Ladies and gentlemen, good day, and welcome to the Q4 FY '25 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 Q4 of FY 2025. Joining us today on this call are Sandeep Batra, Rakesh, Ajay, Anindya and Abinay. 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 our strategic framework to strengthen our franchise. Maintaining high standards of governance, deepening coverage and enhancing delivery capabilities are focus areas for our risk-calibrated profitable growth. The profit before tax, excluding treasury, grew by 13.2% year-on-year to INR 165.34 billion in this quarter and by 11.4% year-on-year to INR 607.13 billion in financial year 2025. The core operating profit increased by 13.7% year-on-year to INR 174.25 billion in this quarter and by 12.5% year-on-year to INR 653.96 billion in financial year 2025. The profit after tax grew by 18% year-on-year to INR 126.30 billion in this quarter. For the fiscal year 2025, the profit after tax grew by 15.5% year-on-year to INR 472.27 billion. The consolidated profit after tax grew by 15.7% year-on-year to INR 135.02 billion in this quarter, and by 15.3% year-on-year to INR 510.29 billion in financial year 2025. The Board has recommended a dividend of INR 11 per share for financial year 2025, subject to requisite approvals. Total deposits grew by 14% year-on-year and 5.9% sequentially at March 31, 2025. During the quarter, average deposits grew by 11.4% year-on-year and 1.9% sequentially. And average current and savings accounts deposits grew by 10% year-on-year and 0.5% sequentially. The bank's average liquidity coverage ratio for the quarter was about 126%. The domestic loan portfolio grew by 13.9% year-on-year and 2.2% sequentially at March 31,…

Thank you, Sandeep. I will talk about loan growth, credit quality, P&L details, technology initiatives, 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 11% year-on-year and 2.8% sequentially. Auto loans grew by 4.6% year-on-year and 0.4% sequentially. The commercial vehicles and equipment portfolio grew by 7% year-on-year and 2.9% sequentially. Personal loans grew by 4.2% year-on-year and 0.6% sequentially. The credit card portfolio grew by 11.7% year-on-year and 0.9% sequentially. The personal loans and credit card portfolio were 9.1% and 4.3% of the overall loan book, respectively, at March 31, 2025. The overseas loan portfolio in U.S. dollar terms declined 10.2% year-on-year at March 31, 2025. The overseas loan portfolio was about 2.3% of the overall loan book at March 31, 2025. Of the overseas corporate portfolio, about 91% comprises Indian corporates. On credit quality, the gross NPA additions were INR 51.42 billion in the current quarter compared to INR 60.85 billion in the previous quarter. Recoveries and upgrades from gross NPAs, excluding write-offs and sales were INR 38.17 billion in the current quarter compared to INR 33.92 billion in the previous quarter. The net additions to gross NPAs were INR 13.25 billion in the current quarter compared to INR 26.93 billion in the previous quarter. The gross NPA additions from the retail and rural portfolios were INR 43.39 billion in the current quarter compared to INR 53.04 billion in the previous quarter. Recoveries and upgrades from the retail and rural portfolios were INR 30.39 billion compared to INR 27.86 billion in the previous quarter. The net additions to gross NPAs in the retail and rural portfolios were INR 13 billion compared to INR 25.18 billion in the previous quarter. The…

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Mahrukh Adajania from Nuvama Wealth Management.

First of all, congratulations on a very strong set. I just had a few questions. Firstly, on loan growth. So have you tightened or have you been cautious on some segments, especially PLCC, overall retail, corporate growth? Because while the loan growth is good, it's a tad lower than your last few quarters. So is there any cautious approach? And if there is, why? Or is this the general demand that the bank is presented with? So that's my first question. And then I have another question on deposits.

So as far as the loan growth is concerned, I don't think anything specific incrementally in terms of caution on the credit side. I think we are pretty comfortable with what we are underwriting. Of course, on personal loans and cards, as you know, we had tightened a few quarters ago, and that is showing up in the volumes over the last couple of quarters and the loan growth. But other than that, no specific caution on the credit side, I would say it's largely a function of what is happening in the system. And also, I guess, on the pricing side, some consciousness given that during this quarter, we were at the sort of cusp of the downward movement in benchmark rates. So we had to be, I think, a little more, I would say, disciplined in terms of the spreads, et cetera, that we were charging over the benchmark. But other than that, no specific caution on the credit side.

And on deposit growth, my question was that, obviously, banks are cutting deposit rates to transmit policy rates, but there has been a lot of tightness in deposits, not recently, but over the last 1.5 years. So with the liquidity situation improving, is there confidence that a sustained deposit growth will now flow through?

I guess that's reflected in what is happening. We have seen liquidity improve substantially over the last couple of months with all the measures that the Central Bank has taken and deposit growth for us has continued to be quite strong. You would have seen the numbers for the fourth quarter have also been pretty strong for us. And as the rate now, of course, if you look at it, the repo rate has fallen by 50 bps, so that will start to see a transmission into deposit rates, which is what has started. So I think that's in the natural course of things.

The next question is from the line of Kunal Shah from Citigroup.

So the question was on margins. When we look at it in terms of the yields, particularly, there has been 21 basis points expansion. So firstly, obviously, there could be some elements of lower the -- reversals on KCC. But besides that, anything else to look into this, was there maybe in the recovery, there was a one-off interest or something which was there? Besides the interest on income tax refund, was there any other one-offs in the yield on advances?

So there was no one-off in the yield on advances. I think probably the largest component driving up the yield was what we had spoken of in, I think, Q2 and Q3 last year, which is the benefit of the day count, which brought down the yield in Q2 vis-a-vis Q1, and we had mentioned at that time that this would reverse out largely in Q4, which has happened. So that is one factor. The second factor is what you alluded to, the absence of the KCC nonaccrual in Q4 relative to Q3. We did speak about the 2 bps of interest on tax refund. Other than that, I think nothing one-off in that sense, there would be maybe some better returns on liquidity deployment, a little better interest collection on NPLs, things like that, but no single item that requires to be called out, I would say.

So this derecognition would be then significant component of it because it was thought to be like earlier when you indicated, it seems like there is a benefit of 3 to 4 odd basis points, which is coming in margin, but then it seems like that component was quite high.

I'm sorry, what component?

This derecognition?

Yes, that would be some number, but I think the larger number is really on account of the day count convention. So as we had said, I think we would really -- the number -- margin number to focus on in our mind is really the 4.3% for the full year, that would be a more representative number.

Yes. And in terms of also going forward, in fact, you have always been indicating that maybe if it's a shallow rate cut cycle, we should be able to manage the margins, but now if we expect like, say, 100 bps kind of a repo rate cut over, say, 4 MPCs, would you still believe it to be shallow rate? And maybe from here on in terms of the margin trajectory, if we have to look at it, how do we see it on the repricing of the yields? Do we follow like a monthly restate and business banking happens immediately, and maybe that will entirely flow through? And are there any levers available to improve margins or maybe to take care of the EBLR repricing impact?

So I don't think -- so whether the rate cut was relatively less or more, there would be some impact on margins because the deposit rates would -- the deposit repricing would occur with a lag while the loan repricing would be immediate. Indeed, the expectations of the rate cut have gone up compared to where they were, say, a couple of months ago and a higher level of rate cuts is now expected. At the same time, as we spoke earlier, the deposit rates have also started falling. So we will have to see as we go along how we manage through this, but there would be an impact on margins definitely. What that will be? We'll have to see as we go through the year because there are a number of factors that will come into play. I think overall, we have to look at -- the way we look at it is, we have to look at kind of the overall risk-adjusted PPOP and what are all the levers, starting with growth margins and other aspects of that, that we have to optimize, and that's what we'll keep continuing to do.

The next question is from the line of Anand Swaminathan from Bank of America.

I had a couple of questions. One is on the elasticity of savings rate cuts. What according to you is the kind of modeling you've done in going ahead with a concerted all banks have done a 25 bps rate cut? And is there theoretically a base limit that we should think about for savings rate cuts? Or can it kind of continue to mirror the repo rate cuts over the next few quarters? That's my first question.

So we'll have to see as we go along. I don't think we can say that there is a sort of any kind of direct relationship. We are at the -- I would say, the repo rate has fallen by 25 bps and significant actions have also happened on liquidity in the system. And we will have to see how it goes on from here. I don't think that there is any direct relation in that sense, which is quantifiable at this stage.

Okay. But theoretically, there is no limit to how much savins rate can go down from here?

It's a rate which each bank can set for itself in that sense, so it can move as per what a bank thinks is optimal.

Okay. My second question is on the business banking side. The loan growth has been exceptionally good, especially it seems to have accelerated in the last few quarters. Can you help us understand what is the risk in this business? How are you assessing the incremental risk? How much riskier is it versus your corporate book? If you can give us something in terms of how much is the self-funded nature of the business? Is it kind of going to contribute to a slightly higher wage credit cost down the line. Some color on this to get a better understanding would be good.

I think last quarter, we had a fairly extensive commentary on this in the earnings call. So the way we have built this business over the last several years, I think we have invested in, I would say, 3 aspects: one, certainly in the distribution, so expecting more and more of our branches to deal with the business banking or self-employed segment customers. Second, investing in our credit underwriting models and processes for this segment to be able to understand and assess the credit, and deliver credit in a timely manner. And third, I think on the digital side, because our technology offering, digital offerings and transaction banking capabilities for this segment have been pretty good. And that has driven growth in the business, I would say, holistically, both on the lending side as well as on the fee and current account side. And in terms of, I would say, the risk profile of this business, it is a fairly granular portfolio and pretty well diversified geographically and industry-wise and so on. Secondly, I think it's not, in that sense, a particularly high-yield business. So this is not the sort of mid-teens lending rate kind of business. It's a pretty -- it's at the higher end of the quality spectrum and pretty much completed for amongst the banks. But it's also a business where we have a very much better scope to do the customer 360 because we are really doing a lot of things for the business and the owners. So in terms of the credit performance, it has actually been quite good. In fact, if we look back 5 years, I think at the onset of the pandemic, then, of course, we were also -- the portfolio was relatively more recently built for us. This would have been one of the portfolios that we would have been most concerned about, but it is probably the portfolio, which surprised significantly on the upside. Even if you look at a systemic level, ECLGS utilization and so on relative to this portfolio has been marginal. So it has behaved well. Currently, credit costs are pretty low, I would say, almost mirroring what we are seeing on the corporate side. But of course, it is something that has to be tightly monitored as we go along. So we will keep monitoring it and managing the portfolio dynamically.

And Anindya, what will be the average yield on this business versus your corporate business, just to understand how much more profitable this is?

We don't really give the segment-wise yield. It would be somewhat higher. But I think more importantly, it is the holistic PML of the business in terms of the full customer 360, the liability side and the transaction banking and the ability to manage delivery cost and credit cost, which yield the bigger benefit. And of course, the granularity of it.

[Operator Instructions] The next question is from the line of Nitin Aggarwal from Motilal Oswal Financial Services.

Congratulations on a very strong performance. So first question is around asset quality. So if I look back like the normalization trend that started at the beginning of the year has reached a fair degree of stability, so just wanted to know your view like how comfortable you feel about asset quality now versus how, say, the situation was 6 months back? And how is that trending now in unsecured retail products?

Actually, we were always quite comfortable, so we were never too worried. But I would say that what we have been saying holds true. I think the corporate portfolio continues to behave extremely well as does business banking. On the retail side, the secured products, I think, are behaving quite well. On unsecured, I think that generally, the NPL formation has broadly stabilized, I would say. We would hope for it to come down, but let us wait for that to happen, maybe it will take another couple of quarters. And all of that is getting absorbed in the credit costs that we are reporting. This quarter, of course, we had a very low credit cost of some 30 basis points. But even if we kind of were to try and adjust out the fact that they were KCC provisions in the previous quarter, and we had some write-back this quarter and so on, it will still be just about 40-odd bps or so. So things are quite stable. Of course, as we go into the year, I think what happens to the overall economy globally and in India and this whole trade-related issues is something we'll have to watch out for. But as of today, we are very comfortable with the portfolio.

And Anindya, second question is around growth again. So we have seen a very healthy growth, continued growth across business banking, but the retail growth has moderated if you compare over the prior years. Now looking forward, with other banks becoming more and more aggressive in lending in certain products where ICICI bank is. So how do you see the trend about the overall loan growth, where it remains skewed in favor of select products, which fits our PPOP and on the profitability thresholds? Or one can expect more broad-based growth?

So we are really focused on the risk-adjusted PPOP. And of course, I think as we focus on that, should we want to make tactical calls on pricing, et cetera, in a particular customer or segment or product for a particular period of time, I think our funding franchise gives us the flexibility to do that. But overall, we are quite focused on the overall PPOP. I think that if we look -- we would, I would say, continue to see pretty healthy growth on the business banking side as things currently stand. Retail, we will see how the market evolves. And I think as the rate environment stabilizes during the year, pricing may also stabilize, so kind of that's where I would look at it. On the unsecured side, probably the growth has bottomed out, and we may see some improved growth from here is what we've seen.

And lastly, on the PSL front line, I see the stronger growth in business banking, but slightly down growth in retail and rural. How is the bank faring on the PSL front?

So I think it's pretty similar to what we have seen in past quarters. We meet our overall PSL requirement. We also meet our MSME requirement. In fact, overall, and MSME, we have some surplus. In some of the categories like the small farmer and weaker section, et cetera, we do have a shortfall, which we have addressed through either buyouts or through purchase of the PSLC certificates. So pretty much the same continues.

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

Just a couple of questions. First one is on the income, if any, which moves on the interest income line on a recovery of bad loans, like NSR receipts have come in on a cash basis, does anything of it move to the interest income line as well?

So the cash portion of the NPA sale would be reflected as a write-back in provisions, not as interest income.

And there is nothing there in the interest income line from bad loans?

There will always be some interest recovery on NPLs in any quarter. It may vary a little quarter-to-quarter, but it will always be there.

Second one is on the current differential that exists on, let's say, some of the benchmark loans between, let's say, private sector banks and public sector banks, does it -- how much does it hurt you right now? Some color on -- because the transmission seems to be a bit clear from the private sector bank side in comparison to public banks at least?

Are you talking about competition in the lending rates?

Yes, because as I look at some of the housing loans...

Yes, clearly, it is an issue. I don't -- I think in retail, it's not just about pricing because you really need the distribution, scale, processing capacity to back up your pricing. So I wouldn't say it's just about pricing. But certainly, there are very large capable competitors who are also priced meaningfully below us. So it does create some challenges in terms of growth. But I guess that's part of life. So we will have to keep dealing with it as we go along and look at how we can drive other levers to continue to maintain profitable growth.

And one clarification. Unsecured loans, today, you would say that we are well past the peak in terms of fresh slippages? Or is there any amount of uncertainty?

So I would say it has -- it's broadly stable. We are yet to see it coming down meaningfully. But I think more importantly, the behavior of portfolios originated more recently, say, what we originated post making some of the credit changes, which we did maybe 18 months ago, the behavior of those portfolios gives us a fair degree of comfort on building the portfolio incrementally.

The next question is from the line of Harsh Modi from JPMorgan.

I just want to understand on RWA growth, it's 17% year-on-year for growth of around 13%. Could you please explain what drove the faster growth in risk-weighted assets? I have a follow-up question after that.

So it's an evolving mix of the different categories of loans and how one classifies them what -- you can justify in which risk weight category. In the year-end, I think market risk also went up because we did take some larger positions as the interest rate environment turned favorable for taking trading positions.

Got it. The follow-up is on just the use of capital. You have significant capital generation. CET1 is at 15.94% and the way it seems your incremental RWA of INR 2.4 trillion growth versus profit of almost INR 0.5 trillion, so let's say, over the next 2 to 3 years, how do you see the use of capital at the bank, assuming given your competitive position and the modes, you may be able to generate significant amount of capital over the next 2 to 3 years?

I think see, two, three things. One, clearly, I think that there is a certain expectations among stakeholders, market, et cetera, of the level of capital that a large private sector bank should be maintaining. And I think our capital levels are not out of line with most of our peers in that context. And as far as the capital generation that will happen in future and how much of that is absorbed by growth, we will see as we go along. But I think that capital -- maintaining a certain level of capital is important from a strategic perspective and market confidence perspective.

Right. And that was exactly my question that organically, seems growth would be -- you're already doing quite well, focused on, as you said, risk-adjusted PPOP. And given the excess capital generation because right now, your RWA growth is just 5x of your net profit. So is there any possibility of -- for strategic purposes, what are the places that you may incrementally allocate capital over the next 2 to 3 years?

We will, I think, believe that our franchise gives us sufficient opportunity to grow and leverage the capital. If at that stage, we feel that we are -- we can always look at other things like maybe increasing payouts or things like that. But for the time being, I think we believe that, given the franchise that we have, we have a lot of runway for growth.

The next question is from the line Param Subramanian from Investec Capital.

Firstly, on the net worth movement in the quarter, so it's up INR 20,000 crores quarter-on-quarter, which is higher than the PAT. So is that the AFS mark-to-market that's happened?

So, one, the main item this quarter would be the issue of shares, the recording of the additional investment in ISEC. So we would have issued shares for the shareholders of ISEC, that would have -- while it's CapEx neutral, it would have increased the net worth by a substantial amount. That would be the biggest item.

Okay, not as much AFS, got it. Secondly, on your -- so broadly, the outlook on CASA, right, so over the last year, the CASA ratio for the bank is almost flat Y-o-Y, which is a great outcome given the context. But if you compare with, say, the pre-COVID period when CASA used to be 48%, 49%, we are lower and we are looking at, like you pointed out, on any accommodative RBI on liquidity, do you think this has legs to go up going ahead, seeing the scenario as it is building up, say, from a macro perspective?

Yes, I think that we basically have to look at the total quantum and cost of funding that is available to us, and that should be superior to our competitors because CASA trends will not vary very widely across the large banks. So we would -- that is the right way to look at it rather than think too much about what is going to be the CASA growth for us. I think we have to really look at what is the total quantum of funding and the cost of that funding, and its deployability because very volatile CASA may not help also and with the deployability and really look at it from that perspective, which is what we do. And not really we wouldn't have a specific outlook on CASA per se.

Okay. Okay. Would you think that the worst of the CASA pressures for yourself and the sector are largely behind, if I were to put it that way?

Logically, that should be so.

The next question is from the line of Piran from CLSA.

Firstly, just on the previous question of Param, why did you say that the CASA pressure is over? Sorry, I missed that.

I said, logically, that should be so given the monetary easing, the improvement in system liquidity. And to the extent that it was a factor the sort of some calm in capital markets, but it's something we'll have to see as we go ahead.

Okay, okay. That's the reason, fair enough. Just moving on to my questions. Firstly, on vehicle growth slowdown, how do we really interpret this? Is this just a function of more competition at the counter? Or are you all intentionally scaling back due to asset quality or pricing? Or is it just something else?

I think it's more the underlying demand and maybe at the margin a little bit on the pricing side. Nothing on asset quality per se.

And Anindya, just on cost of deposits, you all were -- it was inching up 2, 3 bps a quarter, which was understandable. This quarter, it's up almost 10 bps and the CASA ratio probably -- the drop in CASA ratio explains maybe 2, 3 bps of that. What explains the rest?

Similar to...

Or is it the number of days thing?

Yes, it would be partly a number of days.

Okay, okay. And just my last question. Out of your buildup portfolio of INR 60,000 crores, how much would be LRD?

We have not given that breakup. There will be some component of LRD there.

Would it be significant or more minor?

I don't think it will be minor, but we have not given the breakup. I think it will be a reasonable number.

Okay. Fair enough. That's all from my end. And if I could just squeeze in one humble suggestion. If we could move our calls and our results releases to either a weekday or a Saturday morning, it would be great. Times like this when it's literally clashing and in a minute, we've got an HDFC Bank call, it doesn't do justice to either of the banks. So if you could take that suggestion would be great.

Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.

Thank you, everyone, and we'll be happy to take any other questions offline. 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.