Home » Core Investor Group » ICICI Bank Ltd – Q1FY26 Result Update
Sector Outlook: Positive
Strong performance across all segments; beats estimates
ICICI Bank delivered a steady performance in Q1FY26, with Net Interest Income (NII) rising 2.1% QoQ and 10.6% YoY to ₹21,635 crore, supported by credit growth and stable lending spreads. Operating expenses increased 5.6% QoQ and 8.2% YoY, leading to a slight dip in Pre-Provision Operating Profit (PPOP) by 0.9% QoQ to ₹17,505 crore, though it grew 13.6% YoY. Net Profit stood at ₹12,768 crore, up 1.1% QoQ and 15.5% YoY. Asset quality remained robust, with Gross NPA at 1.67% (stable QoQ, down 48bps YoY) and Net NPA at 0.41%. Capital Adequacy Ratio improved to 16.97%, well above regulatory norms. Advances rose 11.5% YoY to ₹13.64 lakh crore, led by a 6.9% YoY growth in retail loans, while deposits grew 12.79% YoY to ₹16.08 lakh crore, showing strong retail traction despite a slight QoQ dip. Net Interest Margin (NIM) stood at 4.34%, marginally lower due to repo rate cuts and competition, while Return on Assets (ROA) remained strong at 2.44%. Among subsidiaries, ICICI Prudential AMC posted a PAT of ₹782 crore, and ICICI Securities reported a PAT of ₹391 crore, down 25% YoY. The bank expanded its physical footprint with 83 new branches, taking the total to 7,066 branches and 13,376 ATMs/Cash Recycler Machines, while continuing to invest in digital channels and technology for enhanced cutomer experience
Key Concall Highlights
The bank reported a gross slippage ratio of 1.9% in Q1FY26, slightly higher than the previous quarter, primarily due to seasonal stress in the Kisan Credit Card (KCC) portfolio. Credit cost stood at 50bps, and the contingency provision buffer remained unchanged at ₹131 billion, equivalent to 1% of total advances. Overall loan growth was 11.5% YoY, led by domestic loan growth of 11–12%. Within this, retail loans grew 7% YoY, rural lending saw a marginal 0.4% decline, business banking rose sharply by 30% YoY, and domestic corporate loans grew 8% YoY. Personal loan growth moderated after management tightened credit filters and adjusted pricing in Q3FY24. Of the domestic loan book, 53% is repo-linked, 15% linked to MCLR or legacy benchmarks, 1% to other external benchmarks, and 31% on fixed rates. The credit-deposit (CD) ratio improved to 85%, aligning with management’s comfort range. Net interest margins were supported by a 7bps contribution from income tax refunds, though the full impact of repo rate cuts is expected in Q2FY26. This pressure will be partly mitigated by reduced savings rates and deposit repricing. Non-interest income grew 22% YoY, driven by a 210% jump in investment income and 8% growth in fee income, with 79% of fees coming from retail, rural, and business banking. Operating costs rose 8% YoY due to higher staff and non-staff expenses. The bank’s capital position remains solid with a CAR of 17.0% and CET-1 ratio of 6.3%.
Valuation and Outlook
ICICI Bank, India’s second-largest private sector bank, delivered a steady performance in Q1FY26, with net profit rising nearly 15% YoY. The bank maintained strong operational momentum, supported by healthy net interest income and stable net interest margins despite rate cuts and intensified market competition. Loan growth remained robust, particularly in the retail and banking segments, while deposit mobilisation continued at a healthy pace. Asset quality remained resilient, although there was a rise in net NPA additions, which warrants continued monitoring. Fee income growth was healthy, further diversifying revenue streams. On the subsidiary front, ICICI’s insurance and securities businesses made a meaningful contribution to consolidated earnings. While near-term challenges such as margin compression and higher operating expenses persist, the bank’s strong capital position, superior return ratios, diversified loan book, and continued digital push position it well for sustainable long-term growth. Overall, ICICI Bank’s performance reflects its consistent execution, and we remain positive on the bank, expecting robust credit growth and further improvements in asset quality in FY26.
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