2.41 billion in Q4 of last year.

With this, we conclude our opening remarks, and we will now be happy to take your questions.

[Operator Instructions] We'll take a first question from the line of Jayant Kharote from Axis Capital.

Congratulations on a great set of numbers. First question is on...

Jayant, sorry, can you use your handset mode, please, your audio is not very clear.

Yes. The first question is on the...

I'm sorry, his line is disconnected. We'll move on to the next question from the line of Kunal Shah from Citigroup.

Yes. So the first question is on the growth side. So particularly on retail, we had seen the good uptick out there, particularly when we look at the mortgages, it's been up like almost 4.7-odd percent, and we had seen the uptick even on the PL as well as the commercial vehicle side. So on mortgages, is it like the competition is coming off, spreads are getting attractive? Otherwise, we have always focused on ROA. So what is actually driving this growth on the mortgages side, in particular quarter-on-quarter?

And the second question is on deposits. Deposits strength seems to be slightly slower compared to then of the loan growth and we have losing the market share. Maybe a couple of years back, we have gained quite a bit of market share on CASA and all. But I think now the overall deposit growth is lower in the system, so what will be our stance on the overall deposit growth getting into the next year?

So first on the growth in mortgages, I think as we may have discussed in the past, we -- maybe if we look back 2 to 3 quarters ago, we were probably holding back a little because of both the benchmark risk and the spreads over the benchmark. I think as the benchmark has settled, it has given us the space to grow that portfolio and that is what you have seen over the last 2 quarters and more particularly in this quarter.

And we continue to -- it is, of course, a competitive market, but we are within that trying to operate and price appropriately across the spectrum, also focusing very much on the entire customer 360 aspect, which we do in all our businesses.

On the deposit side, I think while the -- it looks like a loan growth of 15% and a deposit growth of 11%, on an average basis, they are pretty closely matched. I mean average deposit growth would also be very similar to the period-end deposit growth while average loan growth would be closer to the average deposit growth. So if you look at it from an LCR perspective also, we are continuing to be very comfortable at about 125% average for the quarter. So we are quite comfortable on the deposit side and CASA ratios are also holding up well. So that should support a healthy level of loan growth.

Sorry, so you mentioned average, so average deposit growth is almost 10.8%, okay? So you mean to say that [indiscernible] the average loan growth...

The gap would not be like 11% to 15% gap, it will be a lower gap and that much is fine. And on overall liquidity and LCR basis, we are pretty comfortable. So deposit growth is not something that will constrain us from pursuing loan growth. Deposit growth -- the deposit flows are more than adequate and healthy.

Sure. And lastly, in terms of the provisioning. So when we look at the overall provisioning quite low during the quarter. So were there any write-backs which have happened or release which have been there during the quarter? Maybe the overall recoveries still seems to be pretty much in line with the last quarter. But was there any provisioning release in any of the line items?

So I think a couple of things on the provisioning side. One, if you look at even on a year-on-year basis on the retail side, the net additions are lower and in particular, over the last few quarters, the additions to NPLs on the unsecured side, which get provided pretty aggressively, have been coming down. So that has brought down the provisioning requirements even on the retail side, plus I would say we had a somewhat higher level of recoveries and write-backs on the corporate portfolio, including recoveries from written-off accounts, which has resulted in the provisioning for this quarter being at a pretty low level.

Overall, for the year, as we said on the call, we were at 38 basis points. And if we kind of adjust out the onetime KCC provision and also the corporate recoveries, we would be below 50 basis points. So the underlying credit cost remains pretty stable.

Okay. So maybe for Q4, nothing in particular, maybe you're still alluding to full year. But Q4, because if I look at recoveries in corporate and business banking, it seems to be almost similar at INR 750 crores, INR 775-odd crores. So nothing appears to be there in terms of higher recoveries in Q4 in corporate.

So that's the recovery from the gross NPLs. As I said, we would have also a recovery from the written-off accounts that gets netted off in the provision line item, that would have been on the somewhat higher side in this quarter.

Next question is from the line of Nitin Aggarwal from Motilal Oswal.

Congrats on strong performance, once again. The first question, Anindya, is on the fee income growth. How do you look at this over the coming year? What steps are we taking to drive better traction on this line?

I guess if we look at the broad areas of fee income that we focus on, I think on the transaction banking in which I would include both all the trade aspects as well as ForEx and derivatives and on the deposit account linked fees, deposit DEMAT, et cetera, I think we are doing reasonably well. On the cards and payment side, this year has been a little slow. We have not grown as much there in terms of fees, and that would be one area for us to focus on. I think more recently, as the loan growth has picked up, the lending-linked fees have also picked up, and we will hopefully see that momentum sustain going forward, but this is something we'll have to keep calibrating.

Okay. And can you also give some color as to what has been the impact from RBI's recent foreign currency control regulations that they came up with in respect to the net open position and the NDF regulations as to how much has been the impact on the other income and any losses that we have incurred because of that this quarter?

So we have a net treasury loss of INR 1.06 billion, that includes -- that's after taking into account the impact of the mark-to-market as of March 31 on the net -- the swaps -- the forwards. So that's factored into those numbers.

Okay. Okay, sure. And the last question is around the growth. We have seen a very strong pickup in the system numbers, even ICICI Bank in the last 2 quarters have picked up very well on the growth front. How do you look at this momentum going into FY '27? Is this like something that you will think that will pick steam further or is it kind of -- has already reached the high point?

I mean, overall, the growth will broad base from here further in respect to unsecured loans and some of the other segments which are not contributing, like mortgages started to pick up now or you think that 16-odd percent growth where we are right now is like the -- already on the upper end that we are looking at?

I won't -- we wouldn't get into giving a growth number. I think that post all the measures that were taken at a policy level through last year and from our own side, I think with some other factors like the interest rates stabilizing, benchmark stabilizing, growth has picked up. And the economy -- general outlook on the economy has been quite positive. Of course, more recently, since March, the conflict in West Asia has clouded the outlook in the sense that it has created some amount of uncertainty. But from our side, I think we believe we have a strong franchise, very healthy capital levels and strong funding and liquidity. So we would want to leverage that to grow the business within our parameters of risk acceptance.

Right. And sorry, if I can squeeze one more. And especially on the credit cost line, wherein I think everybody has been waiting for some normalization, some uptick in credit costs in the banking system and yet you've reported a sharp improvement here again. While our guidance remains below 50 basis points, but in terms of your own confidence and assessment, do you feel more confident now versus how things were in the prior years because our guidance in general has been sub-50 over the years? So how do you see like -- and compare this now versus what you have guided in the past?

So I would think if you look at the different segments of the business, I think the corporate sector is pretty strong, and they are well funded with healthy balance sheets and significant resilience, I would say. And on the retail side, I think banks, including us, have been reasonably sensible about credit selection and the customers have also held up well. We had maybe 1 year -- 1.5 year, 2 years ago, some increase in delinquencies on the personal loan side. But with regulatory action and with the steps taken by banks that also was fairly quickly contained.

So that is showing up in these very healthy credit numbers. And while there are these externalities to be monitored, we don't, at the moment, see any cause for concern as such. The other portfolio, which is reasonably large now and has grown rapidly over the last few years, is the whole business banking portfolio. And again, one would have to monitor any potential impact of the external events on that. But I would say that, that is a portfolio at least to the extent that we have a track record, has been tested through COVID, the energy dislocation of 2022 and then the whole tariff issue and has held up reasonably well. So that gives us some degree of confidence, but we will monitor it as we go along.

Next question is from Mahrukh Adajania from [ Tara Capital ].

Congratulations. I had a couple of questions. Firstly, after this war, would you have tightened any credit parameter or any credit rule going into FY '27 or it's business as usual or growth as usual across segments, even small segments? So that's my first question.

Secondly, if you see your yield on advances, what you reported in the presentation, that's been coming off over the last 2 quarters. Of course, there have been the impact of rate cuts as well. But can we say that yields have now bottomed because your cost of funds has also come down materially? So -- and I believe most of the repricing is done there. So in terms of yield, is this now close to the bottom? That's my second question.

So on the first question side, of course, we have looked at and continue to look at regularly all the potential sectoral impact as well as the impact at a client level. I would not say that we have specifically tightened anything or are excluding any segment, but we have our understanding of which are the segments that are potentially need -- require closer monitoring, and we are doing that, and we will calibrate our actions as we go along. Overall, I think, as I said, we are continuing to focus on growing the business.

On the yield, I think we have, of course, this quarter seen the impact of the December repo cut, and we'll just have to, as we go along, look at how incremental pricing, et cetera, play out in the market, and we'll have some amount of deposit repricing also. So I guess, at a margin level, we continue to look at sort of range-bound margins, unlikely to move up, but should be broadly in this range is what we would think.

Got it. And I just have one last question. You explained the decline in credit cost. Was it more driven by unsecured slippage coming down or more by corporate slippage this quarter, I mean, more by corporate recoveries?

No. So this quarter, of course, we saw a higher level of recoveries and write-backs on the corporate portfolio, including recoveries from written-off accounts. But in general, the retail credit costs, as you can see from the retail net additions itself, have been coming down, so the retail credit costs have also been coming down. And within that, the unsecured has been moderating. So secured was anyway pretty stable. So that is having a beneficial impact on the provisions.

Next question is from the line of Seshadri Sen from Emkay Global.

I have a couple of questions. One is, for the second successive quarter, your credit card book is contracting. Is that just the nature of the business, seasonal, or are you taking any interventions in terms of trying to boost profitability? And overall, if you could comment on how the profitability of the credit card business is trending because revolver rates are coming down, cost of acquisitions seems to be moving up a little bit?

So I think in Q3, the decline we saw was really seasonal because there was a sharp buildup of the book towards the end of Q2 due to the festive season spend, which ran off in Q3. The small decline from -- in the fourth quarter, I would say we can't really say that it is seasonal, it is really a function of spends and revolvers. From our perspective, I think we are focused on growing the business and growing it with the right set of customers in a profitable way.

And we have been seeing reasonably steady new customer acquisition. I think the level of revolvers, et cetera, has been an issue for the industry, so that is something that we'll have to deal with. But we would hope to see better numbers in terms of growth. And as I mentioned when prior -- one of the analysts earlier asked about fees, on the fees as well.

Profitability, I think, yes, I mean, at a very high level, if you look at over the last few years, the decline in the level of revolvers has impacted profitability, but it still remains a very profitable business, and it is a business with many levers of profitability, including the kind of -- on the cost side, reward side, et cetera. So I think those -- we keep tweaking those as well. So overall, I think it's a business one would continue to have a very strong focus on.

And my second question is on the corporate loan outlook. Both tactically in the short term while the energy crisis and the war is on and also from a slightly medium perspective, what are your growth aspirations? What are the key drivers? Are there any particular segments that you're looking at?

So I think we are very focused on the counterparty and in terms of the quality and the overall business opportunity. I think our funnels are open, and we are in a constant dialogue with the clients. And wherever there is a level at which -- where it makes sense, both for the client and the bank, the business happens. Over the last 2 quarters, we have seen a reasonably good accretion to the corporate book, and we continue to see opportunities going ahead. And I think with the better-rated clients, we will look through any short-term issues arising out of this crisis and see what -- how we can work with them over the longer term.

We'll take our next question from the line of Rikin Shah from IIFL Capital.

A few questions. First one is on OpEx. So the OpEx growth about at 11.5%, 12% this year has been higher than the peers, perhaps due to the increase in the average remuneration for the employees. So how should we think about it going into next year, especially when your volume growth is also picking up? So does this further rise in terms of the overall OpEx growth or there are certain levers to bring that down? So that's one.

Second, Anindya, could you comment on the government SAA balances where we were seeing some outflows, have the trends stabilized and should we start seeing some growth even in the institutional SAA going ahead? So those are my two questions.

So as far as the OpEx is concerned, I think if we look at this year, more or less, it has been in line with our expectations. I think couple of areas where the costs have been somewhat higher than what we would have expect -- would have started out with. One is on the priority sector compliance and the second is, to some extent, on the remuneration because of the labor code and a couple of other -- like the market movement impact that we saw in March.

And the final numbers on business growth are a little ahead of OpEx growth, and we hope that, that will be sustained over the next year. So definitely, we would want to have OpEx growth at a level which is below the top line growth. That would be our objective.

Got it. And the government SAA balances?

Yes, government SAA balances. So as we had said last time, those are in the low-teens as a proportion of the balances. I think this quarter, it's been -- maybe the level of rundown has been somewhat lower. But really, that's something that we will have to just bake into our plans and really focus on growing the money in bank, as we call it, from the other set of customers. While, of course, this is something that will come and go as it comes and goes.

Got it. And if I can just squeeze in 1 last question. Could you comment on how much residual deposit repricing is remaining in your case?

Don't really give a number of that [ time ], but I guess maybe till the last summer, our peak rates were more in the 1 year kind of level. So that's kind of the repricing horizon.

Next question is from Param Subramanian from Investec.

Firstly, on rural loans, so there is a sharp uptick in this quarter, so what is driving that, 18% quarter-on-quarter?

So part of it is due to, I think, over the last couple of quarters, higher demand for gold loans and we have also geared up our machinery. I mean, some of it is not strictly rural, although we club it in that segment, it could be from a broader range of branches, but that would be one of the drivers in addition to other elements of the portfolio.

Okay. Got it. And where are we in terms of -- so the issue that came up in the last quarter on the priority sector related provisioning. So we have been talking about, say, recoveries of those provisions gradually over the next year. So any update you want to give on that?

So as we said earlier, as of March, we continue to hold those provisions. We're in the process of working through that portfolio, as we said, to try and bring it into conformity with the requirements of the agri lending classification. And maybe we will have an update on that a quarter-or-so from now.

Okay. And Anindya, broadly, where are we in terms of, say, our PSL compliance, say, on SMFs, et cetera, since we are at the end of the year?

So it's pretty much I think the same picture. I mean, we would have some -- we would be compliant. Overall, we will have some shortfall on the small agri side. So that's pretty much the same picture.

Next question is from the line of Piran Engineer from CLSA.

Congrats on the quarter. Firstly, just a clarification on [indiscernible] the government deposits being in low-teens, it's low-teen share of total deposits or low-teen share of SAA?

SAA. Government SAA is a low-teen share of SAA.

Correct. Okay. So I got the answer to the first question. On the second question, just wanted to understand on home loans. Firstly, is there also an element of lower prepayment rate driving the pickup in home loan growth for this quarter? Or is it just a question that now repo rate cuts have ended, as you said, and now you all are pushing growth?

So I would say it's more a pickup in disbursements.

Okay. Like-for-like, Anindya, let's say, [Technical Difficulty].

Piran, sorry, we lost you, again.

Yes. So just pre-repo cut cycle to today, how much [Technical Difficulty] incremental disbursements, of course.

I think we are not able to hear you, Piran. Maybe we can just take this offline, yes?

Yes. Sure.

We'll take our next question from the line of Chintan from Autonomous Research.

How do we see the growth outlook for the coming few quarters? We're talking about nice growth in the system in this quarter. But clearly, it's too early to incorporate the supply shock into expectations. So as you look forward, as you look into your books, as you see how corporates are getting impacted by this, how do you think both your book and system loan growth will develop over the next few quarters?

No, it's very difficult to answer that question because the outlook on the underlying [Technical Difficulty].

I'm sorry, sir, you're not audible. Ladies and gentlemen, please stay connected, we've lost the management line. Ladies and gentlemen, we have the management team back online. Chintan?

Yes, I'm still here. I think Anindya was answering my question. I'll let him finish.

Yes. I don't know where we -- where you lost us.

Pretty much from the start.

Yes. Okay. Essentially, it's very difficult to make a prediction at the current time because this is an evolving situation. But as we said, we believe the system is going into it with a reasonable degree of resilience. So we will wait and see how the demand conditions pan out. I think as far as we are concerned, we see that we have strong levels of capital liquidity, funding and a large franchise. And we would continue to try to use that to grow the business. Of course, we'll have to keep calibrating the risk acceptance levels as we go along.

But are you seeing anything in your corporate or business banking book that looks like production is falling, slowing down, working capital limits are not getting utilized? Is there any kind of -- are you seeing any stress in your early indicators?

It's too early to make any call or generalization of that kind.

Okay. And then a quick follow-up on your cost of deposit point. I think you said that there should be some more residual repricing left, but you also said that kind of take the duration as 1 year, which is a slightly contradictory. So which is it? Is there kind of more to go on cost of deposit in terms of residual repricing?

So I guess, if you look at where the deposit rates were a little more than a year ago, they are at somewhat lower levels. And in the last rate cut cycle happened in June, and then we did -- there was some further cut, small cut in December. So as I said, overall, on the margin side, we don't -- we expect it to be range bound from here on.

Okay. And finally, on cost-to-income ratio. This year, OpEx growth has led top line growth. Could we say we are committed to delivering positive Jaws next year?

We don't -- we really look at the PPOP and the PBT post credit costs. So it's not that we are looking at managing or targeting a particular cost-to-income metric. So obviously, our objective would be to grow revenues ahead of costs. But -- so we will see how it evolves. That's certainly the way in which we would like to drive the bank.

Ladies and gentlemen, we'll take that as the last question for today. I would now like to hand the conference back to management for closing comments. Over to you, sir.

Thank you very much, and we'll be available to take questions if there are any follow-ups. Thank you.

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

Ladies and gentlemen, good day, and welcome to ICICI Bank Limited Q3 FY 2026 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Sandeep Bakhshi, Managing Director and Chief Executive Officer of ICICI Bank. Thank you, and over to you, sir.

Thank you. Good evening to all of you, and welcome to the ICICI Bank earnings call to discuss the results for Q3 of FY 2026. 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 the framework of our values to strengthen our franchise. Maintaining high standards of governance, deepening coverage and enhancing delivery capabilities with a focus on simplicity and operational resilience are key drivers for our risk-calibrated profitable growth.

The core operating profit increased by 6% year-on-year and 2.5% quarter-on-quarter to INR 175.13 billion in this quarter. The total provisions during the quarter were INR 25.56 billion. This includes additional standard asset provision of INR 12.83 billion made pursuant to Reserve Bank of India's annual supervisory review, which Anindya will explain later on the call.

The profit before tax, excluding treasury, was INR 149.57 billion in this quarter compared to INR 152.89 billion in Q3 of last year. The profit after tax was INR 113.18 billion in this quarter compared to INR 117.92 billion in Q3 of last year. Average deposits grew by 8.7% year-on-year and 1.8% sequentially, and average current and savings account deposits grew by 8.9% year-on-year and 1.5% sequentially in this quarter.

The bank continued to see healthy growth in current account deposits and individual term and savings deposits. Total deposits grew by 9.2% year-on-year and 2.9% sequentially at December 31, 2025. The bank's average LCR for the quarter was about 126%. The domestic loan portfolio grew by 11.5% year-on-year and 4% sequentially at December 31, 2025, compared to 10.6% and 3.3% at September 30, 2025. The retail loan portfolio grew by 7.2% year-on-year and 1.9% sequentially. Including non-fund-based outstanding, the retail portfolio was 42.2% of the total portfolio.

The rural portfolio grew by 4.9% year-on-year and 7.2% sequentially. The business banking portfolio grew by 22.8% year-on-year and 4.7% sequentially. The domestic corporate portfolio grew by 5.6% year-on-year and 6.5% sequentially. The overall loan portfolio, including the international branches portfolio, grew by 11.5% year-on-year and 4.1% sequentially at December 31, 2025. The overseas loan portfolio was 2.4% of the overall loan book at December 31, 2025. The net NPA ratio was 0.37% at December 31, 2025, compared to 0.39% at September 30, 2025, and 0.42% at December 31, 2024.

During the quarter, there were net additions of INR 20.74 billion to gross NPAs, excluding write-offs and sales. The provisioning coverage ratio on nonperforming loans was 75.4% at December 31, 2025. In addition, the bank continues to hold contingency provisions of INR 131 billion or about 0.9% of total advances at December 31, 2025. The capital position of the bank continued to be strong with a CET1 ratio of 16.46% and total capital adequacy ratio of 17.34% at December 31, 2025, including profits for 9 months 2026. Looking ahead, we see many opportunities to drive risk-calibrated profitable growth and grow market shares across key segments. We remain focused on maintaining a strong balance sheet, prudent provisioning and healthy levels of capital while delivering sustainable and predictable returns to our shareholders.

I now hand the call over to Anindya.

Thank you, Sandeep. Let me first talk about the additional standard asset provision. Following its annual supervisory review, RBI has directed the bank to make a standard asset provision of INR 12.83 billion in respect of a portfolio of agricultural priority sector credit facilities, wherein the terms of the facilities were found to be not fully compliant with the regulatory requirements for classification as agricultural priority sector lending. There is no change in asset classification or in the terms and conditions applicable to the borrowers or in the repayment behavior of borrowers as per these terms. The bank has been originating this portfolio over some years, and we will work to bring it in conformity with regulatory expectations. This additional standard asset provision will continue until the loans are repaid or renewed in conformity with the PSL classification guidelines.

I will now talk about loan growth, credit quality, P&L details 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 11.1% year-on-year and 3.2% sequentially. Auto loans grew by 0.7% year-on-year and 0.9% sequentially. The commercial vehicles and equipment portfolio grew by 7.9% year-on-year and 3.2% sequentially. Personal loans grew by 2.4% year-on-year and 1.7% sequentially. The credit card portfolio declined by 3.5% year-on-year and 6.7% sequentially. During the quarter, we saw improved growth trends across the mortgage, rural and corporate portfolios. The sequential decline in the credit card portfolio was due to high festive spends towards the end of the previous quarter, which had resulted in high sequential book growth in that quarter and saw repayments in the current quarter.

Within the corporate portfolio, the total outstanding to NBFCs and HFCs was INR 791.18 billion at December 31, 2025, compared to INR 794.33 billion at September 30, 2025. The total outstanding loans to NBFCs and HFCs were about 4.3% of our advances at December 31, 2025. The builder portfolio, including construction finance, lease rental discounting, term loans and working capital was INR 680.83 billion at December 31, 2025, compared to INR 635.83 billion at September 30, 2025. The builder loan portfolio was 4.3% 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 1.1% of the builder portfolio at December 31, 2025, was either rated BB and below internally or was classified as nonperforming.

Moving on to credit quality. The gross NPA additions were INR 53.56 billion in the current quarter compared to INR 60.85 billion in Q3 of last year. Recoveries and upgrades from gross NPAs, excluding write-offs and sale, were INR 32.82 billion in the current quarter compared to INR 33.92 billion in Q3 of last year. The net additions to gross NPAs were INR 20.74 billion in the current quarter compared to INR 26.93 billion in Q3 of last year. The gross NPA additions from the retail and rural portfolios were INR 42.77 billion in the current quarter compared to INR 53.04 billion in Q3 of last year. There were gross NPA additions of about INR 7.36 billion from the Kisan credit card portfolio in the current quarter compared to INR 7.14 billion in Q3 of last year. We typically see higher NPA additions from the Kisan credit card portfolio in the first and third quarter of a fiscal year.

Recoveries and upgrades from the retail and rural portfolios were INR 25.39 billion in the current quarter compared to INR 27.86 billion in Q3 of last year. The net additions to gross NPAs in the retail and rural portfolios were INR 17.38 billion in the current quarter compared to INR 25.18 billion in Q3 of last year. The gross NPA additions from the corporate and business banking portfolios were INR 10.79 billion in the current quarter compared to INR 7.81 billion in Q3 of last year. Recoveries and upgrades from the corporate and business banking portfolios were INR 7.43 billion in the current quarter compared to INR 6.06 billion in Q3 of last year. There were net additions to gross NPAs of INR 3.36 billion in the current quarter in the corporate and business banking portfolios compared to INR 1.75 billion in Q3 of last year. The gross NPAs written off during the quarter were INR 20.46 billion. Further, there was sale of NPAs of INR 1.2 billion for cash in the current quarter.

The non-fund-based outstanding to borrowers classified as nonperforming was INR 22.29 billion as of December 31, 2025. The loans and non-fund-based outstanding to performing corporate borrowers rated BB and below was INR 33.92 billion at December 31, 2025. This portfolio was about 0.2% of our advances at December 31, 2025. The total fund-based outstanding to all standard borrowers under resolution as per various guidelines was INR 16.66 billion or about 0.1% of the total loan portfolio at December 31, 2025.

At the end of December, the total provisions other than specific provisions on fund-based outstanding to borrowers classified as nonperforming were INR 226.57 billion or 1.5% of loans. This includes the contingency provisions of INR 131 billion as well as general provision on standard assets, provisions held for non-fund-based outstanding to borrowers classified as nonperforming, fund and non-fund-based outstanding to standard borrowers under resolution and the BB and below portfolio. These provisions do not include the additional standard asset provision as directed by RBI in respect of a portfolio of agricultural priority sector credit facilities.

Moving on to the P&L details. Net interest income increased by 7.7% year-on-year and 1.9% sequentially to INR 219.32 billion in this quarter. The net interest margin was 4.3% in this quarter compared to 4.3% in the previous quarter and 4.25% in Q3 of last year. The cost of deposits was 4.55% in this quarter compared to 4.64% in the previous quarter and 4.91% in Q3 of last year. The benefit of interest on tax refund was 1 basis point in the current quarter compared to nil in the previous quarter and 1 basis point in Q3 of last year. Of the total domestic loans, interest rates on about 56% of the loans are linked to the repo rate and other external benchmarks, 13% to MCLR and other older benchmarks, and the remaining 31% of loans have fixed interest rates.

Noninterest income, excluding treasury, grew by 12.4% year-on-year and 2.3% sequentially to INR 75.25 billion in Q3 of FY 2026. Fee income increased by 6.3% year-on-year and 1.2% sequentially to INR 65.72 billion in this quarter. Fees from retail, rural and business banking customers constituted about 78% of the total fees in this quarter.

Dividend income from subsidiaries was INR 6.81 billion in this quarter compared to INR 8.1 billion in the previous quarter and INR 5.09 billion in Q3 of last year. The year-on-year increase in dividend income was primarily due to the receipt of interim dividend from ICICI Securities.

On costs, the bank's operating expenses increased by 13.2% year-on-year and 1.2% sequentially in this quarter. Employee expenses increased by 12.5% year-on-year and 1.8% sequentially in this quarter, including the impact of INR 1.45 billion of provisions on an estimated basis pursuant to the new labor code. Non-employee expenses increased by 13.6% year-on-year and 0.8% sequentially in this quarter. Our branch count has increased by 402 in 9 months of the current year. We had 7,385 branches as of December 31, 2025. The technology expenses were about 11% of our operating expenses in 9 months of the current year.

The total provisions during the quarter were INR 25.56 billion. Excluding the additional standard asset provision, the total provisions were INR 12.73 billion or 7.3% of core operating profit and 0.36% of average advances compared to the provisions of INR 12.27 billion in Q3 of last year. The profit before tax, excluding treasury, was INR 149.57 billion in this quarter compared to INR 152.89 billion in Q3 of last year. There was a treasury loss of INR 1.57 billion in Q3 of the current year as compared to a gain of INR 2.2 billion in Q2 of the current year and gain of INR 3.71 billion in Q3 of the previous year, primarily reflecting market movements.

The tax expense was INR 34.82 billion in this quarter compared to INR 38.68 billion in the corresponding quarter last year. The profit after tax was INR 113.18 billion in this quarter compared to INR 117.92 billion in Q3 of last year. Adjusting for additional standard asset provisioning, the profit before tax, excluding treasury, would have increased by 6.2% year-on-year to INR 162.40 billion. And similarly, profit after tax would have increased by 4.1% year-on-year to INR 122.80 billion in this quarter. The return on average assets and stand-alone ROE would have been 2.3% and 15.5%, respectively, in this quarter. The consolidated profit after tax was INR 125.38 billion in this quarter compared to INR 128.83 billion in Q3 of last year.

The details of the financial performance of key subsidiaries are covered in Slides 33 to 36 and 55 to 60 in the investor presentation. The annualized premium equivalent of ICICI Life was INR 68.11 billion in the 9 months ended December 31, 2025, as compared to INR 69.05 billion in 9 months of last year. The value of new business increased to INR 16.64 billion in 9 months ended December 31, 2025, from INR 15.75 billion in 9 months of last year. The value of new business margin was 24.4% in 9 months ended December 31, 2025, compared to 22.8% in FY 2025 and in the 9 months of last year. The profit after tax of ICICI Life was INR 9.92 billion in the 9 months ended December 31, 2025, compared to INR 8.03 billion in 9 months...

[Technical Difficulty]

[Operator Instructions]. Ladies and gentlemen, we have the management team back. Sir, please go ahead.

I'll just repeat, gross direct premium income of ICICI General increased to INR 70.41 billion in this quarter from INR 62.14 billion in Q3 of last year. The combined ratio stood at 104.5% in this quarter compared to 102.7% in Q3 of last year. The profit after tax was INR 6.59 billion in this quarter compared to INR 7.24 billion in Q3 of last year. The profit after tax of ICICI AMC as per Ind AS was INR 9.17 billion in this quarter compared to INR 6.32 billion in Q3 of last year. The profit after tax of ICICI Securities as per Ind AS on a consolidated basis was INR 4.75 billion in this quarter compared to INR 5.04 billion in Q3 of last year.

ICICI Bank Canada had a profit after tax of CAD 5.4 million in this quarter compared to CAD 19.6 million in Q3 of last year. ICICI Bank U.K. had a profit after tax of USD 5 million in this quarter compared to USD 5.1 million in Q3 of last year. As per Ind AS, ICICI Home Finance had a profit after tax of INR 1.95 billion in the current quarter compared to INR 2.03 billion in Q3 of last year.

With this, we conclude our opening remarks, and we will now be happy to take your questions.

[Operator Instructions] We'll take our first question from the line of Mahrukh Adajania from Nuvama.

My first question is on the standard asset provision. So what is the size of the portfolio on which these provisions were to be made? And what will be the impact on OpEx now that you have that much lower priority portfolio? Also, what was the classification issue as in, I mean, what was noncompliant about the classification? So that's my first question.

And my second question is on margins. So obviously, margins have held steady. There is a rate cut and there's, again, aggressive competition in mortgage pricing. So how do you view your margins from here on? Is there some amount of deposit repricing still left, which will help hold up margins at these levels in the near future. So those are my questions.

Yes. So coming to the first set of questions, I think as we have said, following the supervisory review, the regulator has directed us to make this provision of INR 12.83 billion, and that is what has been communicated, and we have made it. The underlying portfolio that we need to work out and resolve in terms of ensuring conformity with the PSL guidelines would be between INR 200 billion to INR 250 billion or so.

And as far as the cost aspect is concerned, I think what we will be working on is to bring this portfolio into conformity with the regulatory expectations and thereby minimize both the provisioning and the PSL impact. On the underlying issues, I think those are really observations made by the regulator as part of its inspection process. So we wouldn't want to go into those details, but the outcomes are what we have reported.

Coming to your next question on margins. I think, as you rightly said, if we look at the current quarter, Q3, which has gone by, we did have the impact of repricing of loans, both on account of repo and MCLR. And we also had the seasonally higher nonaccrual impact on the KCC NPAs. This was offset by some amount of deposit repricing and also the benefit of the CRR cut. If we look ahead into Q4, I think that level of nonaccrual will not be there. We will see the impact of the repo repricing as well as MCLR on the floating rate loan book, the repo cut which happened in December in particular. But at the same time, we should continue to see some amount of repricing of the retail deposits. So overall, I think we would stay with our view that the NIM should be range bound from here on.

We'll take our next question from the line of Rikin Shah from IIFL Capital.

I had 3 questions. So the first one is on, I just wanted to understand, was there any additional PSL cost due to the reclassification of the agri loans as non-PSL? Was there any cost in the P&L this quarter or any potential cost in OpEx in the quarters to come? So that's first.

The second one is on the growth. So just wanted to get a sense of are you seeing any momentum of growth improving, i.e., even on a month-on-month basis during 3Q? And would you expect now the growth to improve from the current levels within the constraints of your quality and risk framework?

And the third one specifically on the credit card. So what is weighing on the overall credit card book growth? Is it merely a decline in the share of transactor loans following the festive pickup in, 2Q or there is more to read into it? Those are my questions.

So first, I think in general, the cost of PSL compliance has been going up. We do meet a part of our PSL obligations by buying the priority sector lending certificates, and the cost of those has steadily gone up over the last few quarters. So part of the increase, for example, or the level of operating expenses over the last couple of quarters has been due to that. But I would say that's not been done specifically in the context of this regulatory observation. That's something we keep looking at on a totality basis and analyzing what is the most efficient thing to do in terms of meeting the priority sector lending requirements.

As far as this particular observation is concerned, as I said, we would be working to kind of bring this portfolio into conformity with the regulatory expectations and thereby minimize the impact. And so I would not want to call out any additional cost, et cetera, at this juncture. I mean, we'll assess it in totality and see where we go, and try to absorb it in the P&L. So that was the first one.

I think your second question was on growth. So I think clearly, we have seen a pickup in the -- if you look at the sequential growth rate in the fourth quarter vis-a-vis the third quarter, despite the rundown in cards, which I'll come to separately, certainly, there has been a pickup in momentum. And we see that momentum sustaining into the fourth quarter as well. And I think even the year-on-year growth rate, which is impacted by the trailing 4 quarters, has picked up in the current quarter, reflecting more recent trends. And I would expect that to continue into Q4 as well.

On the credit card specifically, I think we had a very strong book growth sequentially in Q2 because of the last week kind of festive spend, which were billed and repaid in the current quarter. So that is the main reason for the movement in the current quarter. I mean, we feel that the book should grow from here on.

I think in both credit cards and PL, one thing, as we have been saying that the quality of credit has certainly improved. So if you look at our aggregate retail NPLs excluding the KCC have come down in terms of NPL formation. And we are pretty comfortable with the quality now across secured and unsecured.

In personal loans also, a very small uptick, but there has been an uptick in Q3 on the year-on-year growth and the sequential growth. So I think we are quite positive on what we are underwriting. And I think it's a question of growing -- leveraging our franchise to grow these businesses. Of course, there is price competition across the board, but that's something we will have to keep optimizing and managing.

Right. Sir, just a clarification on the first one. While you are not calling out any additional OpEx-related costs due to this regulatory observation, there would be this INR 200 billion, INR 250 billion of the loans which are now reclassified as PSL. So to meet that shortfall, would you be requiring to do more of RIDF bonds or PSLC? Or do you think that the organic PSL generation itself will take care of the shortfall and hence, no additional cost impact?

So I think the first step is that we will work to bring this portfolio into conformity with the PSL requirements. And that is how we will minimize the shortfall and the impact thereof. That would be the first objective. Thereafter, we will assess overall, as we do in any case on an ongoing basis, that to the extent after organic and inorganic generation of priority sector loans, whether we should buy PSLCs or we can live with some amount of RIDF call. That is an analysis that we anyway do on an ongoing basis. And over the years, I think we have improved our PSL compliance. So our RIDF book outstanding currently, on a relatively larger balance sheet, is down, I think, to 1/3 of its peak levels.

Got it, sir. Congratulations, Mr. Bakhshi for the reappointment.

Thank you.

Next question is from the line of Kunal Shah from Citigroup.

Yes. So a couple of questions. Sorry, again, to harp up on the credit card side. But even now when we look at the portfolio, it is almost at a similar level to where we were in June, okay? In fact, like hardly any growth out there over and above June. And this kind of a trend we had not seen in the earlier years during the festive, wherein it tends to run down. So any particular cohort or maybe like the transactor proportion significantly going up which is leading to this?

No, I think that the transactor portion has gone up across most players, I would think. In our case, there's nothing specific other than the fact that we had an unusually strong growth in Q2, and that has gotten offset in Q3. We continue to...

So how should we compare it with first quarter or maybe Q4 end? Because since Q4 end also, there is a decline in the portfolio. And even from first quarter, it has just been flat over 2 quarters despite the spends going up, yes.

See, as we have said in the past, we are not looking at credit card just as a product portfolio in itself, but really as part of an overall customer offering, and most of our new launches are aimed at enriching the offering to attract good customers and really be able to bank them on a 360 basis. But as I said, I think in this quarter, the book decline is more one-off, and we should see it gradually improve from here on.

Sure. And secondly, on the corporate side, so significant traction on a quarter-on-quarter basis. And within the risk framework or maybe on a risk calibrated operating profit level, earlier it was thought that maybe PSU entities would not be giving us that kind of a benefit or operating profit. And we are seeing the increase in the BBB proportion as well. No doubt you have earlier alluded that, that's because of the business banking. But is the larger part of the growth on the corporate also coming in that segment of BBB, or not really?

No. So I think that, overall, if we look at our approach to the corporate sector -- to the corporate loan growth, one, corporates are well-funded and have multiple sources of funding. To the extent that they are accessing bank funding, we are very happy to participate. It has been very price competitive. So we do look at what is the overall relationship with the corporate. And wherever we have a franchise and we want to build a franchise, we do participate quite actively.

I think one of the things that has changed maybe relative to the past couple of quarters is kind of the settling of the benchmark, because a lot of the lending is happening at external benchmark linked rates. So the settling of the benchmark kind of gives us more confidence to price and lend.

From a credit quality perspective, I think we are quite comfortable with these rating grades. And we have our own limits on BBB, for example, origination, both in terms of aggregate and in terms of borrower size, and we are within those frameworks. So we are quite comfortable with the quality.

Sure. And lastly, on overall OpEx growth now getting closer to like, say, 13-odd percent, we had seen OpEx growth being contained almost in a single digit. So you indicated some cost of compliance being there, but is there any other element? And would we see cost almost settling in a similar level, or there are maybe cost containment levers which are available and it should grow below the balance sheet growth?

We will see whatever is necessary to maximize kind of the overall PPOP. I don't expect costs to go up at the pace at which they had gone up maybe till a couple of quarters ago. If you would see sequentially this quarter, other than the impact of the labor code, costs would have actually come down marginally on an absolute basis. So I think we will work towards maximizing the PPOP and not really cutting cost per se, but definitely leveraging it as well as we can. Of course, one thing is that as far as the labor code is concerned, what we have accounted for is really the additional estimates of liability as they stand today. On an ongoing basis, for all companies and banks, the code will marginally increase the recurring operating costs, but that's something we'll have to just absorb as we go forward.

Okay. Got it. Congratulations, Bakhshi sir, for the reappointment.

Thank you.

Next question is from Nitin Aggarwal from Motilal Oswal.

I have a few questions. One is on the BB segment. And if I look at the growth in the business banking, it has been like moderating for quite some time now. We have earlier talked about that it is a conscious kind of a moderation that we're pursuing while the quality overall remains strong. But how are we looking at this on an incremental basis? Do we now look to relax some figures? Has the growth rate now bottomed out? And -- so some color around this?

No, Business banking, we are at it full steam actually. I think the moderation in the growth rate is really just a function of the base. Even this quarter, on a year-on-year basis, we have grown at 22%, and even the accretion this quarter is close to the accretion we've seen on the corporate side probably. The portfolio in itself now is actually larger than the corporate portfolio slightly. So I don't think we are holding back, and we believe that there is enough untapped space for us to do. As the portfolio grows, the growth rate will normally moderate. But we don't have any -- the portfolio quality has also held up well. So we are quite happy with growing this portfolio.

Okay. Okay. And likewise, on the unsecured, Anindya, when you say that growth rates in credit card NPL will get better, do you see this like now moving above the overall loan growth, or it will just be a recovery from where we are? Because we are like currently at very, very muted levels. So some color as to how...

I think that will take some time. When overall loan growth is 11.5% and personal loan is growing at 2%, it would be foolhardy to say that it will cross that level, but we definitely believe it should pick up from here.

Right. And one -- like on this standard provision that has happened, like earlier also we have this happening in another bank. So just curious to know like are large private banks more vulnerable to this RBI directive? I mean whatever led to this directive from the RBI, are large private banks more vulnerable, or you can see some things happening for PSU banks also?

I really can't comment. I think we have to take the observation that has been given to us, comply with it and resolve it as best as we can.

Next question is from M.B. Mahesh from Kotak Securities.

Anindya, just 2 questions. One is on this low growth in deposits on the savings account side, if you can just kind of comment what's happening there?

Yes. So actually, over the last 2 quarters, our growth in the retail savings account, the individual savings account has continued to be quite strong, adjusted for seasonality. That growth typically is much better in the first and second quarters, because the salary accounts see a pickup in terms of the year-end payments and so on. But we, even in this quarter, have seen a pretty strong growth in the retail savings account. Over the last 2 quarters, we have seen a reduction in balances in what we call the institutional banking savings accounts, which is essentially the government entities, the government schemes or departments that we bank.

There, the floats -- the amounts have come down in absolute terms, which has resulted in a lower growth or flat on the overall savings, but the retail savings continues to do quite well. In fact, both the retail savings and the retail term as well as the current account are all have done -- we are quite happy with the way they are performing. The institutional SA has proved a bit of a dampener on the overall numbers. That's not that large a proportion of our deposit base, and hopefully, this impact will moderate going forward, but it has been an issue in the last couple of quarters.

Okay. And should we assume that it's -- when you say it's not a large proportion, it runs into a double-digit number or it's lower than that?

I couldn't get that clearly.

When you say the corporate deposits are not a large number, it's more than a double-digit number that we are talking about here?

Yes. The institutional savings account would be 10%, 12% now of our -- or definitely around less than 15% of the average SA base.

Okay. The second question is, this share of this AA and, let's say, the high investment grade, how much are you willing to take it lower in your internal expectations?

See, I think that we are quite comfortable with the A family and above. I think that historically, those ratings have proved to be reasonably stable, and that is also where we find better risk-adjusted return. So we are not hung up particularly on the AA, AAA part of it. And as I said, on the BBB, we have to do it selective and really look at the counterparty carefully and operate within our limits framework.

We'll take our next question from the line of Param Subramanian from Investec.

Congratulations to Mr. Bakhshi. But my first question is related to that. So what is the thought process behind the Board seeking a 2-year extension as opposed to a full 3-year extension, because there is nothing holding us back from a regulatory perspective. So how should stakeholders read into that? Yes, that's my first question.

So I think the Board in consultation with the CEO have decided on a 2-year appointment. As you know, the current term itself ends in October 2026. So from now till the end of the renewed term is almost 3 years. And nothing really further to add to that.

Fair enough. So just if I can follow up on that. So one might read into it that this might be his last term. So that's the sort of signal that comes through. So yes, anything you want to add to that?

No, I think as we said, we have 3 years to go. So on a lighter vein, we hopefully addressed the speculation around October '26, and I think it's too early to speculate about October '28.

Okay. very helpful answer. Second question, this is on the results. So sir, we saw a quarter-on-quarter yield on advances decline of about 21 basis points. Is this almost entirely the KCC reversal effect, because it would have been minimal.

No, no, there would have been multiple things. So for example, if you look at the repo cut which happened in June, while all loans would have repriced some in July, some in August, and some in September, the portion which repriced in September would have seen only 1 month of impact in Q2 and 2 months of impact or the full impact in Q3. Similarly, our MCLRs have also come down. I think we are down by about 75 basis points in this rate cut cycle. So that would also have progressively impacted the portfolio as it repriced. So those would be equally relevant as far as the yield on advances is concerned.

Fair enough. So it means the KCC is not as much?

I'm sorry, your voice was muffled, Param.

As we said on the -- just to be clear to avoid confusion, the RBI observation on standard asset provisioning has no impact on asset classification. On a regular basis, in Q1 and Q3 of every year, we see seasonally higher NPLs on the rural product, which is what leads to the nonaccrual. And that has happened this year in Q3 as it happened in Q1 and as it happened in Q3 and Q1 of last year at the normal level. In addition, of course, we have had this whole repricing impact of the loan book, both the external benchmark-linked book and the MCLR linked book.

Got that. Got that. Very clear. Last question, if I may, on the fees, right? So I mean, fee has been -- core fee has been sort of soft at 6% Y-o-Y. So how should we look at it? Will this pick up when the retail loan growth eventually starts picking up? Or is unsecured or credit cards the number to track?

So I think in this quarter, the cards and payments piece has been something which has been a bit of a drag in terms of year-on-year growth in this number that we hope will pick up. Loan growth also should contribute, although a lot of the loan-related fees, the processing fees and so on are under some competitive pressure. But hopefully, we would want to grow this number from here on. One good thing is that it's an extremely granular number. As we have said, 78% of the fees even in this quarter were from the retail, rural and business banking portfolios. And even the corporate fees are very granular, transaction banking-oriented fees.

We'll take our next question from the line of Suresh Ganapathy from Macquarie Capital.

Yes, Anindya, what is your LCR this quarter?

126%.

Okay. And post the new April 2026 guidelines, would it go up or go down?

It will be kind of similar.

Okay. Flattish kind of a level. So would you want to maintain around current levels LCR? Or what exactly do you guys consider, I mean, is a normative level?

So I think that we kind of have a certain funding structure, and we maintain a certain amount of liquidity as a cushion. And that results in this number. Can it go up down 2, 3 percentage points? It could. This is, of course, the number that we report is the average for the quarter. So in every month, there would be periods when it, for example, goes down to 120 or something like that. But yes, at an average level, this is probably an okay level, somewhere above 120 or higher. I mean, we don't have a strict policy on that, but that's where we've been operating.

Okay. So my final question is related to this, because if you look at on a Y-o-Y basis, deposit growth has lagged loan growth. We have seen a rising LDR. So is LDR a constraint, or it's just a mere outcome? As long as you maintain all these ratios intact, even if it goes up, it doesn't matter for the management or the Board. Is that the way we should look at it?

See, LDR is a function of what is the liability structure on the balance sheet, and banks with higher capital ratios, higher capital levels, higher net worth as a proportion of loans can afford a higher LDR. And it's also a function of the regulatory preemption. So this quarter, I think for the entire system and for us and most banks, the LDR would have gone up because of the CRR cut. I think given the current level of capital that we hold and the regulatory requirements of liquidity, this is an okay level. I don't see it going up from here. It can moderate marginally, but we are quite comfortable at this level. In terms of our funding side, as we always say, we maximize the retail deposits and including CASA. And then we look at the different types of wholesale funding available, which could be refinance, bonds, wholesale deposits and so on. And our reliance on wholesale deposits is pretty moderate.

Ladies and gentlemen, we'll take that as the last question for today. I now hand the conference back to management for closing comments. Over to you, sir.

Thank you very much for joining us on a Saturday evening, and we'll be available to take other questions. Thank you.

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

Ladies and gentlemen, good day, and welcome to the Q2 FY '26 Earnings Conference Call of ICICI Bank. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sandeep Bakhshi, Managing Director and Chief Executive Officer of ICICI Bank. Thank you, and over to you, sir.

Thank you. Good evening to all of you, and welcome to the ICICI Bank earnings call to discuss the results for Q2 of financial year 2026. 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 the framework of our values to strengthen our franchise.

Maintaining high standards of governance, deepening coverage and enhancing the delivery capabilities with a focus on simplicity and operational resilience are key drivers for our risk-calibrated profitable growth.

The profit before tax, excluding treasury, grew by 9.1% year-on-year to INR 161.64 billion in this quarter. The core operating profit increased by 6.5% year-on-year to INR 170.78 billion in this quarter. The profit after tax grew by 5.2% year-on-year to INR 123.59 billion in this quarter.

Average deposits grew by 9.1% year-on-year and 1.6% sequentially, and average current and savings account deposits grew by 9.7% year-on-year and 2.7% sequentially in this quarter. Total deposits grew by 7.7% year-on-year and 0.3% sequentially at September 30, 2025. The bank's average liquidity coverage ratio for the quarter was about 127%.

The domestic loan portfolio grew by 10.6% year-on-year. The quarter-on-quarter growth in domestic loan portfolio was 3.3% at September 30, 2025, compared to 1.5% at June 30, 2025. The retail loan portfolio grew by 6.6% year-on-year and 2.6% sequentially. Including nonfund-based outstanding, the retail portfolio was 42.9% of the total portfolio. The rural portfolio declined by 1% year-on-year and grew by 0.8% sequentially. The business banking portfolio grew by 24.8% year-on-year and 6.5% sequentially.

The domestic corporate portfolio grew by 3.5% year-on-year and 1% sequentially. The overall loan portfolio, including the international branches portfolio, grew by 10% year-on-year and 3.2% sequentially at September 30, 2025.

The overseas loan portfolio was 2.3% of the overall loan book at September 30, 2025. The net NPA ratio was 0.39% at September 30, 2025, compared to 0.41% at June 30, 2025, and 0.42% at September 30, 2024.

During the quarter, there were net additions of INR 13.86 billion to gross NPAs, excluding write-offs and sales. The total provisions during the quarter were INR 9.14 billion or 5.4% of core operating profit and 0.26% of average advances. The provisioning coverage ratio on nonperforming loans was 75% at September 30, 2025.

In addition, the bank continues to hold contingency provisions of INR 131 billion or about 0.9% of total advances at September 30, 2025. The capital position of the bank continue to be strong with a CET1 ratio of 16.35% and total capital adequacy ratio of 17% at September 30, 2025, including profits for H1 2026.

Looking ahead, we see many opportunities to drive risk-calibrated portfolio growth and grow market share across key segments. We remain focused on maintaining a strong balance sheet, prudent provisioning and healthy levels of capital, while delivering sustainable and predictable returns to our shareholders.

I now hand the call over to Anindya.

Thank you, Sandeep. I will talk about loan growth, credit quality, P&L details and the performance of subsidiaries.

On loan growth, Sandeep covered the loan growth across various segments. Coming to the growth across retail products. The mortgage portfolio grew by 9.9% year-on-year and 2.8% sequentially. Auto loans grew by 1.4% year-on-year and were flat sequentially. The commercial vehicles and equipment portfolio grew by 6.4% year-on-year and 0.5% sequentially. Personal loans declined by 0.7% year-on-year and grew by 1.4% sequentially.

The credit card portfolio grew by 6.4% year-on-year and 8.4% sequentially. Within the corporate portfolio, the total outstanding to NBFCs and HFCs was INR 794.33 billion at September 30, 2025, compared to INR 874.17 billion at June 30, 2025. The total outstanding loans to NBFCs and HFCs were about 4.4% of our advances at September 30, 2025.

The builder portfolio, including construction finance, lease rental discounting, term loans and working capital was INR 635.83 billion at September 30, 2025, compared to INR 628.33 billion at June 30, 2025. The builder loan portfolio was 4.1% 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 1.3% of the builder portfolio at September 30, 2025, was either rated BB and below internally or was classified as nonperforming.

Moving on to credit quality. The gross NPA additions were INR 50.34 billion in the current quarter compared to INR 62.45 billion in the previous quarter and INR 50.73 billion in Q2 of last year. Recoveries and upgrades from gross NPAs, including write-off -- excluding write-offs and sales, were INR 36.48 billion in the current quarter compared to INR 32.11 billion in the previous quarter and INR 33.19 billion in Q2 of last year.

The net additions to gross NPAs were INR 13.86 billion in the current quarter compared to INR 30.34 billion in the previous quarter and INR 17.54 billion in Q2 of last year. The gross NPA additions from the retail and rural portfolios were INR 40.49 billion in the current quarter compared to INR 51.93 billion in the previous quarter and INR 43.41 billion in Q2 of last year.

We typically see higher NPA additions from the Kisan credit card portfolio in the first and third quarter of the fiscal year. Recoveries and upgrades from the retail and rural portfolios were INR 26.1 billion in the current quarter compared to INR 25.25 billion in the previous quarter and INR 25.92 billion in Q2 of last year.

The net additions to gross NPAs in the retail and rural portfolios were INR 14.39 billion in the current quarter compared to INR 26.68 billion in the previous quarter and INR 17.49 billion in Q2 of last year.

The gross NPA additions from the corporate and business banking portfolios were INR 9.85 billion in the current quarter compared to INR 10.52 billion in the previous quarter and INR 7.32 billion in Q2 of last year.

Recoveries and upgrades from the corporate and business banking portfolios were INR 10.38 billion in the current quarter compared to INR 6.86 billion in the previous quarter and INR 7.27 billion in Q2 of last year.

There were thus net deletion of gross NPAs of INR 0.53 billion in the current quarter in the corporate and business banking portfolio compared to net addition of INR 3.66 billion in the previous quarter and INR 0.05 billion in Q2 of last year.

The gross NPAs written-off during the quarter were INR 22.63 billion. Further, there was a sale of NPA of INR 0.06 billion, mainly for cash in the current quarter. The nonfund based outstanding to borrowers classified as nonperforming declined to INR 23.22 billion as of September 30, 2025, from INR 32.98 billion as of June 30, 2025, and INR 33.82 billion as of September 30, 2024.

The loans and nonfund-based outstanding to performing corporate borrowers rated BB and below increased to INR 36.61 billion at September 30, 2025, from INR 29.95 billion at June 30, 2025, and INR 33.86 billion at September 30, 2024. This portfolio was about 0.3% of our advances at September 30, 2025.

The increase during the quarter was due to the upgrade of certain borrowers having nonfund outstanding from nonperforming to performing status. The total fund base outstanding towards standard borrowers under the resolution as per various guidelines declined to INR 16.24 billion or about 0.1% of the total loan portfolio at September 30, 2025, from INR 17.88 billion at June 30, 2025, and INR 25.46 billion at September 30, 2024.

Of the total fund-based outstanding under resolution at September 30, 2025, INR 14.84 billion was from the retail and rural portfolios and INR 1.4 billion was from the corporate and business banking portfolio. At the end of September, the total provisions other than specific provisions on fund-based outstanding to borrowers classified as nonperforming were INR 26.2 billion or 1.6% of loans.

This includes the contingency provisions of INR 131 billion as well as general provision on standard assets, provisions held for nonfund-based outstanding to borrowers classified as nonperforming, fund and nonfund-based outstanding to standard borrowers under resolution and the BB and below portfolio.

Moving on to the P&L details. Net interest income increased by 7.4% year-on-year to INR 215.29 billion in this quarter. The net interest income was INR 216.35 billion in the previous quarter, which included interest on tax refund of INR 3.61 billion. The net interest margin was 4.30% in this quarter compared to 4.34% in the previous quarter and 4.27% in Q2 of last year.

The benefit of interest on tax refund was nil in the current quarter compared to 7 basis points in the previous quarter and nil in Q2 of last year. The margins for the quarter reflect the benefit from the reduction in deposit rates and cost of borrowings as well as the impact of repricing of external benchmark-linked loans and investments.

Of the total domestic loans, interest rates on about 55% of the loans are linked to the repo rate and other external benchmarks, 14% to NCLR and other older benchmarks and the remaining 31% of loans have fixed interest rates. The domestic NIM was 4.37% in this quarter compared to 4.40% in the previous quarter and 4.34% in Q2 of last year.

The cost of deposits was 4.64% in this quarter compared to 4.85% in the previous quarter and 4.88% in Q2 of last year. Noninterest income, excluding treasury, grew by 13.2% year-on-year and 1.3% sequentially to INR 73.56 billion in Q2 of FY 2026.

Fee income increased by 10.1% year-on-year and 10% sequentially to INR 64.91 billion in this quarter. Fees from retail, rural and business banking customers constituted about 78% of the total fees in this quarter.

Dividend income from subsidiaries was INR 8.1 billion in this quarter compared to INR 13.36 billion in the previous quarter and INR 5.41 billion in Q2 of last year. The timing of receipt of final dividend depends on the annual general meetings of the respective subsidiaries, which are generally held in the first quarter of a fiscal year. The year-on-year increase in dividend income was primarily due to the receipt of interim dividend from ICICI Securities and ICICI Venture.

On costs, the bank's operating expenses increased by 12.4% year-on-year and 3.6% sequentially in this quarter. Employee expenses increased by 5% year-on-year and declined by 8.5% sequentially in this quarter, mainly due to lower provisioning requirements for retiral benefits. Nonemployee expenses increased by 17.3% year-on-year and 12.2% sequentially in this quarter.

The year-on-year and sequential increase in nonemployee expenses reflects retail business-related expenses and festive season-related marketing spends. Our branch count has increased by 263 in H1 of the current year. We had 7,246 branches as of September 30, 2025.

The technology expenses were about 11% of our operating expenses in H1 of the current year. The total provisions during the quarter were INR 9.14 billion or 5.4% of core operating profit and 0.26% of average advances compared to the provisions of INR 18.15 billion in Q1 of 2026 and INR 12.33 billion in Q2 of last year.

The sequential decline in provisions reflects the impact of KCC seasonality and healthy asset quality across segments. The annualized credit cost was about 40 basis points in H1 of the current year, similar to that in H1 of last year.

The profit before tax, excluding treasury, grew by 9.1% year-on-year and 3% sequentially to INR 161.64 billion in this quarter. Treasury income was INR 2.20 billion in Q2 of the current year as compared to INR 12.41 billion in Q1 and INR 6.80 billion in Q2 of the previous year. The lower treasury income during this quarter primarily reflects the increase in yield on fixed income securities.

The tax expense was INR 40.25 billion in this quarter compared to INR 37.44 billion in the corresponding quarter last year. The profit after tax grew by 5.2% year-on-year to INR 123.59 billion in this quarter.

Moving on to the consolidated results. The consolidated profit after tax grew by 3.2% year-on-year to INR 133.57 billion in this quarter. The details of the financial performance of key subsidiaries are covered in Slides 33 to 34 and 53 to 58 in the investor presentation.

The annualized premium equivalent of ICICI Life was INR 42.86 billion in H1 of this year compared to INR 44.67 billion in H1 of last year. The value of new business was INR 10.49 billion in H1 of this year compared to INR 10.58 billion in H1 of last year. The value of new business margin was 24.5% in H1 of this year compared to 22.8% in FY 2025 and 23.7% in H1 of last year.

The profit after tax of ICICI Life was INR 6.01 billion in H1 of this year compared to INR 4.77 billion in H1 of last year and INR 2.99 billion in this quarter compared to INR 2.52 billion in Q2 of last year.

Gross direct premium income of ICICI General was INR 65.96 billion in this quarter compared to INR 67.21 billion in Q2 of last year. The combined ratio stood at 105.1% in this quarter compared to 104.5% in Q2 of last year. Excluding the impact of cash losses of INR 0.3 billion in this quarter and -- INR 0.73 billion, pardon me, in this quarter and INR 0.94 billion in Q2 of last year. The combined ratio was 103.8% and 102.6%, respectively.

The profit after tax increased to INR 8.2 billion in this quarter compared to INR 6.94 billion in Q2 of last year. With effect from October 1, 2024, long-term products are accounted on a one-by-one basis as mandated by IRDAI, hence Q2 numbers are not fully comparable with prior periods.

The profit after tax of ICICI AMC as per Ind AS was INR 8.35 billion in this quarter. The profit after tax of ICICI Securities as per Ind AS on a consolidated basis was INR 4.25 billion in this quarter compared to INR 5.29 billion in Q2 of last year. ICICI Bank Canada had a profit after tax of CAD 6.3 million in this quarter compared to CAD 19.1 million in Q2 of last year.

ICICI Bank U.K. had a profit after tax of USD 6.4 million in this quarter compared to USD 8 million in Q2 of last year. As per Ind AS, ICICI Home Finance had a profit after tax of INR 2.03 billion in the current quarter compared to INR 1.83 billion in Q2 of last year.

With this, we conclude our opening remarks, and we will now be happy to take your questions.

[Operator Instructions] We'll take our first question from the line of Mahrukh Adajania from Nuvama.

Congratulations. My first question was on growth. Do you already see green shoots on growth? Do you see growth accelerating after so many measures taken by the government? And will we reach like close to mid-teens by the end of the year? Is that an assessment we can make right now? That's my first question.

So I think whatever we have seen in the quarter, certainly, growth has picked up. So if you see the sequential growth in Q2 across all the -- the retail portfolio certainly has picked up, business banking growth continues to be strong, and we hope that these trends will sustain.

We are positive on the growth outlook. We would not really be giving a specific year-end loan growth number. But certainly, both in terms of what is happening in the market and our own continuing investment in distribution and allocating capacity to the higher growth opportunities that continues, and we continue to focus on that.

And would you see corporate picking up? Any comments on the corporate loan growth environment?

I think corporate India is very well funded. They have very strong balance sheets, and they have access to many forms of funding. So banks are just one of the things that -- areas that they look at. And we will take it as it comes. I think we are focused on overall the risk-calibrated PPOP journey, and that is how we will look at it.

We are very active in the corporate space, but that may reflect more in our transaction banking income or the flows through us, current accounts, et cetera, and not necessarily in terms of loan growth per se.

Okay. Got it. And my next question is on margins that they've held up pretty well compared to expectations. So this is the bottom, right? And from here on, do they stay stable without rate cuts or they can actually improve?

So I would say that you're right. I think margins have done better than expectations, both -- of course, quarter-on-quarter, yes. But I think broadly through the cycle where we are now at the -- after the large part of the rate cuts have played out, they have done well, which has been aided by the systemic liquidity and the continued healthy funding profile as well as, I would say, the discipline on pricing that we have had consistently over several years.

From here on, our expectation is that margins should be more or less range-bound. We don't expect any major movements either way.

Got it. But there would still be deposit repricing left, right?

It will move from quarter to quarter. So if we look at Q3, there will be, of course, some deposit repricing. There will also be the full CRR reduction, which will take effect. At the same time, it will be a KCC quarter, as we call it. So the level of nonaccrual will also go up. And of course, there are continuing competitive dynamics in the market. So all taken together, I would say that over the next couple of quarters, we see it being range-bound.

Next question is from the line of Harsh Modi from JPMorgan.

Fantastic set of numbers, congratulations. The question is on CASA. Your CASA market share has been improving, if I look at on the average balance basis. Could you talk a bit about how much of visibility do you have in this continued market share gains on CASA? And what are the 2 or 3 areas where you expect relative advantage to sustain over, let's say, next 12, 18 months?

I think where the CASA growth has improved from over the last few years because these things really take root over a period of time. I would say 3 things: One, of course, is the steady expansion in distribution over a period of time. I think our digital platforms do help.

Certainly, they are something that attracts customers to the bank and offers convenience to the customers and encourages flows to the bank. And third, I think there are specific segments that we have been focusing on over a period of time. I think business banking is a great example, where while, of course, if the loan growth is visible, the CASA growth also in the business banking has been a contributor.

Going forward, I think we certainly see the whole transaction banking space as something where we can do more given our distribution and our platforms. In the corporate space, where we have corporate relationships, we can further deepen the synergy of what we are doing on the retail side across actually both the deposit side and the loan side in the corporate ecosystem.

And we also -- the synergy with the ICICI Direct through the 3-in-1 platform is another area where we could do a lot more. So these are some of the levers that we have, which we believe will sustain the CASA growth going forward, it would be our objective.

Yes, makes sense, especially SME liability. The second bit is on your capital adequacy, 16.1, CET1 where if you include the profits. How do we think about the payout ratios with such a solid stock and flow of CET1?

So including profit at September, it was 16.35, actually. I think this is kind of currently the level at which most of the large private sector banks, some of them are there, some may be a little higher, actually. So no specific plan on payouts. I think our view would be to maintain a strong balance sheet at all times and to leverage the capital for growth. That is what we will try to do.

Next question is from the line of Anand Swaminathan from Bank of America.

Sir, a couple of questions. Sandeep, first question to you, are you in a position to kind of give us any color on your intention to continue for another term? I think investors kind of have been looking for some clarity around that. Any color on that would be great.

Number two, in terms of the trade-off between growth and profitability, we have now kind of sustainably developed the 30, 40 bps ROA difference versus even the next best peer. Are we kind of giving up some growth as part of it? Is there a scenario where we could accept a 10, 20 bps lower ROAs and go for higher growth? And where are we in that thought process now? Any color would be great.

Yes. So I'll take both the questions, Anand. As far as the position of CEO is concerned, you are aware that there is still a year to go and the Board will take a view and decide and disclosure will be made at the appropriate time.

On the trade-off point, we don't really look at it as a trade-off between growth and profitability. Our aim is and what we operate to is the risk-adjusted PPOP and that has to be done in a framework which is sustainable, and we have to have an appropriate framework for pricing and then, of course, we can always tactically do trade-offs, keeping the overall opportunity in mind.

But by and large, it's -- we don't think about it in terms of a trade-off between growth and profitability. We think about it in terms of a sustainable sort of accretion to the PPOP over a period of time. And the ROA is more of an outcome. We have never targeted that we will have a 2.3% ROA or something like that. It's basically been an outcome of the way the business has evolved.

No, sure. It makes sense. I just wanted to -- so in your kind of mind, you're not leaving any growth on the table to achieve these ROAs. That's the point you're making.

I'm saying I don't think we are leaving any long-term PPOP growth on the table. We could always do a little bit more. Obviously, we certainly believe that we are not doing that as much as the franchise can deliver and it should deliver more over a period of time. But we would rather think of it in terms of the PPOP opportunity, risk-adjusted rather than loan growth per se.

We'll take our next question from the line of Kunal Shah from Citigroup.

Yes. So [indiscernible] is, say, on the growth side, but particularly looking at the various segments of retail like, say, vehicle, obviously, the industry-wide volumes were down, but with the GST cuts, we have seen the momentum. So should we expect any uptick out there on the vehicle loans, how has been the initial maybe 15, 20 days of feedback?

Plus personal loans, are we comfortable on the overall credit cost? When should we start to see the growth out there? It's been just flat on both year-on-year and a quarter-on-quarter basis. So that's -- and even on the mortgages, obviously, it's competitive and not PPOP-accretive to an extent, but how should we look at the overall mortgage growth going forward? Yes.

No, so, as I said, overall, if you see the loan growth has picked up from 1% sequentially in the previous quarter to 3% in this quarter. And we are positive on growth both in terms of the market opportunity and the way we are continuing to gear up our distribution and allocate resources to growth segments and growth markets. So we would hope to see a growth in these segments. .

As far as the question on personal loans is concerned, if you look at the overall retail NPL, the additions have declined both year-on-year and sequentially despite the growth in the balance sheet. And we do see, I think, healthy asset quality across all the segments. As we have said in the past, we had taken a number of corrective actions on personal loans in 2022-2023 and the cohorts of origination post that, we are quite happy with the performance.

So we are increasing our disbursements there. It may take a little while to show up in book growth because obviously, there's a runoff as well. But in terms of doing more, we are quite happy to do, and we are moving on that front.

Okay. And then on the deposit side, so like LDRs have been expanding past couple of quarters, almost like 400-odd basis points kind of an expansion in the LDR. The pace on loan growth still seems to be higher than the deposit growth. It has help to manage margins as well.

How would we look at it from here on, maybe the pressure on the repricing on the margins would be relatively low now at almost 87-plus LDR. How should we see this ratio settling? So maybe on the term deposit side, would we garner more of the term deposits just to make sure that it is in line with the loan growth from here on?

So I don't think that it's really right to compare the September LDR with the June LDR. First of all, LDR is just a quarter-end measure, whereas what happens on the balance sheet depends on what happens on an average basis. I think for most of the large banks, to the extent I've seen, LDRs would have gone up in Q2 because most of the large banks would have seen relatively lower growth and good deposit inflows and been carrying higher liquidity at the end of Q1. So I think LDRs have expanded across the system and at overall system level as well.

In fact, I would think that as the CRR cuts take effect in Q3, LDRs, the natural corollary would be that LDRs will go up further because that is what would happen when liquidity gets released. From our perspective, we are quite comfortable with where we are. I think our retail deposit growth in term of CASA, current account growth is pretty good. We are quite comfortable with the current levels, and we have ability to grow further.

On the wholesale side, we do optimize between various types of funding and that's the way we look at it. I think the current levels of LDR may be even slightly higher with a lower CRR requirement are quite sustainable.

Okay. Okay. And lastly, in terms of the RBI directions, any initial commentary in terms of the impact which we could see on account of ECL or maybe the risk weight benefit which would come in, say, in the various rating of the corporates plus the home loans and the MSME?

On the capital side, of course, these segments will give a benefit. There are other segments where risk weights are being -- have been proposed to be increased where that would take away some of that benefit. But net-net, I guess, for most banks, it would be a positive.

It's -- the guideline is still open for comments. So we'll have to wait to see what is the final guideline that RBI issues after whatever submissions they receive. Similar is the case with ECL. It's again open for comment, and we'll have to see what the final guidelines come out.

On ECL as far as the transition point is concerned, I think given the level of provisioning that we hold on the balance sheet, we should be okay. On the what credit costs will look like under an ECL regime on an ongoing basis is something we have to still work out and assess.

Got it. So contingency would be utilized at that point in time?

I think we have to just say that given the overall -- because we also provide, for example, on a pretty accelerated basis against NPLs. We have hold provisions -- other provisions as well, and there is the contingency provisions. So all of it we'll have to reassess at that point in time, given the totality of the provisioning on the balance sheet, and what would be -- what the base ECL plus prudential floor suggest under the draft guidelines, we don't expect any impact as such.

Next question is from the line of Rikin Shah from IIFL Capital.

Few ones. First on OpEx, with festival-related nonsalary expenses coming in 2Q this year, should one expect a sequential decline in OpEx in the third quarter given that these expenses could have been front-ended?

So I guess in that line item, you see a decline. I'm not sure I want to say that there will be a decline in overall OpEx because we continue to invest, and we want to -- we are quite focused on the growth of the business. I don't expect sequential increases of the time that we have seen in this quarter.

Got it. Second is on retail asset quality. Until now, you've been saying that it has been stable for us. But if we look at the slippages, in absolute terms, they are down almost 7% Y-o-Y when your book -- rural plus retail book has grown 6%. So clearly, a huge delta. So are we in a position to now say that the retail slippage or the slippages or the overall asset quality environment has started to improve and not only just stabilize?

So I guess, as a starting point is that we don't think it was particularly bad at any point of time. I mean I think the -- for the last several years, banks has been reporting pretty good asset quality. If I look at the secured retail, I think it has been pretty stable, maybe getting marginally better for the last, I would say, 8 or 9 quarters.

We did have some spike in the unsecured in the PL and cards. And there, of course, the regulator took several actions, and I think individual banks like us would also have taken action, where I think that the benefit of those actions is starting to show up, which is why we are now growing those portfolios again.

Got it. And lastly, for one of the peer banks, we saw some PSL classification problem on the crop loans. Just wanted to understand how do you track the end use of the crop loans that you give out? And has there been any discussion around this on your portfolio as well with the regulator?

As our processes for the PSL classification and those get reviewed, regulator could always -- of course, can always examine and have a view, but nothing specific to call out at this point in time.

Next question is from the line of Piran Engineer from CLSA.

Congrats on a good set of numbers. So firstly, just on NIM, Anindya, why do you say they'll be largely range-bound for the next 2 quarters? I understand next quarter, you're talking about the interest reversals [Technical Difficulty] credit card, but why should the NIMs improve consistently for the next 4 to 6 quarters?

I think that we have -- I would say, been navigated the cycle reasonably well and the NIMs have come in at this level. Over the next few quarters, we will see, there are too many moving parts in terms of monetary policy, the competitive dynamic, loan mix and so on. So we will see it as it comes. We've not really taken a view on next year. For the next couple of quarters, it should be range-bound.

Okay. Let me harp on this in another way. Out of your INR 9.5 lakh crore term deposit book, how much was acquired in the last 6 months?

We don't really give data of that kind. I think on the NIM question, we've given our perspective.

Okay. Fair enough. Okay. Secondly, just moving on to this provision for retiral benefits. This was because of higher GSE yields or what caused this sudden...

So I think -- if you look at it, I think every year, there is some decline from Q1 to Q2 because in Q1, when the increments, et cetera, given the gratuity-related provisions and so on are -- we true them up. And we also have certain employees who are on pensions who are mainly retired colleagues who were earlier working with some of the acquired entities. And there, they are entitled to DMF allowance. And this year, there has been no increase in the DMF allowance. So those would be the 2 main factors.

Okay. So then if I have to think of it -- think of modeling this going forward, clearly, 2Q should not be the current base to model growth of [Technical Difficulty].

Piran, I'm sorry, your voice was breaking.

I don't have a -- I don't -- but we have, of course, a sense of what kind of increments, et cetera, will happen. We don't -- we can't really model it for you. But as I said, over the next couple of quarters, I don't expect overall OpEx to increase at the pace at which it has in the current quarter.

Got it. Fair enough. And just lastly, getting back to Rikin's question on slippages. Now slippages are down meaningfully even if you adjust for the [indiscernible] portfolio, is all of that improvement attributable to PLCC or are we seeing improvement in other retail segments also?

So we have given, first of all, the breakup between retail and rural and corporate and business banking. So there is actually a small net dilution in corporate and business banking. But I would say you're right across most of the other retail segment...

No, I'm referring only to retail and rural, Anindya. So it's about INR 1,200 crore improvement...

In most of the other retail portfolios also there has been some improvement sequentially.

Okay, that answers all my questions. And also just one request and I've made this in the past, if you could please do something about the Saturday results. It just gets too much for all of us. And I understand you all want to keep your data secret and no leakage and all of that. Maybe if you could release results on Friday night and then 9 a.m. on Saturday keep a con-call, that just helps us a lot. But please, just try to look into it.

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

Can I come back on the capital points? Just the risk -- credit risk reduction seems substantial, you highlighted it's a net positive. Your CET1 ratios are also very high. I understand that's where the larger banks operate. But isn't there an opportunity here to grow at the pace you want to grow or take the opportunity that is on the table and yet improve payouts?

Because from our vantage point, the top 3 banks in the system are swimming in capital. Just want to get some thoughts on how this might play out as the -- as you look -- as these guidances and the draft reports become more concrete?

So we will take a view at that point in time. If this is any way going to kick in 1.5 years from now. And it really -- a lot of it depends on what is the position of the balance sheet at that point in time and which are the segments where we have seen growth. So -- but overall, capital is not constraining us from growing. We are continuing to focus on the kind of growth that we want.

Yes. In fact, your capital is -- your retail earnings is enough to grow already. On ECL, could you give us some color? From your last submission, you said there is no impact for you. So I'm assuming there's no impact, including the other provisions you have on the balance sheet. So you would assume that they will be utilized when you see no impact?

I guess, it depends on what form the final guidelines take, but we have to look at the total provisions on the balance sheet in totality, including NPL and other provisions and we don't expect that there should be any impact.

So it could even be positive because from what I can see, you have more than enough provisions on your balance sheet and they come back into your CET1 if they are excessive. So shouldn't this become almost CET1-accretive at some point?

Yes. We'll have to see. It's very difficult to say it now. In any case, this is something, again, which will really depend upon the balance sheet at the point of transition.

And then final point, you are 1 of the 2 large players in salaried accounts. So how much of your salaried accounts come from the IT services area? There's so much hype around AI. Just wondering if there are kind of unemployment in that section, how much would it impact you? How do you think about that?

No, not just for us for any bank with salaried accounts, the IT services sector and similar sectors would account for a good share of the salary accounts because they are a good share of employment in the country, salaried employment in the country. So far, we have not seen any impact.

Ladies and gentlemen, we'll take that as a last question for today. I now hand the conference over to management for closing comments. Over to you, sir.

Thank you very much, and wish you all a very, very Happy Diwali. Thank you.

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