ICICI Bank reported a 20.1% year-on-year increase in standalone net profit to Rs 14,843 crore for the quarter ended September 30, 2026 (Q2 FY27). The profit growth was driven by core operating performance rather than lower provisions or extraordinary gains. Core operating profit rose 21.8% year on year to Rs 20,805 crore, while provisions fell only slightly to Rs 851 crore from Rs 914 crore a year earlier. A treasury loss of Rs 230 crore, compared to income of Rs 220 crore in Q2 FY26, partially offset the gains. Investor Presentation +1
Net interest income (NII) grew 17.7% year on year to Rs 25,339 crore and 3.9% quarter on quarter. This growth was supported by strong loan expansion. Total advances grew 30.0% year on year and 12.3% quarter on quarter. Excluding loans booked by international branches against FCNR(B) deposits, growth was 24.1% year on year and 7.3% quarter on quarter. The loan mix shifted toward business banking and domestic corporate loans, which grew 33.8% and 30.6% year on year respectively, while retail and rural loans grew 14.8%. Yield on advances was nearly flat quarter on quarter at 8.82%, down from 8.86% in Q1. Investor Presentation +2
Fee income grew 20.1% year on year to Rs 7,795 crore, complementing NII growth. However, dividend income from subsidiaries fell 42.9% year on year to Rs 463 crore, which weighed on total non-interest income. Overall non-interest income (excluding treasury) rose 12.5% year on year to Rs 8,277 crore. The treasury loss of Rs 230 crore in Q2, against income of Rs 220 crore a year earlier, was a drag. Investor Presentation +1
Net interest margin (NIM) declined to 4.18% in Q2 from 4.36% in Q1 and 4.30% in Q2 FY26. The 18 basis point quarter-on-quarter decline was driven by an 8 basis point fall in yield on interest-earning assets and an 8 basis point rise in cost of funds. Cost of deposits rose 9 basis points quarter on quarter to 4.50%. The average CASA ratio fell to 35.8% from 38.1% in Q1, as average term deposits grew 28.0% year on year while CASA balances grew only 10.7%. This shift toward costlier term funding pressured margins. Investor Presentation +2
The FCNR(B) deposit programme, with an all-in hedged cost of 6.30–6.40%, is "marginally NIM dilutive" but earnings-accretive through offshore balance sheet growth. Overseas advances jumped to Rs 1,429.54 billion from Rs 502.75 billion in June. Total borrowings rose to Rs 2,045.5 billion, with overseas borrowings reaching Rs 1,109.0 billion. The domestic credit-deposit ratio fell to 84.0% from 87.5% in June, indicating deposit mobilization is catching up with credit growth. Transcript +4
Asset quality improved. Gross NPA ratio fell to 1.20% from 1.38% in June and 1.58% a year earlier. Net NPA ratio declined to 0.30% from 0.35% in June. Gross slippages fell to Rs 4,833 crore from Rs 5,552 crore in Q1, with retail and rural slippages declining to Rs 3,709 crore. Recoveries and upgrades rose to Rs 3,620 crore from Rs 2,845 crore in Q1. Provisions were 0.20% of average advances, down from 0.32% in Q1 and 0.26% a year earlier. The H1 FY27 provisioning ratio was 0.25%. Contingency provisions remained steady at Rs 13,100 crore. Investor Presentation +3
Total operating expenses rose 8.5% year on year to Rs 12,811 crore, well below the 16.4% growth in core operating income. Employee expenses grew 13.5% year on year, while non-employee expenses rose only 5.6%. The cost-to-income ratio improved to about 38.1% from 40.9% a year earlier. Core operating profit grew 21.8% year on year, faster than both NII and expense growth, demonstrating operating leverage. The bank added 97 branches in Q1, reaching 7,608. Digital initiatives, including AI tools for customer service and process automation, are being deployed to improve efficiency, though their specific cost impact is not quantified in the filings. Investor Presentation +4
Standalone CET-1 ratio was 16.01% and total CAR 16.68% at September 30, 2026, down from 16.19% and 16.84% in June. Risk-weighted assets grew 4.6% quarter on quarter and 19.3% year on year to Rs 20,375.68 billion. Capital ratios remain strong, supporting further growth. Management has no segment-wise growth targets and emphasized that credit and deposit growth must move together over time. The bank prefers to grow CASA and retail deposits first, using wholesale funding as a top-up. The FCNR(B) programme is a key part of the funding strategy, with management seeing no need to raise rates above 6%. Investor Presentation +4
ICICI Bank delivered strong profit growth despite margin pressure, supported by robust loan expansion, improving asset quality, and disciplined cost management. The NIM compression reflects a strategic choice to prioritize growth through the FCNR(B) programme and corporate lending. Capital adequacy remains comfortable, providing room for continued balance sheet expansion. The key monitorables will be the sustainability of credit costs, the trajectory of deposit costs, and the spread earned on the FCNR(B)-linked loan book.
