Mumbai: ICICI Financial institution Ltd expects additional strain on its internet curiosity margins (NIMs) within the July-September quarter, as the total impression of the Reserve Financial institution of India’s (RBI) fee cuts continues to play out.
The non-public lender’s NIM—a key measure of profitability—has been steadily declining in latest quarters. It stood at 4.34% in April-June (Q1FY26), in comparison with 4.41% within the March quarter and 4.36% a 12 months earlier. For the total FY24, the financial institution reported NIM of 4.53%, which fell to 4.32% in FY25.
“We do count on the NIM to type of compress just a little extra within the subsequent quarter. After that, we are going to see the way it goes,” mentioned Sandeep Batra, govt director, ICICI Financial institution, advised reporters after saying the financial institution’s Q1 outcomes on Saturday.
Batra famous that the margin trajectory will rely upon RBI’s coverage actions and general liquidity situations. Since February, the central financial institution has lower the repo fee by 100 foundation factors, squeezing margins throughout the banking sector. Whereas over 60% of floating-rate loans within the system are linked to an exterior benchmark that tracks the repo, deposits stay at mounted charges and reprice extra step by step, placing short-term strain on margins.
ICICI Financial institution’s margins, Batra mentioned, had been about 4% earlier than the beginning of the speed hike cycle in FY22, peaked at 4.5%, and have since softened to present ranges.
“Compared to the present quarter (Q1FY26), the impression of transmission of repo fee cuts on exterior benchmarks linked to loans is predicted to be larger within the subsequent quarter, and I feel that is only a operate of the cycle,” mentioned Batra. “After all, it will likely be partially set off by financial savings fee discount and gradual repricing of time period deposits.”
In response to the financial institution’s investor presentation, the price of deposits declined to 4.85% in Q1 from 5% within the previous quarter.
Regardless of the margin compression, ICICI Financial institution reported a robust 15.5% year-on-year rise in internet revenue to ₹12,768 crore for the June quarter, supported by larger complete revenue. Gross non-performing asset (NPA) ratio held regular at 1.67% sequentially.
Mortgage development, nonetheless, moderated. Home advances grew 12% year-on-year to ₹13.3 trillion, with retail loans rising 6.9%, company loans 7.5%, and enterprise banking loans 29.7%. Together with the abroad mortgage ebook, general credit score development stood at 11.5%. Retail mortgage development, specifically, slowed in comparison with each the earlier quarter and the identical quarter final 12 months.
Analysts welcomed the earnings however raised considerations in regards to the tempo of credit score development.
“ICICI continued on its trajectory of selecting profitability over development with RoA (return-on-assets) maintained at over 2.4%, even because the mortgage development slipped to 11.5% y-o-y,” analysts at Sanford C. Bernstein (India) Pvt Ltd mentioned in a be aware to shoppers.
“However with a 14% y-o-y earnings per share development, the financial institution delivered above expectations with some assist from treasury features that greater than offset the credit score price normalization and modest opex development,” it mentioned. “A continued slowdown in development continues to be the one grievance.”
The analysts additionally drew a distinction with latest considerations over asset high quality at Axis Financial institution, describing ICICI Financial institution’s regular efficiency as a constructive.
They mentioned that the nonetheless wholesome asset high quality developments are constructive and the selection of profitability over development is in line with the development in the previous few quarters—general an excellent set of numbers that justifies its valuation premium.
Axis Financial institution on 17 July reported a deterioration in asset high quality in Q1FY26, citing elevated slippages in retail unsecured loans and modifications in NPA classification metrics.
Individually, ICICI Financial institution mentioned its board had authorised the acquisition of 100% stake in ICICI Prudential Pension Funds Administration Firm Ltd from ICICI Prudential Life Insurance coverage Co. Ltd. The pension enterprise will turn into a completely owned subsidiary of the financial institution, topic to regulatory approvals from the RBI, the Pension Fund Regulatory and Growth Authority (PFRDA), and others.
ICICI Prudential Pension Funds Administration had complete property of ₹59.26 crore as of 31 March. The financial institution mentioned the transfer would assist each entities “higher capitalise on the synergies in step with the client 360 focus of the financial institution.”