Ladies and gentlemen, good day, and welcome to the Q1 FY '26 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 Q1 of FY '26. Joining us today on this call are Sandeep Batra, Rakesh, Ajay, Anindya and Abhinek. At ICICI Bank, our strategic focus continues to be on growing profit before tax, excluding treasury to the 360-degree customer-centric approach and by serving opportunities across ecosystems and micro markets. We continue to operate within the framework of our values to strengthen our franchise. Maintaining high standards of governance, deepening coverage and enhancing delivery capabilities with a focus on simplicity and operational resilience are key drivers for our risk-calibrated profitable growth. The profit before tax, excluding treasury grew by 11.4% year-on-year to INR 156.90 billion in this quarter. The core operating profit increased by 13.6% year-on-year to INR 175.05 billion in this quarter. The profit after tax grew by 15.5% year-on-year to INR 127.68 billion in this quarter. Total deposits grew by 12.8% year-on-year and were flat sequentially at June 30, 2025. During the quarter, average deposits grew by 11.2% year-on-year and 3.1% sequentially. And average current and savings account deposits grew by 8.7% year-on-year and 3.9% sequentially. The bank's average liquidity coverage ratio for the quarter was about 128%. The domestic loan portfolio grew by 12% year-on-year and 1.5% sequentially at June 30, 2025. The retail loan portfolio grew by 6.9% year-on-year and 0.5% sequentially. Including non-fund-based outstanding, the retail portfolio was 43.2% of the total portfolio. The rural portfolio declined by 0.4% year- on-year and 1.5% sequentially. The business banking portfolio grew by 29.7% year-on-year and 3.7% sequentially. The domestic corporate portfolio grew by 7.5% year-on-year and declined by 1.4% sequentially. The overall loan portfolio, including the international branches portfolio grew by 11.5% year-on-year and 1.7% sequentially at June 30, 2025. The overseas loan portfolio was about 2.4% of the overall loan book at June 30, 2025. The net NPA ratio was 0.41% at June 30, 2025, compared to 0.43% at June 30, 2024. During the quarter, there were net additions of INR 30.34 billion to gross NPAs, excluding write-offs and sales. The total provisions during the quarter were INR 18.15 billion or 10.4% of core operating profit and 0.53% of average advances. The provisioning coverage ratio on nonperforming loans was 75.3% at June 30, 2025. In addition, the bank continues to hold contingency provisions of INR 131 billion or about 1% of total advances at June 30, 2025. The capital position of the bank continued to be strong with a CET1 ratio of 16.31% and total capital adequacy ratio of 16.97% at June 30, 2025, including profits for Q1 for financial year '26. Looking ahead, we see many opportunities to drive risk-calibrated profitable growth and grow market share across key segments. We remain focused on maintaining a strong balance sheet, prudent provisioning and healthy levels of capital while delivering sustainable and predictable returns to our shareholders. I now hand the call over to Anindya.

Thank you, Sandeep. I will talk about loan growth, credit quality, P&L details 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 10.3% year- on-year and 1.9% sequentially. Auto loans grew by 2.2% year-on-year and declined by 0.7% sequentially. The commercial vehicles and equipment portfolio grew by 5.9% year-on-year and 1.1% sequentially. Personal loans grew by 1.4% year-on-year and declined by 1.3% sequentially. The credit card portfolio grew by 1.5% year-on-year and declined by 5.4% sequentially. The personal loans and credit card portfolio were 8.8% and 4% of the overall loan book, respectively at June 30, 2025. Within the corporate portfolio, the total outstanding to NBFCs and HFCs was INR 874.17 billion at June 30, 2025, compared to INR 918.38 billion at March 31, 2025. The total outstanding to NBFCs and HFCs were about 6.4% of our advances at June 30, 2025. The builder portfolio, including construction finance, lease rental discounting, term loans and working capital was INR 628.33 billion at June 30, 2025, compared to INR 616.24 billion at March 31, 2025. The builder portfolio was about 4.6% of our total loan portfolio. Our portfolio largely comprises well-established builders, and this is also reflected in the sequential increase in the portfolio. About 1.9% of the builder portfolio at June 30, 2025, was either rated BB and below internally or was classified as nonperforming. On credit quality, the gross NPA additions were INR 62.45 billion, in the current quarter compared to INR 59.16 billion in Q1 of last year. There were gross NPA additions of about INR 7.67 billion from the Kisan credit card portfolio in the current quarter. We typically see higher NPA additions from the Kisan credit card portfolio in the first…

[Operator Instructions] We'll take our first question from the line of Mahrukh Adajania from Nuvama Wealth Management.

So my first question was on margins regarding the change in method. Now fourth quarter is the quarter where you see the biggest positive impact of the old method. So in fact, your margin decline even adjusted for the tax refund, interest on tax refund appears to be just 4 to 5 basis points. Is that a correct assessment? That's my first question or if you could give a like-to-like comparison of margins for the fourth quarter, that would be even better. And then my second question is on growth because that's -- that is an obvious challenge for the sector and nothing seems to be growing much other than low yield corporate loans. Home loans, there's intense competition. So when do you see growth reviving? And where do you see our growth settle? I mean, ICICI's loan growth settle? Because mid-teens, I mean, would mid-teens still be possible? Yes. Those are my questions.

Thanks, Mahrukh. On the first one, yes, the -- on the reported margin for Q4 would have been a few basis points lower. So the kind of range that you spoke of is probably correct. As far as -- but equally, the same Q3 to Q4 spike will not happen in the current year, we'll have a more even spread of reported margin through the year. On the growth side, I think as you know, there -- I think in the first quarter, there have been a number of global events, et cetera, which have had some impact on, I guess, on sentiment. But the substantial monetary easing that has taken place starting from Q4, particularly and carry through into Q1 will also have some positive impact, hopefully, as we go along. So I think it's too early to say we will have to wait for another quarter to really form a view about how it's going to go.

We'll take our next question from the line of Kunal Shah from Citigroup.

So sorry, again to touch upon on margin. So fair to say maybe the unwinding, which was expected to come in, in the first quarter, maybe because of this the benefit, that wouldn't have been there in this particular quarter. Otherwise, any which way was like we are comparing 4.41 to 4.34. So maybe like 4, 5 basis points of unwinding is not really there in this quarter. And thereafter, maybe adjusting for interest on income tax refund, we have seen like 14 bps kind of a decline in NIMs on a quarter-on-quarter basis. So would that be correct?

No, that would not be correct because there is no unwinding in the first quarter. The NIM typically declines from the Q4 to Q1 because of the higher number of days in Q1. And then there is a pickup again in Q4. So the Q4 NIM, if we had used an equal month basis would have been lower than the reported number of 4.41. But I think this is what the wave -- that's why even in our previous calls, we have focused attention on the previous year's full year NIM of 4.3% as the anchor for further discussion. But we thought that it would also be good to eliminate that one confusion point.

Yes. So only thing was maybe unwinding, I just meant to say that the benefit which was there in the fourth quarter that have been relatively lower in the first quarter by, say, 4, 5 basis points, which goes away, which is not there in the computation now.

No. This -- the method -- if you look at, for example, the reported margins for this year and on the new basis and Q1 last year on the old basis are almost the same. There is no real impact. That impact largely comes later in the year. So the first quarter is not impacted at all. If you're looking at a sequential analysis, then on a like-to-like basis, the reported margin for Q4 would have been a little bit lower.

Yes. So would that have been like 8, 9 basis points, how much it would have been lower, yes?

No, I think I answered the range that Mahrukh quoted was probably the correct range.

Okay. Okay. Got it. Perfect. Yes. And secondly, with respect to the credit cost. So we have been indicating that it would normalize in a gradual manner. This quarter would have KCC slippages. But ex of that when we look at the credit cost, okay, so would we say like now we have reached -- or maybe there is a further normal gradualization, which has still to happen from the current levels adjusting for KCC? Because we are already seeing like 50, there would be some impact of KCC. So do we expect further normalization? Or maybe this is more like a clean margins which we are seeing -- clean credit cost, which we are seeing now?

I think we have always said that currently, your underlying level would be more like about 50 basis points. Can that inch up? It could, but I don't see anything -- any major movement.

Next question is from the line of Harsh Modi from JPMorgan Life Insurance.

JPMorgan Chase, but thanks for that. A couple of questions. First is, if I see your mix on corporate creditors, the AA- mix has been reducing over the last few years and BBB- has been increasing. Is that the best -- the sweet spot on RORWA, that's why you're doing it? And any risks around that? That is first one. Second one is on business banking, very good numbers. What went right? And going forward, if you think about the mix of credit growth over the next, let's say, a couple of years, where should we see the incremental delta coming from? Any granularity you can provide would be great.

So on the first question, I think the decline in the proportion of the very high rated is partly a function of demand and partly a function of pricing. And in some cases, we may have in earlier periods of very easy liquidity built up some portfolio there, and that has gradually run off as the funding environment got tighter. Currently, of course, as you would know, that overall credit growth itself has come down. And in this particular segment, there is a fairly high price competition. So we would really look at this segment as we look at all the other corporate borrowers from a Customer 360 perspective and look at the totality of our relationship with the borrower. And in that context, if lending makes sense, we would do it. As far as the increase in the proportion -- I think we are very comfortable with the whole entire, I think, A bucket. So we don't have -- we feel that to answer your question, that is probably the segment where you do have the right balance of risk reward, although we have competition in those segments also. I think on the lower-rated origination and BBB and below, we have fairly tight controls and limits on how we approach that segment. So -- and it is quite calibrated. So overall, I think the reduction in the very -- proportion of the very high rated is really a function of demand and pricing. On your second question on business banking, I think we have spoken about it in the past couple of calls. To keep it short, I would say it's a combination of distribution, process and technology, the digital interfaces and capabilities that we offer to the customers and also a fairly tight focus on monitoring of the credit and managing the portfolio in a disciplined way.

All right. Sorry, can I have just one more question on the liability side?

Sorry, the last part of your question was around mix going forward. I think basis the visibility and the market share opportunity, one would expect the business banking piece to grow faster than the overall loan book, and therefore, that proportion should gradually go up.

Right. And one more on the liability side. It seems you have been gaining market share on CASA deposits nationwide. Now with rate cuts, how do you see behavior changing? Any early signs of higher degree of competition, more preponderance of sweep accounts and so on and so forth. So do you see market share stabilizing? Or you still see CASA market share growing for the bank over the next, let's say, 12 months period?

So I think CASA is not really -- the current account, of course, is purely the result of presence in the transaction flows of corporates, businesses, capital markets players and so on. The savings account is the result of being sort of the primary bank or the transacting bank of the retail customer. And that is how money comes in, goes out and some level of float stays in those accounts. I don't think that there is any particular change in the competitive scenario. If you see in the quarter, I think rate actions taken by all the large banks have been more or less in the same line. So given the decline in the overall interest rates and the policy environment. And we would continue to focus on this segment by -- through increasing customer acquisition, increasing our share of the customers' wallet and trying to become the primary banker. So we would hope that we will continue to do reasonably well.

Next question is from the line of Nitin Aggarwal from Motilal Oswal.

Congrats on another set of good numbers. I have 3 questions. One is around the decline in cost of deposits that we have reported in the quarter. So it seems fairly sharp 15 basis point decline. So is it like the unwinding that we have done in respect to the high cost deposits that has resulted in this kind of decline and has it played out fully and this -- or this will continue along with the [indiscernible] benefits in Q2 also.

There is no unwinding. As I said, the impact of the equal month convention on the reported NIM for the quarter and other ratios for the quarter is negligible. So as far as the decline in deposits -- deposit cost, it's clearly the reduction in the savings account deposit rate, which has -- a large part of it was 25 basis points that was there in April, which the full -- the benefit of that has been there for pretty much the full quarter. And then on the higher value deposits, there was another cut in May, which also helped. In addition, of course, we had -- as the retail term deposit also gradually, the incremental rates repricing would reflect. Plus during the quarter, we saw a reasonable reduction in our wholesale deposit book given the continued strong growth in CASA and retail term deposits and the high liquidity that we were running. And so that -- the runoff of the wholesale deposit book also helped in the funding cost.

Yes. So that -- yes, that actually I was referring to the wholesale deposit unwinding that we have done. And so the benefit of that has played out fully in this quarter or you expect that to continue?

I don't -- it's difficult to really say. I think we've not been aggressively raising wholesale deposits. So I think as we -- as I said in the opening remarks, we would continue to see a gradual benefit of deposit cost repricing in Q2. But there will also be a higher impact of the 50 bps repo cut of June.

Right. And second question, Anindya, is around the unsecured retail growth. So how are we looking at that segment? Because while we have been able to deliver healthy growth, but because of the systemic softness in the overall credit demand, the growth overall has come down as well. And our unsecured retail segments have not been able to contribute as you know. So how are we seeing at those segments given the asset quality has seen some stabilization. So how do we look at those segments in terms of their contribution going forward?

I think clearly, we can do more on both personal loans and credit cards. In personal loans, I think as we may have commented in the past, we are quite comfortable with the quality of origination done over the last 12 to 15 months. So I think we can see volumes pick up and see some better growth there. And similarly, on cards also going forward, maybe some better customer acquisition is also something we can see. So I think we are quite focused on both the segments. We could do better there than what we've done in Q1.

Right. And lastly, on the business banking, that is a segment which has been growing very well for us and very good yields. But how do you really ensure that we don't go on to see some challenges in respect to asset quality because the kind of growth on a very decent base that the segment is at now -- so how do we ensure that we don't get into sort of asset quality challenges in the segment? Any tightening that we have done in the recent quarters? So we have talked about the underwriting like commissions being tightened in the past. Are we looking at this on a continuous basis as the environment is getting tougher around some of these segments?

As I said, we monitor the portfolio continuously. Just to put the numbers in context, if you look at the gross NPA additions to the corporate and business banking portfolios in the quarter were about INR 10 billion on an aggregate portfolio of about INR 5.6 trillion. The business banking portfolio alone is now about INR 2.7 trillion. So I think the current sort of credit behavior and asset quality is extremely benign. And we will probably see some increase going forward, but credit costs today are negligible. So they may go up slightly. But the portfolio is granular and tightly monitored.

We'll take our next question from the line of M.B. Mahesh from Kotak Securities.

Anindya just on this -- again, this question on margins.

I'm sorry to interrupt. Can you use your handset mode, please? Your line is not very clear.

Anindya on this question on margins, just on the yield side, with the drop of 25 basis points that you have seen, is it possible to kind of quantify how much of the yields -- sorry, how much of the repo rate cuts have flown through the loan book?

We have not quantified it. If you look at the February cut, I think it would be -- it would have largely flown through almost entirely. The April cut also would have substantially flown through. Maybe we have a little bit more to happen in Q3. The June cut, I would say, has not flown through much and most of that will come through in Q2.

And sorry, just to answer the previous question, you said that the bulk of the benefit on the cost of deposit side has come from the savings account, given that the contribution of wholesale is fairly small.

That you can just compute -- that's just computable, a 25 bps cut on the portfolio that would have yielded a reasonable benefit.

And the second question on the demand environment. When you say that you're ready to accelerate portfolio is good. Is it a question of demand being an issue on the ground? Or is it a problem with pricing?

I think it's a part maybe there is some pricing, but probably we also need to focus a little more on the distribution and the throughput. So I wouldn't say that in some of these segments, it is purely demand. If you're talking about PL and cards. In other segments, of course, overall loan growth in the system is what it is. So that reflects some softness in demand.

Perfect. And last one, one question. Are you allowed to restructure any standard assets and let's say, it's in a default book in the SMA-0, 1 and 2, are you allowed to restructure it and classify it as standard.

No.

Next question is from the line of Rikin Shah from IIFL Capital. Sorry, we've lost the connection. We'll take the next question from the line of Piran Engineer from CLSA.

Congrats on the quarter. So just firstly a couple of clarifications on previous questions. So Nitin's question on 15 bps reduction in cost of deposits, that also includes the number of days thing, right? Like core deposit cost would not have gone down 15 bps, correct Q-o- Q?

As I said, the deposit -- the margins for the first quarter on both basis, there would be a negligible difference, which is what we have mentioned in our opening remarks. Relative to the fourth quarter, the margins would have been -- the decline in margins would have been somewhat lower on a comparable basis.

But then, Anindya, how do I think about it in the context of you versus peers where your margins are down, say, 5, 6 bps, core NIM. HDFC, Axis are down 12, 13 bps. Is it just a more delayed pass-through of the repo rate cuts? Is that how I should simplistically put it? Because all of you all have cut [indiscernible] rates at approximately the same time and by the same amount.

I don't.

And similar [indiscernible].

I can't really comment on others. I think we have -- a to begin with been always saying that we have to look at the full year margin of last year of 4.3% and the repo rate cut and the lagged repricing of deposits will create some pressure on that. In the first quarter, I think we had the upfront benefit of the savings deposit rate cut, and we also had 6, 7 basis points of the benefit of interest on income tax refund. As we go into Q2, the full impact of the 50 bps repo cut of June will come into effect. We will also have some continuing repricing of term deposits as well as the benefit of the savings rate cut that happened in May and June. And then from -- in Q3, I guess, unless there is any change in the policy stance, the benefit of the CRR cut will also kick in.

Okay. Okay. That's helpful. Just secondly, if I have to compare retail term deposits today versus a wholesale term deposits today and even adjusted for the outflow rate and the LCR competition. Would wholesale rates be similar to TD rates now or lower?

No, lower. They would be lower.

It will be lower, right? So then why are we trimming wholesale deposits when it's lower? That's what I look at.

I think it's a function of the overall liquidity that we are carrying if you look at the CASA and the term deposits. So we had -- what we have trimmed is the -- what has gone down is the deposits that were raised in the past at higher rates. If we get deposits at the rates we are quoting now, we'll take them.

And just lastly, on vehicle loans. I mean, our growth has gone down to 2%, 3%. This is -- now, of course, demand has slowed down. There's no doubt about it. But it's not slowed down so much also. Is this more a function of us just being cautious on pricing and that's why we are choosing not to grow here?

So I think price competition has always been a part of it. And of course, the underlying asset class also is not growing at that pace.

Ladies and gentlemen, we'll take that as the last question for today. I now hand the conference over to management for closing comments. Over to you, sir.

Thank you very much for taking time on a Saturday, and we are happy to clear any other doubts off line. 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.