ICICI Bank Ltd (ICICIBANK) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day and welcome to ICICI Bank Limited Q2 FY27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please know 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. Sir, I think you're on mute.
Sandeep Bakhshi (ICICI Bank Ltd): Yeah. Thank you. Good evening to all of you and welcome to the ICICI Bank earnings call to discuss the results for Q2 of FY27. 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. The profit before tax, excluding treasury, grew by 23.4% year-on-year to 199.54 billion rupees in this quarter. The core operating profit increased by 21.8% year-on-year to 208.05 billion rupees in this quarter. The core operating profit, excluding dividend from subsidiaries, increased by 25% year-on-year to 203.42 billion rupees in this quarter. The profit after tax grew by 20.1% year-on-year to 148.43 billion rupees in this quarter.
Sandeep Bakhshi (ICICI Bank Ltd): and 11.8% sequentially at September 30, 2026. Average deposits grew by 21.2% year-on-year and 8% sequentially. And average current and savings accounts deposits grew by 10.7% year-on-year and 1.4% sequentially during this quarter. The bank has mobilized gross FCNR(B) deposits of about $18 billion pursuant to RBI RBI swap facility. Excluding FCNR(B) deposits, total period end deposits grew by 17% year-on-year and 3.1% sequentially at September 30, 2026. The bank's average liquidity coverage ratio for the quarter was about 126%. The overall loan portfolio including the international branches grew by 30% year-on-year and 12% sequentially at September 30, 2026. Excluding loans provided by international branches of the bank against FCNR(B) deposits, total loans grew by 24.1% year-on-year and 7.3% sequentially. The retail and rural portfolio portfolio grew by 14.8% year-on-year and 3.2% sequentially. Including non-fund based outstanding, the retail and rural portfolio was 43% of the total portfolio. The business banking portfolio grew by 33.8% year-on-year and 11.1% sequentially. The domestic corporate portfolio grew by 30.6% year-on-year and 10.4% sequentially. The domestic loan portfolio grew by 22.8% year-on-year and 6.8% sequentially at September 30, 2026. The overseas loan portfolio was 7.8% of the overall loan book at September 30, 2026. The net NPA ratio was 0.3% at September 30, 2026 compared to 0.35% at June 30, 2026 and 0.39% at September 30, 2025. During the quarter, there were net additions of 12.13 billion rupees to gross NPAs, excluding write-offs and sale. The total provisions during the quarter were 8.5 8.51 billion rupees, or 4.1% of core operating profit and 0.2% of average advances. The provisioning coverage ratio on non-performing loans was 75% at September 30, 2026. In addition, the bank continues to hold contingency provisions of 131 billion rupees or about 0.7% of total advances at September 30, 2026. The capital position of the bank continued to be strong with a CET-1 ratio of 16.01% and total capital adequacy of 16.68% at September 30, 2026. The bank purchased 2% additional shareholding in ICICI Life Insurance Limited for consideration of 14.7 billion rupees during the quarter. 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.
Anindya Banerjee (ICICI Bank Ltd): Thank you, Sandeep. I will talk about loan growth, credit quality, P&L details and the performance of subsidiaries. On loan growth, we have revised the presentation of loans to reflect a consolidated view of the retail and rural portfolio with additional product-wise details. The comparable data for previous periods have also been provided on slide 64 and 65 of the investor presentation. Coming to the growth across retail and rural products, the mortgage portfolio grew by 15.3% year-on-year and 3.5% sequentially. Vehicle loans grew by 7.8% year-on-year and 1.4% sequentially. Personal loans grew by 16.6% year-on-year and 4.7% sequentially. The credit card portfolio declined by 9.7% year-on-year and 0.2% sequentially. Jewel loans grew by 79.4% year-on-year and 4.5% sequentially. Within the corporate portfolio, the total outstanding to NBFCs and HFCs was 1033.78 billion rupees at September 30, 2026, compared to 920.52 billion rupees at June 30, 2026. The total outstanding loans to NBFCs and HFCs were about 4.3% of our advances at September 30, 2026. The builder portfolio, including construction finance, lease rental discounting, term loans and working ca-
Anindya Banerjee (ICICI Bank Ltd): was 788.52 billion rupees at September 30th, 2026, compared to 747.21 billion rupees at June 30th, 2026. The builder loan portfolio was 4% 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 0.5% of the builder portfolio at September 30, 2026, was either rated BB and below internally or was classified as non-performing. Moving on to credit quality. The gross NPA additions were 48.33 billion rupees in the current quarter, compared to 50.34 billion rupees in Q2 of last year. Recoveries and upgrades from gross NPAs, excluding write-offs and sale, were 36.20 billion rupees in the current quarter, compared to 36.48 billion rupees in Q2 of last year. The net additions to gross NPAs were 12.13 billion rupees in the current quarter, compared to 13.86 billion rupees in Q2 of last year. The gross NPA additions from the retail and rural portfolio were 37.09 billion rupees in the current quarter, compared to 40.49 billion rupees in Q2 of last year. Recoveries and upgrades from the retail and rural portfolio were 26.04 billion rupees in the current quarter, compared to 26.10 billion rupees in Q2 of last year. The net additions to gross NPAs in the retail and rural portfolio were 11.05 billion rupees in the current quarter, compared to 14.39 billion rupees in Q2 of last year. The gross NPA additions from the corporate and business banking portfolios were 11.24 billion rupees in the current quarter compared to 9.85 billion rupees in Q2 of last year. Recoveries and upgrades from the corporate and business banking portfolios were 10.16 billion rupees in the current quarter, compared to 10.38 billion rupees in Q2 of last year. There were net additions to gross NPAs of 1.08 billion rupees in the current quarter in the corporate and business banking portfolios, compared to net deletions of 0.53 billion rupees in Q2 of last year. The gross NPAs written off during the quarter were 15.92 billion rupees. Further, there was sale of NPAs of 1.33 billion rupees for cash in the current quarter. The non-fund-based outstanding to borrowers classified as non-performing was 22.51 billion rupees as of September 30th, 2026, as compared to 22.07 billion rupees as of June 30th, 2026, and 23.22 billion rupees as of September 30th, 2025. The loans and non-fund-based outstanding to performing corporate borrowers rated BB and below was 35.47 billion rupees at September 30th, 2026, as compared to 34.85 billion rupees at June 30th, 2026, and 36.61 billion rupees at September 30th, 2025. This portfolio was about 0.2% of our advances at September 30th, 2026. The total fund-based outstanding to all standard borrowers under resolution, as per various guidelines, declined to 11.85 billion rupees at September 30th, 2026, from 13.63 billion rupees at June 30th, 2026, and 16.24 billion rupees at September 30th, 2025. At the end of September, the total provisions, other than specific provisions on fund-based outstanding to borrowers classified as non-performing, were 238.15 billion rupees, or 1.3% of loans. This includes the contingency provisions of 131 billion rupees, as well as general provision on standard assets, provisions held for non-fund-based outstanding to borrowers classified as non-performing, fund and non-fund based outstanding to standard borrowers under resolution, and the BB and below portfolio. The bank also continues to hold additional standard asset provision of 12.83 billion rupees made in Q3 of FY2026, as directed by RBI, in respect of the agricultural priority sector portfolio, till completion of the review process. Moving on to the P&L details. Net interest income increased by 17.7% year on year and 3.9% sequentially to 250
Anindya Banerjee (ICICI Bank Ltd): 0.39 billion rupees in this quarter. The net interest margin was 4.18% in this quarter, compared to 4.36% in the previous quarter and 4.30% in Q2 of last year. Excluding the benefit of interest on tax refund, the net interest margin would have been 4.28% in the previous quarter. The domestic NIM, excluding benefit of interest on income tax refund, was 4.32% in the current quarter, compared to 4.36% in the previous quarter and 4.37% in Q2 of last year. The cost of deposits was 4.50% in this quarter, compared to 4.41% in the previous quarter and 4.64% in Q2 of last year. The increase in proportion of the assets of overseas branches in the total assets and the large sequential increase in the retail term deposit base, have led to a moderation in margins, and the full impact would reflect in the third quarter, after which we expect the margins to start moving back up, even based on the current level of policy rates. Of the to- total domestic loans, interest rates on about 57% of the loans are linked to the repo rate and other external benchmarks, 14% to MCLR and other older benchmarks, and the remaining 29% of loans have fixed interest rates. Non-interest income, excluding treasury, grew by 12.5% year on year to 82.77 billion rupees in Q2 of FY 2027. Fee income increased by 20.1% year on year to 77.95 billion rupees in this quarter. Fees from retail, rural, and business banking customers constituted about 75% of the total fees in this quarter. Fee income for the quarter includes fee for providing lending facilities against FCNR(B) deposits. Dividend income from subsidiaries was 4.63 billion rupees in this quarter, compared to 8.1 billion rupees in Q2 of last year, primarily reflecting the shift in timing of dividend declaration from quarterly to half-yearly basis by ICICI Prudential AMC Limited. On costs, the bank's operating expenses increased by 8.5% year on year and 1.9% sequentially in this quarter. Employee expenses increased by 35- 13.5% year on year. Non-employee expenses increased by 5.6% year on year. Our branch count has increased by 145 in H1 of 2027. We had 7,656 branches as of September 30th, 2026. The technology expenses were about 11.2% of our operating expenses in H1 of the current year. The total provisions during the quarter were 8.51 billion rupees or 4.1% of core operating profit and 0.2% of average advances, compared to the provisions of 9.14 billion rupees in Q2 of last year. Adjusting for one-off corporate recoveries, standard asset provision on loans provided against FCNR(B) deposits, and seasonality of KCC provisioning, the normalized credit cost to advances would be about 50 basis points. The profit before tax, excluding treasury, [cough] grew by 23.4% year on year to 199.54 billion rupees in Q2 of this year. There was a treasury loss of 2.3 billion rupees in this quarter, as compared to a gain of 1.5 billion rupees in the previous quarter and 2.2 billion rupees in Q2 of last year, reflecting market movements. The tax expense was 48.81 billion rupees in this quarter, compared to 43.21 billion rupees in the previous quarter and 40.25 billion rupees in Q2 of last year. In the previous quarter, the bank had written back tax provision of 4.46 billion rupees, pursuant to favorable tax orders. The profit after tax grew by 20.1% year on year to 148.43 billion rupees in this quarter. The consolidated profit after tax grew by 22.3% year on year to 163.33 billion rupees in this quarter. The details of the financial performance of key subsidiaries are covered in slides 37 to 39 and 58 to 63 in the investor presentation. The annualized premium equivalent of ICICI Life increased to 49.35 billion rupees in H1 of this year from 42.86 billion rupees in H1 of last year. The value of new business increased to 12.83 billion rupees in H1 of this year from 10.49 billion rupees of H1 of last year. The value of new business margin was 26
Anindya Banerjee (ICICI Bank Ltd): one of this year compared to 24.7% in FY 2026 and 24.5% in H1 of last year. The profit after tax of ICICI Life increased to 7.6 billion rupees in H1 of this year from 6.01 billion rupees in H1 of last year and 3.74 billion rupees in this quarter from 2.99 billion rupees in the second quarter of FY 2026. Gross direct premium income of ICICI General increased to 67.92 billion rupees in Q2 2027 from 65.96 billion rupees in Q2 2026. The combined ratio stood at 107% in Q2 2027 compared to 105.1% in Q2 2026. Excluding the impact of cat losses of 108- 1.18 billion rupees in Q2 2027 and 0.73 billion rupees in Q2 2026, the combined ratio was 105.3% and 103.8% respectively. The profit after tax increased to 9.46 billion rupees in Q2 2027 from 8.2 billion rupees in Q2 2026. The profit after tax of ICICI AMC as per Ind AS increased to 8.89 billion rupees in this quarter from 8.38 billion rupees in Q2 of last year. The profit after tax of ICICI Securities as per Ind AS on a consolidated basis increased to 4.39 billion rupees in this quarter from 4.25 billion rupees in Q2 of last year. ICICI Bank Canada had a profit after tax of 5 million Canadian dollars in this quarter compared to 6.3 million Canadian dollars in Q2 of last year. ICICI Bank UK had a profit after tax of 6.5 million US dollars in this quarter compared to 6.4 million US dollars in Q2 of last year. As per Ind AS, ICICI Home Finance profit after tax increased to 2.2 billion rupees in the current quarter from 2.03 billion rupees in Q2 of last year. With this, we conclude our opening remarks and we will now be happy to take your questions.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Mahrukh Adajania from Tala Capital. Please go ahead.
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