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ICICI Bank
Our verdict on ICICI Bank isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
The domestic credit/deposit ratio stood at 82.4% as of March 31, 2025, which is within the guided low-to-mid 80s range. (1 met across 1 tracked commitment)
“As far as the LDR is concerned, I think this low-to-mid 80s is the level of domestic LDR that we have historically operated at and I don't see any big change in that, it may vary one quarter here up or down, but broadly it should be at that level.”
NIM remained range-bound at 4.36% in Q1-2025 compared to 4.40% in Q4-2024, showing stability despite the high-interest rate environment. (5 met across 5 tracked commitments)
“So I guess we could see some further moderation in the NIM, but I would expect it to be pretty range bound from here on for the next few quarters until a rate cut actually happens.”
The bank delivered on its dividend commitment for the previous cycle and has now recommended an increased dividend for FY2025. (1 met across 1 tracked commitment)
“But, in terms of the headcount, I would expect stability to moderate increase from here on.”
Personal loan growth moderated significantly to 2.4% y-o-y and 1.7% q-o-q, confirming the downward trend in growth pace. (1 met across 1 tracked commitment)
“On PL, we had taken a number of actions last year and I think the growth rate has come off; if you look at the yearon year growth, it has come from 40% to 24% and I am guessing by the time we end this year it will be closer to 20% kind of number or lower.”
Credit costs (provisions/average advances) were 0.43% in Q1-2025, remaining below the 50 bps threshold but showing a slight normalization from 0.24% in the previous quarter. (3 met, 1 in progress, 1 exceeded across 5 tracked commitments)
“I think, if you kind of adjust out one offs or if you take a more adjusted view, we would still be under 50 basis points. That may normalize upwards slightly, but I don't see anything very dramatic there.”
See the full cited Management analysis of ICICI Bank
How durable is the business?
Asset quality remains robust with a Net NPA ratio of 0.39% and a high Provision Coverage Ratio of 76.2%, supplemented by significant contingency buffers. (2 stable, 3 expanding)
“The provisioning coverage ratio on non-performing loans was 75.4% at December 31, 2025. In addition, the Bank continues to hold contingency provisions of 131.00 billion Rupees”
Technology expenses now account for 10.7% of total operating expenses as the bank continues to invest in digital platforms for business banking and retail segments. (3 expanding, 1 stable)
“Growth driven by leveraging branch network and digital platforms such as, InstaBIZ, Merchant STACK and Trade Online”
The bank continues to shift away from international lending, with the overseas book contracting by 8.0% year-on-year, while the domestic book grew by 13.9%. (1 shifted, 1 stable)
“Overseas book3 334.51 (Mar 31, 2024) 307.85 (Mar 31, 2025) (8.0%)”
The bank faced a regulatory setback as the RBI directed an additional provision of ₹12.83 billion due to non-compliance in agricultural loan classification, though overall credit quality remains healthy with a net NPA of 0.37%. (1 shifted)
“Following its annual supervisory review, RBI has directed the Bank to make a standard asset provision of 12.83 billion Rupees in respect of a portfolio of agricultural priority sector credit facilities wherein the terms... were found to be not fully compliant”
The bank's low-cost deposit base (CASA) grew by 8.7% year-on-year. Management noted that the cost of deposits actually declined to 4.85% from 5.00% sequentially, aided by a reduction in savings account interest rates and a runoff of expensive wholesale deposits. (2 expanding, 2 contracting, 1 stable)
“CASA % share at Dec 31, 2025 40.2%”
See the full cited Business Model analysis of ICICI Bank
Where does growth come from?
NIM is experiencing compression due to rising cost of deposits, though management expects it to remain range-bound. (2 decelerating, 1 steady across 3 signals)
“The net interest margin was 4.30% in this quarter compared to 4.30% in the previous quarter and 4.25% in Q3 of last year.”
Contrary to previous temporary dips, the credit card portfolio is showing strong double-digit growth (31.3% YoY), with management explicitly stating they are keen to grow this business despite systemic stress in the segment. (3 accelerating, 2 reversing across 5 signals)
“The credit card portfolio declined by 3.5% year-on-year and 6.7% sequentially... The sequential decline in the credit card portfolio was due to high festive spends towards the end of the previous quarter”
While average CASA grew 9.7% YoY, the bank is facing a 'tight' deposit market. Term deposits are growing much faster (19.9% YoY) than CASA, suggesting a shift in the deposit mix toward higher-cost funding. (2 decelerating, 3 steady across 5 signals, 1 leading indicator)
“CASA ... % share at Dec 31, 2025: 40.2%”
A significant regulatory hurdle appeared as the RBI directed the bank to set aside extra money (provisions) for a specific agricultural loan portfolio that didn't meet technical 'Priority Sector' rules. This temporarily hit profits this quarter.
“Following its annual supervisory review, RBI has directed the Bank to make a standard asset provision of 12.83 billion Rupees in respect of a portfolio of agricultural priority sector credit facilities wherein the terms of the facilities were found to be not fully compliant”
Capital adequacy remains exceptionally strong and steady at 15.94%, providing significant 'firepower' for future balance sheet expansion without dilution risk. (1 steady across 1 signal)
“Common Equity Tier 1 ratio of 15.94% (After reckoning the impact of proposed dividend)”
See the full cited Future Growth analysis of ICICI Bank
What could break the thesis?
Net additions to Gross NPAs dropped sharply to ₹ 13.25 bn in Q4-2025 from ₹ 26.93 bn in Q3-2025, confirming the seasonal nature of the previous spike has passed. (2 easing, 3 stable)
“The gross NPA additions from the retail and rural portfolios were 42.77 billion Rupees... We typically see higher NPA additions from the kisan credit card portfolio in the first and third quarter of a fiscal year.”
Exposure to 'BB and below' rated corporate borrowers increased to ₹ 28.54 bn in Q4-2025 from ₹ 21.93 bn in Q3-2025, indicating a slight uptick in lower-rated credit exposure. (1 intensifying, 3 easing, 1 stable)
“Mortgages... % share at Dec 31, 2025: 63.0%”
The risk is INTENSIFYING. NIM declined to 4.34% from 4.41% in the previous quarter. Management expects further downward pressure as the June repo rate cut transmits to the loan book in Q2. (1 intensifying, 1 easing, 3 stable)
“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... overall, we would stay with our view that the NIM should be range-bound from here on.”
The bank is seeing a reduction in 'institutional' savings account balances (government and department funds), which has slowed down the overall growth of low-cost savings deposits. [MARGIN_COST]
“Over the last two quarters, we have seen a reduction in balances in what we call the institutional banking savings accounts... which has resulted in a lower growth or flat on the overall savings.”
The bank's credit card portfolio saw a significant decline this quarter, which management attributes to repayments following high festive spending, but it represents a temporary slowdown in a high-margin segment. [DEMAND]
“The credit card portfolio declined by 3.5% year-on-year and 6.7% sequentially. The sequential decline in the credit card portfolio was due to high festive spends towards the end of the previous quarter... and saw repayments in the current quarter.”
See the full cited Risk analysis of ICICI Bank
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