ICICI Bank Ltd Quarterly Results Q4 FY 25 stock analysis

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Sector Outlook: Positive

All-Round Beat on Estimates

ICICI Bank posted strong Q4FY25 results, with net profit rising 17.9% YoY to ₹12,630 crores, beating market expectations. Net Interest Income grew 11.8% YoY to ₹21,193 crores, driven by solid loan growth and stable margins. Operating profit rose 17.5% YoY, while provisions dropped 27.4% QoQ, showing a strong buffer. Asset quality improved with Gross NPA falling to 1.67% and Net NPA to 0.39%. NIM stayed healthy at 4.4%, and ROA rose to 2.52%. The bank’s capital position remains strong with a capital adequacy ratio of 16.55%. Deposits rose nearly 14% YoY, and loans grew over 13%, with strong gains in business banking and corporate lending. Subsidiaries also did well—ICICI Prudential’s profit jumped 76.7%, ICICI Lombard’s profit tripled, and ICICI Securities added positively after becoming a fully-owned unit. The bank expanded its branch network and recommended an ₹11 dividend per share for FY25.

Key Concall Highlights

Loan Growth Strategy: Overall loan growth was slightly lower due to earlier tightening in Personal Loans (PL) and Credit Cards (CC). That phase is now behind, and growth is expected to pick up.
Future Loan Growth:
- Business banking is expected to grow strongly.
- Unsecured retail growth has likely bottomed out and will improve going forward.
- Bank avoided aggressive lending in highly competitive or rate-sensitive segments.
Loan Rate Composition:
- 53% of loans are linked to repo rate,
- 15% to MCLR/other benchmarks,
- 1% to external benchmarks,
- 31% are fixed-rate loans.
Savings Rate Policy: Savings rate changes won’t be directly linked to repo rate cuts; decisions will depend on overall market trends.
Margins Outlook: Margins could face pressure due to the ongoing rate cut cycle.
PSL Compliance: Overall, the bank has a PSL surplus. Minor shortfalls in Small & Marginal Farmers (SMF) have been addressed using PSLCs or buyouts.
Deposit Growth: Expected to remain strong, even with falling interest rates.
Focus Area: More focus on risk-adjusted Pre-Provision Operating Profit (PPOP) than just Net Interest Margin (NIM).
Business Banking Quality:
- Credit cost for business banking matches corporate loans,
- Yields are slightly higher than the corporate book.
Asset Quality:
- Corporate and business banking loans are performing well.
- On the retail side, secured loans are stable.
- Unsecured loan defaults have stabilised and are expected to improve.
NPA Sale Update:
- Bank sold ₹2,800 crores in NPAs to an ARC.
- Wrote off 30%, and for the remaining 70%, received ₹1,600 crores in Security Receipts (SRs) and ₹300 crores in cash.
Tech Spending: Tech costs made up 10.7% of operating expenses in FY25.
Provisioning Buffers:
- Provision Coverage Ratio (PCR): 76.2% on NPAs.
- Additionally holds ₹13,100 crores (₹131 bn) in contingency provisions, around 1% of total loans.

Valuation and Outlook

ICICI Bank reported a strong Q4FY25, with net profit jumping nearly 18%. The bank continues to perform well, with steady income from lending, lower costs, and improving asset quality. While some other banks are facing issues with bad loans, ICICI Bank has kept its NPAs under control. Loan growth was solid, especially in retail and SME segments, and deposits also grew well. Fee income stayed strong, and profit margins remained steady despite market competition. Its subsidiaries in insurance and securities added to overall profits, showing the strength of its diversified model. With a solid capital base and strong return ratios, ICICI Bank remains one of the top performers in the sector. Looking ahead, credit growth is expected to stay strong with further improvements in asset quality in FY26.