MUMBAI, Oct 18, 2025 — ICICI Bank Ltd. (ICBK.NS), India’s second-largest private lender by market capitalization, reported a stronger-than-expected profit for the quarter ended September 2025, supported by lower provisions against bad loans even as treasury income declined due to volatile bond markets.
The Mumbai-based bank posted a standalone net profit of ₹123.59 billion ($1.40 billion) for Q2 FY2025-26, surpassing analyst expectations of ₹122.36 billion, according to LSEG data. This represents a 5.2% year-on-year increase from ₹117.46 billion in the same quarter last year.
Provisions Fall, Boosting Profitability
ICICI Bank’s bottom line was strengthened by a 26% drop in provisions, with funds set aside for potential loan losses declining to ₹9.14 billion.
“Provisions are likely to move back up in the next quarter due to seasonal factors,” said Sandeep Batra, Executive Director at ICICI Bank, during a post-earnings conference call.
The reduction in provisions reflects improved credit quality and disciplined risk management. The bank’s gross non-performing asset (NPA) ratio improved to 1.58% as of September 2025, down from 1.67% in the previous quarter, signaling a healthier loan book.
Treasury Income Dips Amid Bond Market Volatility
While total other income rose a modest 5%, treasury income took a hit, declining to ₹2.2 billion from ₹6.8 billion a year earlier.
Batra attributed this drop to a “challenging environment in the bond market,” as rising bond yields in the July–September quarter eroded returns on fixed-income holdings.
Despite this, ICICI Bank’s diverse income streams — including fees, commissions, and foreign exchange gains — helped cushion the impact of treasury losses.
Loan and Deposit Growth Remain Steady
The bank’s net interest income (NII) — a key measure of lending profitability — rose 7.4% year-on-year to ₹215.29 billion, driven by a 10% growth in domestic loans.
Notably, small and mid-sized business loans recorded the fastest growth, while retail and large corporate lending saw moderate increases.
Deposits grew 7.7%, maintaining healthy liquidity levels.
Margins Stable Despite RBI Rate Cuts
ICICI Bank’s net interest margin (NIM) held steady at 4.3%, indicating strong pricing discipline despite a series of interest rate cuts by the Reserve Bank of India (RBI) totaling 100 basis points in 2025.
The rate cuts were intended to stimulate consumption and investment amid an economic slowdown. However, for banks, such moves can temporarily compress margins, as lending rates typically decline faster than deposit rates.
“Margins are likely to remain range-bound in the coming quarters,” said Batra, suggesting the bank’s profitability will stay stable despite the rate environment.
Outlook: Strength in Credit Growth and Asset Quality
Analysts expect credit demand to strengthen in the second half of FY2025-26, supported by government tax incentives and consumer-led economic recovery. ICICI Bank’s focus on SME lending, digital expansion, and risk diversification positions it well to capitalize on this trend.
With stable asset quality, strong capital buffers, and consistent profitability, ICICI Bank remains one of India’s most resilient private-sector lenders.
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