Ladies and gentlemen, good day, and welcome to ICICI Bank Limited Q3 FY 2026 Earnings Conference Call. [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 Q3 of FY 2026. 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, through 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 core operating profit increased by 6% year-on-year and 2.5% quarter-on-quarter to INR 175.13 billion in this quarter. The total provisions during the quarter were INR 25.56 billion. This includes additional standard asset provision of INR 12.83 billion made pursuant to Reserve Bank of India's annual supervisory review, which Anindya will explain later on the call. The profit before tax excluding treasury was INR 149.57 billion in this quarter compared to INR 152.89 billion in Q3 of last year. The profit after tax was INR 113.18 billion in this quarter compared to INR 117.92 billion in Q3 of last year. Average deposits grew by 8.7% year-on-year and 1.8% sequentially, and average current and savings account deposits grew by 8.9% year-on-year and 1.5% sequentially in this quarter. The bank continued to see healthy growth in current account deposits and individual term and savings deposits. Total deposits grew by 9.2% year-on-year and 2.9% sequentially at December 31, 2025. The bank's average LCR for the quarter was about 126%. The domestic loan portfolio grew by 11.5% year-on-year and 4% sequentially at December 31, 2025, compared to 10.6% and 3.3% at September 30, 2025.…

Thank you, Sandeep. Let me first talk about the additional standard asset provision. Following its annual supervisory review, RBI has directed the Bank to make a standard asset provision of INR 12.83 billion in respect of a portfolio of agricultural priority sector credit facilities, wherein the terms of the facilities were found to be not fully compliant with the regulatory requirements for classification as agricultural priority sector lending. There is no change in asset classification or in the terms and conditions applicable to the borrowers or in the repayment behavior of borrowers as per these terms. The bank has been originating this portfolio over some years and will work to bring it in conformity with regulatory expectations. This additional standard asset provision will continue until the loans are repaid or renewed in conformity with the PSL classification guidelines. I will now 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 11.1% year-on-year and 3.2% sequentially. Auto loans grew by 0.7% year-on-year and 0.9% sequentially. The commercial vehicles and equipment portfolio grew by 7.9% year-on-year and 3.2% sequentially. Personal loans grew by 2.4% year-on-year and 1.7% sequentially. The credit card portfolio declined by 3.5% year-on-year and 6.7% sequentially. During the quarter, we saw improved growth trends across the mortgage, rural and corporate portfolios. The sequential decline in the credit card portfolio was due to high festive spends towards the end of the previous quarter, which had resulted in high sequential book growth in that quarter and saw repayments in the current quarter. Within the corporate portfolio, the total outstanding to NBFCs and HFCs was INR 791.18 billion at December 31, 2025, compared to INR 794.33 billion at…

[Operator Instructions]. Ladies and gentlemen, we have the management team back. Sir, please go ahead.

I'll just repeat, gross direct premium income of ICICI General increased to INR 70.41 billion in this quarter from INR 62.14 billion in Q3 of last year. The combined ratio stood at 104.5% in this quarter compared to 102.7% in Q3 of last year. The profit after tax was INR 6.59 billion in this quarter compared to INR 7.24 billion in Q3 of last year. The profit after tax of ICICI AMC, as per Ind AS, was INR 9.17 billion in this quarter compared to INR 6.32 billion in Q3 of last year. The profit after tax of ICICI Securities as per Ind AS on a consolidated basis was INR 4.75 billion in this quarter compared to INR 5.04 billion in Q3 of last year. ICICI Bank Canada had a profit after tax of CAD 5.4 million in this quarter compared to CAD 19.6 million in Q3 of last year. ICICI Bank U.K. had a profit after tax of USD 5 million in this quarter compared to USD 5.1 million in Q3 of last year. As per Ind AS, ICICI Home Finance had a profit after tax of INR 1.95 billion in the current quarter compared to INR 2.03 billion in Q3 of last year. With this, we conclude our opening remarks, and we will now be happy to take your questions.

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

My first question is on the standard asset provision. So what is the size of the portfolio on which these provisions were to be made? And what will be the impact on OpEx now that you have that much lower priority portfolio? Also, what was the classification issue as in -- I mean, what was noncompliant about the classification? So that's my first question. And my second question is on margins. So obviously, margins have held steady. There is a rate cut and there's, again, aggressive competition in mortgage pricing. So how do you view your margins from here on? Is there some amount of deposit repricing still left which will help hold up margins at these levels in the near future. So those are my questions.

Yes. So coming to the first set of questions, I think as we have said, following the supervisory review, the regulator has directed us to make this provision of INR 12.83 billion, and that is what has been communicated, and we have made it. The underlying portfolio that we need to work out and resolve in terms of ensuring conformity with the PSL guidelines would be between INR 200 billion to INR 250 billion or so. And as far as the cost aspect is concerned, I think what we will be working on is to bring this portfolio into conformity with the regulatory expectations and thereby minimize both the provisioning and the PSL impact. On the underlying issues, I think those are really observations made by the regulator as part of its inspection process. So we wouldn't want to go into those details, but the outcomes are what we have reported. Coming to your next question on margins. I think we -- as you rightly said, if we look at the current quarter, Q3, which has gone by, we did have the impact of repricing of loans, both on account of repo and MCLR. And we also had the seasonally higher nonaccrual impact on the KCC NPAs. This was offset by some amount of deposit repricing and also the benefit of the CRR cut. If we look ahead into Q4, I think that level of nonaccrual will not be there. We will see the impact of the repo repricing as well as MCLR on the floating rate loan book, the repo cut which happened in December in particular. But at the same time, we should continue to see some amount of repricing of the retail deposits. So overall, I think we would stay with our view that the NIM should be range bound from here on.

We'll take our next question from the line of Rikin Shah from IIFL Capital.

I had three questions. So the first one is on -- I just wanted to understand, was there any additional PSL cost due to the declassification of the agri loans as non-PSL? Was there any cost in the P&L this quarter or any potential cost in OpEx in the quarters to come? So that's first. The second one is on the growth. So just wanted to get a sense of are you seeing any momentum of growth improving, i.e., even on a month-on-month basis during 3Q? And would you expect now the growth to improve from the current levels within the constraints of your quality and risk framework? And the third one specifically on the credit card. So what is weighing on the overall credit card book growth? Is it merely a decline in the share of transactor loans following the festive pickup in 2Q or there is more to read into it? Those are my questions.

So first, I think in general, the cost of PSL compliance has been going up. We do meet a part of our PSL obligations by buying the priority sector lending certificates and the cost of those has steadily gone up over the last few quarters. So part of the increase, for example, or the level of operating expenses over the last couple of quarters has been due to that. But I would say that's not been done specifically in the context of this regulatory observation. That's something we keep looking at on a totality basis and analyzing what is the most efficient thing to do in terms of meeting the priority sector lending requirements. As far as this particular observation is concerned, as I said, we would be working to kind of bring this portfolio into conformity with the regulatory expectations and thereby minimize the impact. And so I would not want to call out any additional cost, et cetera, at this juncture. I mean, we'll assess it in totality and see where we go and try to absorb it in the P&L. So that was the first one. I think your second question was on growth. So I think clearly, we have seen a pickup in the -- if you look at the sequential growth rate in the fourth quarter vis-a-vis the third quarter, despite the rundown in cards, which I'll come to separately. Certainly, there has been a pickup in momentum. And we see that momentum sustaining into the fourth quarter as well. And I think even the year-on-year growth rate, which is impacted by the trailing 4 quarters has picked up in the current quarter, reflecting more recent trends. And I would expect that to continue into Q4 as well. On the credit card specifically, I think we had a very strong book growth sequentially in Q2 because of the last week kind of festive spend, which were billed and repaid in the current quarter. So that is the main reason for the movement in the current quarter. I mean, we feel that the book should grow from here on. I think in both credit cards and PL, one thing, as we have been saying that the quality of credit has certainly improved. So if you look at our aggregate retail NPLs excluding the KCC have come down in terms of NPL formation. And we are pretty comfortable with the quality now across secured and unsecured. In personal loans also, a very small uptick, but there has been an uptick in Q3 on the year-on-year growth and the sequential growth. So I think we are quite positive on what we are underwriting. And I think it's a question of leveraging our franchise to grow these businesses. Of course, there is price competition across the board, but that's something we will have to keep optimizing and managing.

Right. Sir, just a clarification on the first one. While you are not calling out any additional OpEx-related costs due to this regulatory observation, there would be this INR 200 billion, INR 250 billion of the loans which are now declassified as PSL. So to meet that shortfall, would you be requiring to do more of RIDF bonds or PSLC? Or do you think that the organic PSL generation itself will take care of the shortfall and hence, no additional cost impact?

So I think the first step is that we will work to bring this portfolio into conformity with the PSL requirements. And that is how we will minimize the shortfall and the impact thereof. That would be the first objective. Thereafter, we will assess overall as we do in any case on an ongoing basis that to the extent after organic and inorganic generation of priority sector loans, whether we should buy PSLCs or we can live with some amount of RIDF call. That is an analysis that we anyway do on an ongoing basis. And over the years, I think we have improved our PSL compliance. So our RIDF book outstanding currently, on a relatively larger balance sheet, is down, I think, to 1/3 of its peak levels.

Got it, sir. Congratulations, Mr. Bakhshi for the reappointment.

Thank you.

Next question is from the line of Kunal Shah from Citigroup.

Yes. So a couple of questions. Sorry, again, to harp up on the credit card side. But even now when we look at the portfolio, it is almost at a similar level to where we were in June, okay? In fact, like hardly any growth out there over and above June. And this kind of a trend we had not seen in the earlier years during the festive wherein it tends to run down. So any particular cohort or maybe like the transactor proportion significantly going up, which is leading to this?

No, I think that the transactor portion has gone up across most players, I would think. In our case, there's nothing specific other than the fact that we had an unusually strong growth in Q2 and that has gotten offset in Q3. We continue to be...

But how should we compare it with first quarter or maybe Q4 end? Because since Q4 end also, there is a decline in the portfolio. And even from first quarter, it has just been flat over 2 quarters despite the spends going up, yes.

See, as we have said in the past, we are not looking at credit card just as a product portfolio in itself, but really as part of an overall customer offering and most of our new launches are aimed at enriching the offering to attract good customers and really be able to bank them on a 360 basis. But as I said, I think in this quarter, the book decline is more one-off, and we should see it gradually improve from here on.

Sure. And secondly, on the corporate side, so significant traction on a quarter-on-quarter basis. And within the risk framework or maybe on a risk calibrated operating profit level, earlier it was thought that maybe PSU entities would not be giving us that kind of a benefit or operating profit. And we are seeing the increase in the BBB proportion as well. No doubt you have earlier alluded that, that's because of the business banking. But is the larger part of the growth on the corporate also coming in that segment of BBB or not really?

No. So I think that, overall, if we look at our approach to the corporate loan growth, one, corporates are well funded and have multiple sources of funding. To the extent that they are accessing bank funding, we are very happy to participate. It has been very price competitive. So we do look at what is the overall relationship with the corporate. And wherever we have a franchise and we want to build a franchise, we do participate quite actively. I think one of the things that has changed maybe relative to the past couple of quarters is kind of the settling of the benchmark because a lot of the lending is happening at external benchmark linked rates. So the settling of the benchmark kind of gives us more confidence to price and lend. From a credit quality perspective, I think it's -- we are quite comfortable with these rating grades. And we have our own limits on BBB, for example, origination, both in terms of aggregate and in terms of borrower size, and we are within those frameworks. So we are quite comfortable with the quality.

Sure. And lastly, on overall OpEx growth now getting closer to like, say, 13-odd percent, we had seen OpEx growth being contained almost in a single digit. So you indicated some cost of compliance being there, but is there any other element? And would we see cost almost settling in a similar level or there are maybe cost containment levers which are available and it should grow below the balance sheet growth?

We will see whatever is necessary to maximize kind of the overall PPOP. I don't expect costs to go up at the pace at which they had gone up maybe till a couple of quarters ago. If you would see sequentially this quarter, other than the impact of the labor code, costs would have actually come down marginally on an absolute basis. So I think we will work towards maximizing the PPOP and not really cutting cost per se, but definitely leveraging it as well as we can. Of course, one thing is that as far as the labor code is concerned, what we have accounted for is really the additional estimates of liability as they stand today. On an ongoing basis for all companies and banks, the code will marginally increase the recurring operating costs, but that's something we'll have to just absorb as we go forward.

Okay. Got it. Congratulations Bakhshi sir for the reappointment.

Thank you.

Next question is from Nitin Aggarwal from Motilal Oswal.

I have a few questions. One is on the BB segment. And if I look at the growth in the business banking, it has been moderating for quite some time now. We have earlier talked about that it is a conscious kind of a moderation that we're pursuing to while the quality overall remains strong. But how are we looking at this on an incremental basis? Do we now look to relax some figures? Has the growth rate now bottomed out? And -- so some color around this?

No, Business banking, we are at it full steam actually. I think the moderation in the growth rate is really just a function of the base. Even this quarter, on a year-on-year basis, we have grown at 22% and even the accretion this quarter is close to the accretion we've seen on the corporate side probably. The portfolio in itself now is actually larger than the corporate portfolio slightly. So I don't think we are holding back, and we believe that there is enough untapped space for us to do. As the portfolio grows, the growth rate will normally moderate. But we don't have any -- the portfolio quality has also held up well. So we are quite happy with growing this portfolio.

Okay. Okay. And likewise, on the unsecured, Anindya, when you say that growth rates in credit card NPL will get better, do you see this like now moving above the overall loan growth or it will just be a recovery from where we are? Because we are like currently at very, very muted levels. So some color as to how...

I think that will take some time. When overall loan growth is 11.5% and personal loan is growing at 2%, it would be foolhardy to say that it will cross that level, but we definitely believe it should pick up from these...

Right. And one -- like on this standard provision that has happened, like earlier also, we have seen this happening with another bank. So just curious to know like are large private banks more vulnerable to this RBI directive? I mean whatever led to this directive from the RBI, are large private banks more vulnerable or you can see some things happening for PSU banks also?

I really can't comment. I think we have to take the observation that has been given to us, comply with it and resolve it as best as we can.

Next question is from M.B. Mahesh from Kotak Securities.

Anindya, just two questions. One is on this low growth in deposits on the savings account side, if you can just kind of comment what's happening there?

Yes. So actually, over the last 2 quarters, our growth in the retail savings account, the individual savings account has continued to be quite strong, adjusted for seasonality. That growth typically is much better in the first and second quarters because the salary accounts see a pickup in terms of the year-end payments and so on. But we, even in this quarter, have seen a pretty strong growth in the retail savings account. Over the last 2 quarters, we have seen a reduction in balances in what we call the institutional banking savings accounts, which is essentially the government entities, the government schemes or departments that we bank. There, the floats -- the amounts have come down in absolute terms, which has resulted in a lower growth or flat on the overall savings, but the retail savings continues to do quite well. In fact, both the retail savings and the retail term as well as the current account are all have done -- we are quite happy with the way they are performing. The institutional SA has proved a bit of a dampener on the overall numbers. That's not that large a proportion of our deposit base. And hopefully, this impact will moderate going forward, but it has been an issue in the last couple of quarters.

Okay. And should we assume that it's -- when you say it's not a large proportion, it runs into a double-digit number or it's lower than that?

I couldn't get that clearly.

When you say the corporate deposits are not a large number, it's more than a double-digit number that we are talking about here?

Yes. The institutional savings account would be 10%, 12% now of our -- or definitely around less than 15% of the average SA base.

Okay. The second question is, this share of this AA and, let's say, the high investment grade, how much are you willing to take it lower in your internal expectations?

See, I think that we are quite comfortable with the A family and above. I think that historically, those ratings have proved to be reasonably stable, and that is also where we find better risk-adjusted return. So we are not hung up particularly on the AA, AAA part of it. And as I said, on the BBB, we have to do it selective and really look at the counterparty carefully and operate within our limits framework.

We'll take our next question from the line of Param Subramanian from Investec.

Congratulations to Mr. Bakhshi. But my first question is related to that. So what is the thought process behind the Board seeking a 2-year extension as opposed to a full 3-year extension because there is nothing holding us back from a regulatory perspective. So how should stakeholders read into that? Yes, that's my first question.

So I think the Board in consultation with the CEO have decided on a 2-year appointment. As you know, the current term itself ends in October 2026. So from now till the end of the renewed term is almost 3 years and nothing really further to add to that.

Fair enough. So just if I can follow up on that. So one might read into it that this might be his last term. So that's the sort of signal that comes through. So yes, anything you want to add to that?

No, I think as we said, we have 3 years to go. So on a lighter vein, we hopefully addressed the speculation around October '26, and I think it's too early to speculate about October '28.

Okay. Very helpful answer. Second question, this is on the results. So sir, we saw a quarter-on-quarter yield on advances decline of about 21 basis points. Is this almost entirely the KCC reversal effect, because this quarter, that impact would have been minimal.

No, no, there would have been multiple things. So for example, if you look at the repo cut which happened in June, while all loans would have repriced some in July, some in August and some in September, the portion which repriced in September would have seen only 1 month of impact in Q2 and 2 months of impact or the full impact in Q3. Similarly, our MCLRs have also come down. I think we are down by about 75 basis points in this rate cut cycle. So that would also have progressively impacted the portfolio as it repriced. So those would be equally relevant as far as the yield on advances is concerned.

Fair enough. So it means the KCC impact is not as much?

I'm sorry, your voice was muffled, Param.

As we said on the -- just to be clear -- to avoid confusion, the RBI observation on standard asset provisioning has no impact on asset classification. On a regular basis, in Q1 and Q3 of every year, we see seasonally higher NPLs on the rural product, which is what leads to the nonaccrual. And that has happened this year in Q3 as it happened in Q1 and as it happened in Q3 and Q1 of last year at the normal level. In addition, of course, we have had this whole repricing impact of the loan book, both the external benchmark-linked book and the MCLR linked book.

Got that. Got that, Anindya. Very clear. Last question, if I may, on the fees, right? So I mean, core fee has been sort of soft at 6% Y-o-Y. So how should we look at it? Will this pick up when the retail loan growth eventually starts picking up? Or is unsecured or credit cards, the number to track?

So I think in this quarter, the cards and payments piece has been something which has been a bit of a drag in terms of year-on-year growth in this number that we hope will pick up. Loan growth also should contribute, although a lot of the loan-related fees, the processing fees and so on are under some competitive pressure. But hopefully, we would want to grow this number from here on. One good thing is that it's an extremely granular number. As we have said, 78% of the fees even in this quarter were from the retail, rural and business banking portfolios. And even the corporate fees are very granular, transaction banking-oriented fees.

We'll take our next question from the line of Suresh Ganapathy from Macquarie Capital.

Yes, Anindya, what is your LCR this quarter?

126%.

Okay. And post the new April 2026 guidelines, would it go up or go down?

It will be kind of similar.

Okay. Flattish kind of level. So would you want to maintain around current levels LCR? Or what exactly do you guys consider, I mean, is a normative level?

So I think that we kind of have a certain funding structure, and we maintain a certain amount of liquidity as a cushion. And that results in this number. So can it go up down 2, 3 percentage points? It could. This is -- of course, the number that we report is the average for the quarter. So in every month, there would be periods when it, for example, goes down to 120 or something like that. But yes, at an average level, this is probably an okay level, somewhere above 120 or higher. I mean, we don't have a strict policy on that, but that's where we've been operating.

Okay. So my final question is related to this because if you look at on a Y-o-Y basis, deposit growth has lagged loan growth. We have seen a rising LDR. So is LDR a constraint or it's just a mere outcome. As long as you maintain all these ratios intact, even if it goes up, it doesn't matter for the management or the Board. Is that the way we should look at it?

See, LDR is a function of what is the liability structure on the balance sheet, and banks with higher capital ratios, higher capital levels, higher net worth as a proportion of loans can afford a higher LDR. And it's also a function of the regulatory preemption. So this quarter, I think for the entire system and for us and most banks, the LDR would have gone up because of the CRR cut. I think given the current level of capital that we hold and the regulatory requirements of liquidity, this is an okay level. I don't see it going up from here. It can moderate marginally, but we are quite comfortable at this level. In terms of our funding side, as we always say, we maximize the retail deposits, including CASA. And then we look at the different types of wholesale funding available, which could be refinance, bonds, wholesale deposits and so on. And our reliance on wholesale deposits is pretty moderate.

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

Thank you very much for joining us on a Saturday evening, and we'll be available to take other questions. 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.