ICICI Bank Q1 Profit Rises 15.5% on Treasury Gains

Newsium DeskJuly 19, 20253 Mins read23 Views

ICICI Bank Results

Mumbai, July 20, 2025 — India’s second-largest private sector lender, ICICI Bank, reported a 15.5% year-on-year (YoY) increase in its consolidated net profit for the first quarter of FY26, bolstered by robust treasury income, steady credit growth, and healthy asset quality metrics. The net profit for the quarter ended June 30, 2025, stood at ₹10,636 crore, up from ₹9,214 crore in the same quarter last year.

The bank’s financial performance underscores its strong fundamentals and diversified income streams, particularly in the face of dynamic interest rate environments and global economic uncertainties.

Key Highlights of ICICI Bank Q1 FY26 Results:

Net Profit: ₹10,636 crore (↑15.5% YoY)
Net Interest Income (NII): ₹19,934 crore (↑10.6% YoY)
Non-Interest Income: ₹6,456 crore (↑28% YoY)
Treasury Gains: Major contributor to non-interest income
Net Interest Margin (NIM): 4.15% vs 4.78% in Q1 FY25
Gross NPA Ratio: 2.69% vs 2.76% YoY
Net NPA Ratio: 0.43% vs 0.48% YoY
Loan Growth: 16.8% YoY
CASA Ratio: 43.2%

Treasury Gains Drive Profit Growth

One of the standout features in this quarter’s results was the sharp increase in treasury income, arising from favourable bond market movements. With the Reserve Bank of India (RBI) maintaining its policy stance and yields softening during the quarter, ICICI Bank capitalised on mark-to-market (MTM) gains in its investment book.

This came at a time when core banking margins were under pressure due to rising deposit costs, making treasury operations a key revenue booster. The gains from the bank’s statutory liquidity ratio (SLR) investments and trading portfolio contributed significantly to its non-interest income, which rose to ₹6,456 crore from ₹5,041 crore a year ago.

Net Interest Income and Margins: Healthy But Slower

ICICI Bank’s Net Interest Income (NII), the difference between interest earned and expended, rose 10.6% YoY to ₹19,934 crore, reflecting strong loan growth. However, the Net Interest Margin (NIM) declined to 4.15%, compared to 4.78% in Q1 FY25, highlighting rising deposit costs and competitive lending rates.

The bank attributed the NIM compression to a faster repricing of term deposits relative to loans and higher proportion of low-yielding assets. Despite this, the margin performance remains healthy, staying well above the industry average.

Credit Growth and Loan Book Expansion

ICICI Bank reported a robust 16.8% YoY growth in its domestic loan book, with healthy contributions from both retail and corporate segments.

Retail Loan Growth: 19.3% YoY
Corporate Loan Growth: 13.7% YoY
Rural & SME Loans: High double-digit growth

Retail lending continued to dominate, accounting for nearly 55% of the loan book, led by home loans, personal loans, auto loans, and credit card portfolios. The bank’s strategy of leveraging its digital ecosystem to acquire and service retail customers appears to be paying dividends.

Asset Quality Remains Stable

Despite concerns around asset quality due to global macroeconomic headwinds, ICICI Bank managed to improve its non-performing asset (NPA) ratios:

Gross NPA ratio stood at 2.69%, compared to 2.76% in Q1 FY25
Net NPA ratio came in at 0.43%, versus 0.48% last year

The provision coverage ratio (PCR) stood at an impressive 83.8%, reflecting prudent provisioning practices. The total provisions made during the quarter were ₹1,182 crore, down 5.4% YoY.

The bank has not seen any significant asset quality deterioration post the withdrawal of COVID-related restructuring schemes, and slippages have remained largely under control.

Operating Expenses and Cost-to-Income Ratio

Operating expenses increased by 12.2% YoY to ₹9,832 crore, primarily due to investments in technology, branch expansion, and employee costs. However, the cost-to-income ratio improved marginally to 41.5% from 42.1% in the same period last year, reflecting operating leverage benefits.

The bank continues to focus on enhancing productivity through automation, AI-driven processes, and digital onboarding of customers.

Digital and Technological Advancements

ICICI Bank continues to lead in digital adoption across services. Over 90% of retail transactions are now conducted via digital channels, reflecting the bank’s robust fintech infrastructure. The bank added new features to its iMobile Pay app, enhanced its AI chatbot capabilities, and improved fraud detection systems using machine learning.

Digital lending also gained momentum, especially in personal loans, SME credit lines, and credit cards.

Capital Position and Liquidity

ICICI Bank remains well-capitalised with a capital adequacy ratio (CAR) of 18.3%, well above regulatory requirements. The Tier-I capital ratio stood at 17.6%. The bank also maintained a strong liquidity coverage ratio (LCR) of 122%, ensuring ample buffer for short-term obligations.

Management Commentary

Mr. Sandeep Bakhshi, MD & CEO of ICICI Bank, commented:

“We are pleased with our Q1 performance which reflects our strategic focus on delivering sustainable growth while maintaining strong risk discipline. Our treasury gains, stable asset quality, and digital innovation continue to drive shareholder value.”

He further added:

“We are committed to investing in customer-centric technology and deepening our engagement across all segments, particularly in retail and MSMEs.”

Market Reaction

Following the announcement, shares of ICICI Bank reacted positively on the Bombay Stock Exchange (BSE), closing 2.1% higher at ₹1,115, reflecting investor optimism over its performance and strong earnings trajectory.

Brokerages have largely maintained a ‘Buy’ rating, with several firms revising their target price upward citing strong credit growth and manageable asset quality risks.