Q1 2027 ICICI Bank Ltd Earnings Call
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Speaker #1: Thank you. Ladies and gentlemen, good day and welcome to ICICI Bank Limited Q1 FY27 Earnings Conference Call. As a reminder, all participant lines will be in listen-only mode.
Operator 3: Ladies and gentlemen, good day and welcome to ICICI Bank Limited Q1 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 this conference call, please signal an operator by pressing star then zero on your touch-tone phone. 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.
Speaker #1: There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touch-tone phone.
Speaker #1: 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.
Speaker #1: Thank you, and over to you, sir.
Speaker #2: Thank you. Good evening to all of you, and welcome to the ICICI Bank earnings call to discuss the results of Q1 of financial year '27.
Sandeep Bakhshi: Thank you. Good evening to all of you, welcome to the ICICI Bank earnings call to discuss the results of Q1 FY27. Joining us today on this call are Sandeep Batra, Rakesh, Ajay, Ananda, and Abhinay. 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 20.9% year-on-year to INR 189.75 billion in this quarter. The core operating profit increased by 15.6% year-on-year to INR 202.35 billion in this quarter. The core operating profit, excluding dividend from subsidiaries, increased by 18.3% year-on-year to INR 191.25 billion in this quarter. The profit after tax grew by 15.9% year-on-year to INR 148.05 billion in this quarter. Total deposits grew by 14% year-on-year and 2.2% sequentially at 30 June 2026.
Speaker #2: Joining us today on this call are Sandeep Batra, Rakesh, Ajay, Anandya, and Abhinak. 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.
Speaker #2: The profit before tax excluding Treasury grew by 20.9% year on year, to 189.75 billion rupees in this quarter. The core operating profit increased by 15.6% year on year, to 202.35 billion rupees in this quarter.
Speaker #2: The core operating profit, excluding treasury, increased by 18.3% year-on-year to ₹191.25 billion in this quarter. The profit after tax grew by 15.9% year-on-year to ₹148.05 billion in this quarter.
Speaker #2: Total deposits grew by 14% year on year and 2.2% sequentially at June 30, 2026. Average deposits grew by 14% year on year and 6.1% sequentially and average current and savings accounts deposits grew by 12.1% year on year and 4.7% sequentially during this quarter.
Sandeep Bakhshi: Average deposits grew by 14% year-on-year and 6.1% sequentially, and average current and savings accounts deposits grew by 12.1% year-on-year and 4.7% sequentially during this quarter. The bank's average liquidity coverage ratio, LCR, for the quarter was about 124%. The overall loan portfolio, including the international branches portfolio, grew by 19.6% year-on-year and 5% sequentially at 30 June 2026. The retail loan portfolio grew by 12% year-on-year and 2.7% sequentially. Including non-fund-based outstanding, the retail portfolio was 41.1% of the total portfolio. The rural portfolio, including gold loan, grew by 35.4% year-on-year and 6.2% sequentially. The business banking portfolio grew by 28.2% year-on-year and 6.9% sequentially. The domestic corporate portfolio grew by 18.5% year-on-year and 6.9% sequentially. The domestic loan portfolio grew by 18.8% year-on-year and 4.6% sequentially at 30 June 2026. The overseas portfolio was 3.1% of the overall loan book at 30 June 2026.
Speaker #2: The bank's average Liquidity Coverage Ratio, or LCR, for the quarter was about 124%. The overall loan portfolio, including the international branches portfolio, grew by 19.6% year-on-year and 5% sequentially as of June 30, 2026.
Speaker #2: The retail loan portfolio grew by 12% year-on-year and 2.7% sequentially. Including non-fund-based outstanding, the retail portfolio was 41.1% of the total portfolio.
Speaker #2: The rural portfolio, including gold loan, grew by 35.4% year-on-year and 6.2% sequentially. The business banking portfolio grew by 28.2% year-on-year and 6.9% sequentially.
Speaker #2: The domestic corporate portfolio grew by 18.5% year-on-year and 6.9% sequentially. The domestic loan portfolio grew by 18.8% year-on-year and 4.6% sequentially at June 30, 2026.
Speaker #2: The overseas portfolio was 3.1% of the overall loan book as of June 30, 2026. The net NPI ratio was 0.35% at June 30, 2026, compared to 0.33% at March 31, 2026.
Sandeep Bakhshi: The net NPA ratio was 0.35% at 30 June 2026, compared to 0.33% at 31 March 2026, and 0.41% at 30 June 2025. During the quarter, there were net additions of INR 27.07 billion to gross NPAs, excluding write-offs and sale. The total provisions during the quarter were INR 12.60 billion, or 6.2% of the core operating profit and 0.32% of average advances. The provisioning coverage ratio on non-performing loans was 74.7% at 30 June 2026. In addition, the bank continues to hold contingency provision of INR 131 billion, or about 0.8% of total advances at 30 June 2026. The capital position of the bank continued to be strong with a CET1 ratio of 16.19% and total capital adequacy ratio of 16.84% at 30 June 2026. Looking ahead, we see many opportunities to drive risk-calibrated profitable growth and grow market share across key segments.
Speaker #2: And 0.41% at June 30, 2025. During the quarter, there were net additions of ₹27.07 billion to gross NPIs, excluding write-offs and sales. The total provisions during the quarter were ₹12.60 billion, or 6.2% of the core operating profit, and 0.32% of average advances.
Speaker #2: The provisioning coverage ratio on non-performing loans was 74.7% as of June 30, 2026. In addition, the bank continues to hold a contingency provision of ₹131 billion, or about 0.8% of total advances as of June 30, 2026.
Speaker #2: The capital position of the bank continued to be strong, with the CET-1 ratio at 16.19% and the total capital adequacy ratio at 16.84% as of June 30, 2026.
Speaker #2: 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.
Sandeep Bakhshi: 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 Ananda.
Speaker #2: I now hand the call over to Anandya.
Speaker #3: Thank you, Sandeep. I will talk about loan growth, credit quality, P&L details, and the performance of subsidiaries. Sandeep covered the loan growth across various segments.
Anindya Banerjee: Thank you, Sandeep. I will 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 14.6% year-on-year and 3.2% sequentially. Auto loans grew by 3.6% year-on-year and 1.2% sequentially. The commercial vehicles and equipment portfolio grew by 12.8% year-on-year and 2.2% sequentially. Personal loans grew by 12.9% year-on-year and 4% sequentially. The credit card portfolio declined by 1.9% year-on-year and 1.7% sequentially. Within the corporate portfolio, the total outstanding to NBFCs and HFCs was INR 920.52 billion at 30 June 2026, compared to INR 859.04 billion at 31 March 2026. The total outstanding loans to NBFCs and HFCs were about 4.5% of our advances at 30 June 2026.
Speaker #3: Coming to the growth across retail products, the mortgage portfolio grew by 14.6% year-on-year and 3.2% sequentially. Auto loans grew by 3.6% year-on-year and 1.2% sequentially.
Speaker #3: The commercial vehicles and equipment portfolio grew by 12.8% year-on-year and 2.2% sequentially. Personal loans grew by 12.9% year-on-year and 4% sequentially.
Speaker #3: The credit card portfolio declined by 1.9% year-on-year and 1.7% sequentially. Within the corporate portfolio, the total outstanding to NBFCs and HFCs was ₹920.52 billion as of June 30, 2026, compared to ₹859.04 billion as of March 31, 2026.
Speaker #3: The total outstanding loans to NBFCs and HFCs were about 4.5% of our advances as of June 30, 2026. The builder portfolio, including construction finance, lease rental discounting, term loans, and working capital, was ₹747.21 billion as of June 30, 2026, compared to ₹714.21 billion as of March 31, 2026.
Anindya Banerjee: The builder portfolio, including construction finance, lease rental discounting, term loans, and working capital, was INR 747.21 billion at 30 June 2026, compared to INR 714.21 billion at 31 March 2026. The builder portfolio was 4.3% 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 0.7% of the builder portfolio at 30 June 2026, was either rated BB and below internally or was classified as non-performing. The gross NPA additions were INR 55.52 billion in the current quarter, compared to INR 62.45 billion in Q1 of last year. There were gross NPA additions of INR 7.06 billion from the Kisan Credit Card portfolio in the current quarter. We typically see higher NPA additions from the Kisan Credit Card portfolio in the first and third quarter of a fiscal year.
Speaker #3: The builder portfolio was 4.3% of our total loan portfolio. Our portfolio largely comprises well-established builders, and this is also reflected in the sequential increase in the portfolio.
Speaker #3: About 0.7% of the builder portfolio at June 30, 2026, was either rated BB and below internally, or was classified as non-performing. The gross NPI additions were ₹55.52 billion in the current quarter, compared to ₹62.45 billion in Q1 of last year.
Speaker #3: There were gross NPI additions of ₹7.06 billion from the Kisan Credit Card portfolio in the current quarter. We typically see higher NPI additions from the Kisan Credit Card portfolio in the first and third quarter of a fiscal year.
Speaker #3: Recoveries and upgrades from gross NPIs, excluding write-offs and sales, were ₹28.45 billion in the current quarter, compared to ₹32.11 billion in Q1 of last year.
Anindya Banerjee: Recoveries and upgrades from gross NPAs, excluding write-offs and sale, were INR 28.45 billion in the current quarter, compared to INR 32.11 billion in Q1 of last year. The net additions to gross NPAs were INR 27.07 billion in the current quarter, compared to INR 30.34 billion in Q1 of last year. The gross NPA additions from the retail and rural portfolios were INR 43.31 billion in the current quarter, compared to INR 51.93 billion in Q1 of last year. These include the KCC NPAs mentioned earlier. Recoveries and upgrades from the retail and rural portfolios were INR 22.10 billion in the current quarter, compared to INR 25.25 billion in Q1 of last year. The net additions to gross NPAs in the retail and rural portfolios were INR 21.21 billion in the current quarter, compared to INR 26.68 billion in Q1 of last year.
Speaker #3: The net additions to gross NPIs were ₹27.07 billion in the current quarter, compared to ₹30.34 billion in Q1 of last year. The gross NPI additions from the retail and rural portfolios were ₹43.31 billion in the current quarter, compared to ₹51.93 billion in Q1 of last year.
Speaker #3: These include the KCC NPIs mentioned earlier. Recoveries portfolios were ₹22.10 billion in the current quarter, compared to ₹25.25 billion in Q1 of last year.
Speaker #3: The net additions to gross NPIs in the retail and rural portfolios were ₹21.21 billion in the current quarter, compared to ₹26.68 billion in Q1 of last year.
Speaker #3: The gross NPI additions from the corporate and business banking portfolios were ₹12.21 billion in the current quarter, compared to ₹10.52 billion in Q1 of last year.
Anindya Banerjee: The gross NPA additions from the corporate and business banking portfolios were INR 12.21 billion in the current quarter, compared to INR 10.52 billion in Q1 of last year. Recoveries and upgrades from the corporate and business banking portfolios were INR 6.35 billion in the current quarter, compared to INR 6.86 billion in Q1 of last year. There were net additions to gross NPAs of INR 5.86 billion in the current quarter in the corporate and business banking portfolios, compared to INR 3.66 billion in Q1 of last year. The gross NPAs written off during the quarter were INR 16.73 billion. Further, there was sale of NPAs of INR 2.39 billion for cash in the current quarter. The non-fund-based outstanding to borrowers classified as non-performing was INR 22.07 billion as of 30 June 2026, as compared to INR 21.74 billion as of 31 March 2026, and INR 32.98 billion as of 30 June 2025.
Speaker #3: Recoveries and upgrades from the corporate and business banking portfolios were ₹6.35 billion in the current quarter, compared to ₹6.86 billion in Q1 of last year.
Speaker #3: There were net additions to gross NPIs of ₹5.86 billion in the current quarter in the corporate and business banking portfolios, compared to ₹3.66 billion in Q1 of last year.
Speaker #3: The gross NPIs written off during the quarter were ₹16.73 billion. Further, there was sale of NPIs of ₹2.39 billion for cash in the current quarter.
Speaker #3: The non-fund-based outstanding to borrowers classified as non-performing was ₹22.07 billion as of June 30, 2026, as compared to ₹21.74 billion as of March 31, 2026, and ₹32.98 billion as of June 30, 2025.
Speaker #3: The loans and non-fund-based outstanding to performing corporate borrowers rated BB and below was ₹34.85 billion as of June 30, 2026, as compared to ₹35.19 billion at March 31, 2026, and ₹29.95 billion at June 30, 2025.
Anindya Banerjee: The loans and non-fund-based outstanding to performing corporate borrowers rated BB and below was INR 34.85 billion at 30 June 2026, as compared to INR 35.19 billion at 31 March 2026, and INR 29.95 billion at 30 June 2025. This portfolio was about 0.2% of our advances at 30 June 2026. The total fund-based outstanding towards standard borrowers under resolution as per various guidelines declined to INR 13.63 billion at 30 June 2026, from INR 14.96 billion at 31 March 2026, and INR 17.88 billion at 30 June 2025. At the end of June, the total provisions, other than specific provisions on fund-based outstanding to borrowers classified as non-performing, were INR 229.63 billion or 1.4% of loans.
Speaker #3: This portfolio was about 0.2% of our advances at June 30, 2026. The total fund-based outstanding towards standard borrowers under resolution, as per various guidelines, declined to ₹13.36 billion at June 30, 2026, from ₹14.96 billion at March 31, 2026, and ₹17.88 billion at June 30, 2025.
Speaker #3: At the end of June, the total provisions, other than specific provisions on fund-based outstanding to borrowers classified as non-performing, were ₹229.63 billion, or 1.4% of loans. This includes contingency provisions of ₹131 billion, as well as general provisions 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.
Anindya Banerjee: This includes the contingency provisions of INR 131 billion, 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 BB and below portfolio. The bank also continues to hold additional standard asset provision of INR 12.83 billion made in Q3 FY 2026 as directed by RBI in respect of the agricultural priority sector portfolio. Moving on to the P&L details. Net interest income increased by 12.7% year-on-year and 6.1% sequentially to INR 243.84 billion in this quarter. The net interest margin was 4.36% in this quarter, compared to 4.32% in the previous quarter and 4.34% in Q1 of last year. The cost of deposits was 4.41% in this quarter, compared to 4.43% in the previous quarter and 4.85% in Q1 of last year.
Speaker #3: The bank also continues to hold an additional standard asset provision of ₹12.83 billion made in Q3 of FY2026, as directed by the RBI, in respect of the agricultural priority sector portfolio.
Speaker #3: Moving on to the P&L details, net interest income increased by 12.7% year-on-year and 6.1% sequentially to ₹243.84 billion in this quarter. The net interest margin was 4.36% in this quarter, compared to 4.32% in the previous quarter, and 4.34% in Q1 of last year.
Speaker #3: The cost of deposits was 4.41% in this quarter, compared to 4.43% in the previous quarter, and 4.85% in Q1 of last year. The benefit of interest on income tax refund was 8 basis points in the current quarter, compared to 5 basis points in the previous quarter, and 7 basis points in Q1 of last year.
Anindya Banerjee: The benefit of interest on income tax refund was eight basis points in the current quarter, compared to five basis points in the previous quarter and seven basis points in Q1 of last year. Excluding the benefit of interest on tax refunds, the net interest margin would have been 4.28% in this quarter, 4.27% in the previous quarter, and 4.27% in Q1 of last year. Of the total domestic loans, interest rates on about 57% of the loans are linked to the repo rate and other external benchmarks, 13% to MCLR and other older benchmarks, and the remaining 30% of loans have fixed interest rates. Non-interest income, excluding treasury, grew by 16% year-on-year to INR 84.25 billion in Q1 FY 2027. Fee income increased by 23.5% year-on-year to INR 72.86 billion in this quarter, off a low base of Q1 of last year.
Speaker #3: Excluding the benefit of interest on tax refund, the net interest margin would have been 4.28% in this quarter, 4.27% in the previous quarter, and 4.27% in Q1 of last year.
Speaker #3: Of the total domestic loans, interest rates on about 57% of the loans are linked to the repo rate and other external benchmarks, 13% to MCLR and other older benchmarks, and the remaining 30% of loans have fixed interest rates.
Speaker #3: Non-interest income, excluding Treasury, grew by 16% year-on-year to ₹54.25 billion in Q1 of FY2027. Fee income increased by 23.5% year-on-year to ₹72.86 billion in this quarter, off a low base of Q1 last year.
Speaker #3: Fees from retail, rural, and business banking customers constituted about 72% of the total fees in this quarter. Dividend income from subsidiaries was ₹11.1 billion in this quarter, compared to ₹13.36 billion in Q1 of last year.
Anindya Banerjee: Fees from retail, rural, and business banking customers constituted about 72% of the total fees in this quarter. Dividend income from subsidiaries was INR 11.1 billion in this quarter, compared to INR 13.36 billion in Q1 of last year. On costs, the bank's operating expenses increased by 10.4% year-on-year in this quarter, compared to 11.5% year-on-year in FY 2026. Employee expenses increased by 5.5% year-on-year in this quarter, reflecting mainly the impact of annual increments and promotions that take place during the first quarter of every fiscal year. Non-employee expenses increased by 13.8% year-on-year in this quarter. Our branch count has increased by 97 in the first quarter. We had 7,608 branches as of 30 June 2026. The technology expenses were about 11.4% of our operating expenses this quarter.
Speaker #3: On costs, the bank's operating expenses increased by 10.4% year-on-year in this quarter, compared to 11.5% year-on-year in FY2026. Employee expenses increased by 5.5% year-on-year in this quarter, reflecting mainly the impact of annual increments and promotions that take place during the first quarter of every fiscal year.
Speaker #3: Non-employee expenses increased by 13.8% year-on-year in this quarter. Our branch count has increased by 97 in the first quarter. We had 7,608 branches as of June 30, 2026.
Speaker #3: The technology expenses were about 11.4% of our operating expenses this quarter. The total provisions during the quarter were ₹12.6 billion, or 6.2% of core operating profit, and 0.32% of average advances.
Anindya Banerjee: The total provisions during the quarter were INR 12.6 billion or 6.2% of core operating profit and 0.32% of average advances compared to the provisions of INR 18.15 billion in Q1 of last year. The profit before tax, excluding treasury, grew by 20.9% year-on-year to INR 189.75 billion in Q1 of this year. There was a treasury gain of INR 1.51 billion in this quarter as compared to a loss of INR 1.06 billion in the previous quarter and a gain of INR 12.41 billion in Q1 of last year. The tax expense was INR 43.21 billion in this quarter, compared to INR 41.63 billion in the corresponding quarter last year. The bank has written back tax provision of INR 4.46 billion pursuant to favorable tax orders. The profit after tax grew by 15.9% year-on-year to INR 148.05 billion in this quarter. The consolidated profit after tax grew by 13.9% year-on-year to INR 154.4 billion in this quarter.
Speaker #3: Compared to the provisions of ₹18.15 billion in Q1 of last year, the profit before tax, excluding Treasury, grew by 20.9% year-on-year to ₹189.75 billion in Q1 of this year.
Speaker #3: There was a Treasury gain of ₹1.51 billion in this quarter, as compared to a loss of ₹1.06 billion in the previous quarter, and a gain of ₹12.41 billion in Q1 of last year.
Speaker #3: The tax expense was ₹43.21 billion in this quarter, compared to ₹41.63 billion in the corresponding quarter last year. The bank has written back a tax provision of ₹4.46 billion pursuant to favorable tax orders.
Speaker #3: The profit after tax grew by 15.9% year-on-year to ₹148.05 billion in this quarter. The consolidated profit after tax grew by 13.9% year-on-year to ₹154.4 billion in this quarter.
Speaker #3: The details of the financial performance of key subsidiaries are covered in slides 33 to 35 and 54 to 59 in the investor presentation. The annualized premium equivalent of ICICI Life increased to ₹21.36 billion in Q1 2027, from ₹18.64 billion in Q1 2026.
Anindya Banerjee: The details of the financial performance of key subsidiaries are covered in slides 33 to 35 and 54 to 59 in the investor presentation. The annualized premium equivalent of ICICI Life increased to INR 21.36 billion in Q1 2027 from INR 18.64 billion in Q1 2026. The value of new business increased to INR 5.71 billion in Q1 2027 from INR 4.57 billion in Q1 2026. The value of new business margin was 26.7% in Q1 2027 compared to 24.7% in FY 2026. The profit after tax of ICICI Life increased to INR 3.86 billion in Q1 2027 from INR 3.02 billion in Q1 2026. Gross direct premium income of ICICI General increased to INR 83.18 billion in Q1 2027 from INR 77.35 billion in Q1 2026. The combined ratios stood at 107.2% in Q1 2027 compared to 102.9% in Q1 2026.
Speaker #3: The value of new business increased to ₹5.71 billion in Q1 2027, from ₹4.57 billion in Q1 2026. The value of new business margin was 26.7% in Q1 2027, compared to 24.7% in FY 2026.
Speaker #3: The profit after tax of ICICI Life increased to ₹3.86 billion in Q1 2027, from ₹3.02 billion in Q1 2026. Gross direct premium income of ICICI General increased to ₹83.18 billion in Q1 2027, from ₹77.35 billion in Q1 2026.
Speaker #3: The combined ratio stood at 107.2% in Q1 2027, compared to 102.9% in Q1 2026. The profit after tax was ₹4.03 billion in Q1 2027, compared to ₹7.47 billion in Q1 2026.
Anindya Banerjee: The profit after tax was INR 4.03 billion in Q1 2027 compared to INR 7.47 billion in Q1 2026. The results for the quarter include the impact of an increase in reserves pursuant to a recent judicial pronouncement. The profit after tax of ICICI AMC, as per Ind AS, increased to INR 9.65 billion in this quarter from INR 7.84 billion in Q1 of last year. The profit after tax of ICICI Securities, as per Ind AS on a consolidated basis, was INR 4.19 billion in this quarter compared to INR 3.91 billion in Q1 of last year. ICICI Bank Canada had a profit after tax of CAD 5.3 million in this quarter compared to CAD 7.8 million in Q1 of last year. ICICI Bank UK had a profit after tax of $7.2 million in this quarter compared to $5.9 million in Q1 of last year.
Speaker #3: The results for the quarter include the impact of an increase in reserves pursuant to a recent judicial pronouncement. The profit after tax of ICICI AMC, as per NDS, increased to ₹9.65 billion in this quarter, from ₹7.84 billion in Q1 of last year.
Speaker #3: The profit after tax of ICICI Securities, as per NDS, on a consolidated basis, was ₹4.19 billion in this quarter, compared to ₹3.91 billion in Q1 of last year.
Speaker #3: ICICI Bank Canada had a profit after tax of $5.3 million Canadian dollars in this quarter, compared to $7.8 million Canadian dollars in Q1 of last year.
Speaker #3: ICICI Bank UK had a profit after tax of $7.2 million in this quarter, compared to $5.9 million in Q1 of last year.
Speaker #3: As per NDS, ICICI Home Finance had a profit after tax of ₹2.00 billion in the current quarter, compared to ₹2.14 billion in Q1 of last year.
Anindya Banerjee: As per Ind AS, ICICI Home Finance had a profit after tax of INR 2 billion in the current quarter compared to INR 2.14 billion in Q1 of last year. With this, we conclude our opening remarks, and we will now be happy to take your questions.
Speaker #3: With this, we conclude our opening remarks, and we will now be happy to take your questions.
Speaker #1: 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 touchtone telephone.
Operator 3: 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 touchtone 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 will take our first question from the line of Mahrukh Adajania from Tara Capital. Please go ahead.
Speaker #1: 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.
Speaker #1: Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Maharukh Arizania from Tara Capital.
Speaker #1: Please go ahead.
Speaker #2: Yeah. Hi, congratulations. I had a question on your loan growth outlook. Given that you've already achieved such good loan growth in a seasonally weak quarter, do you see this sustaining? As in, would you be able to do, say, high-teens loan growth through the year?
Mahrukh Adajania: Yeah. Hi. Congratulations. I had a question on your loan growth outlook. Given that you've already achieved such good loan growth in a seasonally weak quarter, do you find this sustaining? As in, would you be able to do, say, a high teen loan growth through the year? Is there enough visible demand across your segments? That's my first question. On FCNR, if you have a target in mind and how much you've already mobilized and what is the cost effectiveness of FCNR relative to your domestic term deposits? Just one more question. The foreign loans, they've grown quite aggressively this quarter. Any comments on that?
Speaker #2: Is there enough visible demand across your segments? So that's my first question. And then, on FCNR, do you have a target in mind, and how much have you already mobilized? Also, what is the cost-effectiveness of FCNRB relative to your domestic term deposit?
Speaker #2: And also, just one more question. The foreign loans—they've grown quite aggressively this quarter, so any comments on that?
Speaker #3: Yeah. So on the first one, I think it's partly really reflective of what has happened in the system, where loan growth has picked up over the last two or three quarters, as the various policy measures, both on the fiscal side and the monetary side, have taken effect.
Anindya Banerjee: Yeah. On the first one, I think it's partly really reflective of what has happened in the system, where loan growth has picked up over the last 2, 3 quarters as the various policy measures, both on the fiscal side and the monetary side, have taken effect. I think not just loan growth, but a range of other high-frequency indicators are showing positive momentum. We are sort of participating in that and we will keep looking at opportunities as they come. I think the momentum continues to be pretty good as far as we can see it. On the second question on FCNR, we don't really have any target or so on that we put out. I think we think it's a good scheme and we will look to mobilize as much as we can, but it is very early days yet.
Speaker #3: And I think not just loan growth, but a range of other high-frequency indicators are showing positive momentum. So, we are sort of participating in that.
Speaker #3: And we will keep looking at opportunities as they come. And I think the momentum continues to be pretty good, as far as we can see it.
Speaker #3: On the second question on FCNRB, we don't really have any target or so on that we put out. I think we think it's a good scheme, and we will look to mobilize as much as we can.
Speaker #3: But it is very early days yet. This is something that will really play out over the next maybe eight weeks, eight to ten weeks or so.
Anindya Banerjee: This is something that will really play out over the next maybe 8, 10 weeks or so. Nothing that can be said on that just now. From a cost effectiveness perspective, 6%. If you look at kind of the all-in cost after hedging the coupon, et cetera, it will be somewhere maybe 630, 640. Which is of course lower than the wholesale lending rates. It will therefore be competitive compared to the wholesale lending rates. Of course, there'll be an incremental loan growth opportunity also as these funds start getting deployed. Lastly, on the international branches growth, I guess again, even if you look at the previous quarter, we had a decent momentum. We did see some amount.
Speaker #3: So nothing that can be said on that just now. From a cost-effectiveness perspective, 6%, and then if you look at kind of the all-in cost after hedging, the coupon, etc., it'll be somewhere maybe 6.30–6.40%, which is, of course, lower than the wholesale lending rates.
Speaker #3: And it will therefore be competitive compared to the wholesale lending rates. And of course, there will be an incremental loan growth opportunity also, as these funds start getting deployed.
Speaker #3: Lastly, on the international branches' growth, I guess again, even if you look at the previous quarter, we had decent momentum. So we did see some amount—we have been seeing both an increase in the trade-related book, as well as some borrowing by the overseas operations of companies.
Anindya Banerjee: We have been seeing both increase in the trade-related book as well as some borrowing by the overseas operations of Indian companies, and we have been participating in that. As we go forward, of course, there will be some amount of loans against FCNR deposits that will also keep adding to the loan book overseas.
Speaker #3: And we have been participating in that. And as we go forward, of course, there will be some amount of loans against FCNR deposits that will also keep adding to the loan book overseas.
Speaker #2: Okay, thanks a lot. Thank you.
Mahrukh Adajania: Okay, thanks a lot. Thank you.
Speaker #1: Thank you. Next question is from the line of Kunal Shah from Foodie Group. Please go ahead.
Operator 3: Thank you. Next question is from the line of Kunal Shah from Citigroup. Please go ahead.
Speaker #4: Yeah, thanks for taking the question. So, firstly, just a clarification on the names. The overall yields have held on steady despite the reversals on Agri.
Kunal Shah: Yeah. Thanks for taking the question. Firstly, just a clarification on the NIMs. The overall yields have held on steady despite the reversals on Agri. Was there any offsetting recoveries also during the quarter which has helped that in terms of sustaining the yields?
Speaker #4: So, was there any offsetting recoveries also during the quarter which have helped that in terms of sustaining the yields?
Speaker #3: So that's something that keeps happening on an ongoing basis. I think overall, the name reflects, I think, the healthy funding franchise, and our disciplined approach consistently on both deposit and loan pricing.
Anindya Banerjee: That's something that keeps happening on an ongoing basis. I think overall the NIM reflects, I think the healthy funding franchise, our disciplined approach consistently on both deposit and loan pricing, and as well as our management of the government securities book. I think that is what really causes the yield. That is what really held the NIM up. As for other factors, there is always some amount of collection, less or more in each quarter. There was, of course, this interest on income tax refund, which we have as always specifically called out.
Speaker #3: And as well as our management of the government securities book. So I think that is what really causes the yield; that is what really held the name up.
Speaker #3: And as for other factors, there is always some amount of collection, less or more, in each quarter. There was, of course, this interest on income tax refund, which we have, as always, specifically called out.
Kunal Shah: Yeah.
Speaker #3: But even if adjusting for that, the name is stable both on a year-on-year and on a quarter-on-quarter basis.
Anindya Banerjee: Even if adjusting for that, the NIM is stable both on a year-on-year and on a quarter-on-quarter basis.
Speaker #4: Yeah, so the question was more on yield because the growth is also coming in from the corporate and all. Okay, so to that extent, yields are still sustained.
Kunal Shah: Yeah. Question was more on yield because the growth is also coming in from the corporate and all. Okay. To that extent, yields are still sustained. That was the question. Secondly on the Agri, now maybe larger part of the regularization we have been working all through and would have been interacting with the regulator as well. How is the approach and when do we see the recoveries coming through or maybe the reversals of the provision? Is it expected to come through in Q2 or maybe it might take some time and we should see it more towards the end of the fiscal year?
Speaker #4: So, there was the question. And secondly, on the Agri—so now maybe a larger part of the regularization we have been working all through and would have been interacting with the regulator as well.
Speaker #4: So, how is the approach, and when do we see the recoveries coming through, or maybe the reversals of the provision? Is it expected to come through in the second quarter, or might it take some time and we should see it more towards the end of the fiscal year?
Speaker #3: Yeah, I wouldn't really be able to comment on the timing, but yes, of course, we have been working on the required remediation of the portfolio.
Anindya Banerjee: I wouldn't really be able to comment on the timing, but yes, of course, we have been working on the required remediation of the portfolio and we just want to make sure that whatever we have done is correct and signed off and validated before we discuss a write-back of the provision. I think we are in the process and we will hopefully work it out over the next few months, but I don't want to give a timeline.
Speaker #3: And we just want to make sure that whatever we have done is correct, signed off, and validated before we discuss a write-back of the provision.
Speaker #3: So, I think we are in the process, and we will hopefully work it out over the next few months. But I don't want to give a timeline.
Speaker #4: Okay, so that process is already underway in terms of the validation and getting the sign-off from the IBS.
Kunal Shah: Okay. That process is already on in terms of the validation and getting the sign-off from the RBI?
Anindya Banerjee: Oh, yes. Very much so. It's a granular portfolio and as I said, we want to make sure that we are getting it right and then we want to get it appropriately validated, the work that the field teams have done and that process is on. Sure. Okay. Thanks. That answers the question.
Speaker #3: Oh, yes. Oh, yes. Very much so. It's a granular portfolio. And as I said, we want to make sure that we are getting it right.
Speaker #3: And then we want to get it appropriately validated—the work that the field teams have done. And that process is on.
Speaker #4: Sure. Okay, thanks. Yeah, that answers the question.
Speaker #1: Thank you. Next question is from the line of Rikin Shah from IIM Capital. Please go ahead.
Operator 3: Thank you. Next question is from the line of Nikunj Shah from IIFL Capital. Please go ahead.
Speaker #5: Yeah. Hi. Thanks for the opportunity. I had five questions. The first one is on fee income. It has accelerated significantly from 8% YoY last year to 23% YoY this quarter.
Nikunj Shah: Hi, thanks for the opportunity. I have five questions. First one is on fee income. It has accelerated significantly from 8% YOY last year to 23% YOY this quarter. If you could just throw some color on what is driving this, and should one expect it to remain closer to the overall balance sheet growth here onwards?
Speaker #5: If you could just throw some color on what is driving this, and should one expect it to remain closer to the overall balance sheet growth going forward?
Anindya Banerjee: As I briefly mentioned in our opening remarks, there is some amount of a base effect. Last year, the fee income growth in Q1 was in fact sequentially lower over the preceding quarter. Sorry. The absolute fee income in Q1 was actually sequentially lower over the preceding quarter. There is some amount of base effect as well. I think other than that, it really reflects the underlying business momentum. We've seen growth pick up across all business segments, retail and corporate, while business banking has sustained. We would continue to focus on the fee income line item as we go forward.
Speaker #3: So, as I briefly mentioned in our opening remarks, there is some amount of a base effect. Last year, the fee income growth in Q1 was, in fact, sequentially lower over the preceding quarter.
Speaker #3: Sorry. The absolute fee income in Q1 was actually sequentially lower than in the preceding quarter, so there is some amount of base effect as well.
Speaker #3: And I think, other than that, it really reflects the underlying business momentum. You've seen growth pick up across all business segments—retail and corporate—while business banking has sustained.
Speaker #3: So we would continue to focus on the fee income line item as we go forward.
Speaker #5: Right. The second question, on margins—you've managed them extremely well in this cycle. And now, with loan growth accelerating meaningfully for you, would you continue to maintain your guidance on range-bound margins even going forward?
Nikunj Shah: Right. The second question on margins. You've managed it extremely well in this cycle, and now with loan growth accelerating meaningfully for you, would you continue to maintain your guidance on range-bound margins even going ahead?
Speaker #3: So there are a lot of moving parts to it because it really depends, to some extent, on systemic liquidity and interest rates. For example, in the month of May, we had seen a lot of hardening of wholesale rates.
Anindya Banerjee: There are a lot of moving parts to it because it really depends to some extent on systemic liquidity and interest rates. Where, for example, in the month of May, we had seen a lot of hardening of wholesale rates. That has come off substantially. Based on current conditions and assuming no real policy rate movements, I would say it should be range bound. We will also have to, as we go along, factor in sort of the impact of the FCNR deposit mobilization and the related leverage, where there could be some impact on margins. That is something that will happen over a period of time. In any case, the program itself has significant advantages. That's something we'll see. Other things being equal, I would still say range bound.
Speaker #3: That has come up substantially. So, assuming current conditions and no real policy rate movements, I would say it should be range-bound.
Speaker #3: We'll also have to, as we go along, factor in the impact of the FCNR deposit mobilization and the related leverage, where there could be some impact on margins. But that is something that will happen over a period of time.
Speaker #3: In any case, the program itself has significant advantages, so that's something we've seen. But, other things being equal, I would still say it remains range-bound.
Speaker #5: That exactly was my third question. So, could you talk a bit more about the potential limb and profitability profile for FCNR raised via self-leverage versus via tie-ups with the foreign banks?
Nikunj Shah: That exactly was my third question. Could you talk a bit more about potential NIM and profitability profile for FCNR raised via self-leverage and versus via tie-ups with the foreign banks? Is it materially different in terms of the implications on margins and profitability?
Speaker #5: Is it materially different in terms of the implications on margins and profitability?
Anindya Banerjee: I think we have just about started that whole process. We will have to wait and see. It will be a combination of unleveraged deposits, the deposits where we are providing leverage. For that, there may be some fundraising requirement at our end as well. There will be, of course, other banks providing leverage for deposits into us. As I said, the best case we have now is that there could be some impact on the NIM, particularly because, as I mentioned in response to Maarja's question, the balance sheet of the international branches will expand materially if we indeed are able to mobilize significant amounts. That will happen. We'll see it as it comes. Of course, from an earnings perspective, it is quite positive.
Speaker #3: I think we have just about process, so we will have to wait and see. It will be a combination of unleveraged deposits, where we are providing leverage, and for that, there may be some fundraising requirement at our end as well.
Speaker #3: And there will be, of course, other banks providing leverage for deposits into us. So, as I said, the best guess we have now is that there could be some impact on the NIM, particularly because, as I mentioned in response to Marit's question, the balance sheet of the international branches will expand materially if we are indeed able to mobilize significant amounts.
Speaker #3: So that will happen. We'll see it as it comes. But of course, from an earnings perspective, it is quite positive.
Speaker #5: All right. The fourth one is on recoveries. Was there any one-off recovery in this quarter from any accounts?
Nikunj Shah: Right. The fourth one is on recoveries. Was there any one-off recovery in this quarter from any accounts?
Anindya Banerjee: I think you would all be aware that in one particular case, there was an NCLT judgment where the company was taken over. That recovery did come through this quarter. This is an asset that had been previously sold to ARC. That is there, and then there are some other things in the regular course. From a credit cost perspective, the reported of 32 basis points, I guess as we always say, in the more normalized level, adjusting for chunky recoveries would be around 50 basis points, and that is where it stays.
Speaker #3: So I think most would all be aware that, in one particular case, there was an NCLT judgment where the company was taken over.
Speaker #3: So, that recovery did come through this quarter. This is an asset that had been previously sold to NARCL, and that is there. And then there are some other things in the regular course.
Speaker #3: But from a credit cost perspective, the reported number of 32 basis points—I guess, as we always say, the more normalized level, adjusting for chunky recoveries, would be around 50 bps, and that is where it stays.
Speaker #5: All right, and thanks. The last question is on ECL. If you could just talk about the impact of the transition from next year, both on a one-time basis in net worth and also on the recurring credit cost piece.
Nikunj Shah: Got it. Thanks. The last question is on ECL. If you could just talk about the impact on transition from next year, both on one-time basis on net worth and also on the recurring credit cost piece.
Speaker #3: So, on the net worth, we will not really have any impact. I mean, our assessment, based on whatever pro forma estimates we've done based on the existing position of the balance sheet of the portfolio, is that whatever impact is there will be well absorbed by our provisioning buffers.
Anindya Banerjee: On the net worth, we will not really have any impact in our assessment based on whatever pro forma estimates we've done based on the existing position of the balance sheet of the portfolio. Whatever impact is there will be well absorbed via provisioning buffers. Of course, it always depends on what is the situation of the portfolio at that point in time. On an ongoing basis, the fact that we will be providing for stage 2, obviously that is a provision that is currently not made by any bank. That will result in higher provisions, which will be partly offset by lower provisions on the stage 3, where currently we follow this percentage-based approach, and there it will be much more on a predicted loss kind of approach.
Speaker #3: Of course, we'll always depend on what is the situation of the portfolio at that point in time. On an ongoing basis, the fact that we will be providing for stage two—obviously, that is a provision that is currently not made by any bank.
Speaker #3: So that will result in a higher provision, which will be partly offset by lower provisions on the stage three, where currently we follow this percentage-based approach, and there it will be much more on a predicted loss kind of approach.
Nikunj Shah: Any pro forma estimate that you may want to call out? Is it 510 basis points or meaningfully higher?
Speaker #5: Okay. Proforma estimate that you may want to call out—is it 510 bps or meaningfully higher?
Anindya Banerjee: No, very difficult to make that estimate because we then actually have to run it based on the new ECL guidelines. I think we have a some assessment of the transition impact. The ongoing impact is something that will come, but it will be a uniform impact across the sector, adjusted for portfolio composition.
Speaker #3: No, it's very difficult to make that estimate because we then actually have to run it based on the new ECL guidelines. So I think we are all—so I think we have some assessment of the transition impact; the ongoing impact is something that will come.
Speaker #3: But it will be a uniform impact across the sector, adjusted for portfolio composition.
Nikunj Shah: All right. Thanks, Anindya, and congrats on a very strong quarter.
Speaker #5: All right. Thanks, Anindya, and congrats on a very strong quarter.
Anindya Banerjee: Thank you very much.
Speaker #3: you very much.
Speaker #2: Thank you. Next question is from the line of Chintan from Autonomous Research. Please go ahead.
Operator 3: Thank you. Next question is from the line of Chintan from Autonomous Research. Please go ahead.
Speaker #4: Hi, thank you for taking my question. We have seen some very strong loan growth, particularly in business banking. I'm just wondering, is this the right time to accelerate, given we are going through the energy shock and El Niño is upon us?
[Analyst] (Autonomous Research): Hi. Thank you for taking my question. We have seen some very strong loan growth, particularly business banking. I'm just wondering, is this the right time to accelerate given we are going through the energy shock and El Niño is upon us? We are coasting a little bit on the kind of macro tailwinds from last year. I'm just wondering how you think about the growth opportunity and the evolving environment, over the next kind of year or two.
Speaker #4: We are posting a little bit on the kind of macro tailwinds from last year, but I'm just wondering how you think about the growth opportunity and the evolving environment over the next year or two.
Anindya Banerjee: We are, of course, monitoring this portfolio very closely, and we are factoring in some of these, West Asia, et cetera, into our customer selection and onboarding. I think fundamentally we feel quite comfortable with the portfolio and with growing it. You would see the NPL performance is also pretty good and stable, and we will keep adjusting it as we go along. It is a granular portfolio, reasonably secured portfolio, and we are quite comfortable growing it.
Speaker #3: So, we are, of course, monitoring this portfolio very closely, and we are factoring in some of these West Asia aspects, etc., into customer selection and onboarding.
Speaker #3: But I think, fundamentally, we feel quite comfortable with the portfolio and with how we are growing it. You would see the NPL performance is stable.
Speaker #3: And we will keep adjusting it as we go along. But it is a granular portfolio, a reasonably secure portfolio, and we are quite comfortable growing it.
Speaker #3: The pace is also pretty good and
[Analyst] (Autonomous Research): Are you leaning on these credit guarantee funds? Are you leaning on these government schemes to help you grow better or there's no need?
Speaker #4: Are you leaning on these credit guarantee funds? Are you leaning on these government schemes to help you grow better, or is there no need?
Speaker #3: No. So, when applications come under that, we are assessing and going ahead. I mean, it is a scheme that has been created for the benefit of the customer.
Anindya Banerjee: No. When applications come under that, we are assessing and going ahead. It is a scheme that has been created for the benefit of the customer, we are quite open to it. We are also adding new customers and growing with existing customers in line with their business.
Speaker #3: So, we are quite open to it. But we are also adding new customers and growing with existing customers in line with their business.
Speaker #4: Okay. What would the average loan be on a year-on-year basis? I'm just wondering if there's any lumpiness that will run off in this 19.6% number.
[Analyst] (Autonomous Research): Okay. What was the average loan on a year-on-year basis? I'm just wondering if there's any lumpiness that will run off in this 19.6% number.
Speaker #3: Average loan growth on a year-on-year basis? It will be somewhat lower. But I mean, as I mentioned earlier, this higher loan growth this quarter is reflective of the increase in loan growth in the system.
Anindya Banerjee: Average loan growth on a year-on-year basis? It will be somewhat lower. As I mentioned earlier, this higher loan growth this quarter is reflective of the increase in loan growth in the system, and both the banks and the system is off the base of Q1 last year. There could be some base effect, but I think incremental momentum continues to be pretty strong.
Speaker #3: And both the banks and the system are off the base of Q1 last year, so there could be some base effect. But I think incremental momentum continues to be pretty strong.
Speaker #4: Okay. And then the final question is just on competitive dynamics. Have you seen any easing off of competitive dynamics from the PSU banks, or does it remain as intense as ever?
[Analyst] (Autonomous Research): Okay. The final question is just on competitive dynamics. Have you seen any easing off of competitive dynamics from the PSU banks, or does it remain intense as ever? They've used up their LCR and LDR buffers substantially. Just wondering if there's been any change in recent months.
Speaker #4: They've used up their LCR and LDR buffers substantially. Just wondering if there's been any change in recent months.
Anindya Banerjee: The way we like to look at it is what is our existing market share and what is the franchise capable of delivering. Our belief is that our franchise should deliver more. These competitive, there is always some set of competition that you have to deal with, but I think there is enough business for us to do within our frameworks. We keep calibrating based on sort of the interest rate environment and the competitive environment. I think we will keep looking at that as we go along. That is not sort of something that is holding us back currently.
Speaker #3: The way we like to look at it is: What is our existing market share, and what is the franchise capable of delivering? So, our belief is that our franchise should deliver more.
Speaker #3: And there's competition that you have to deal with. But I think there is enough business for us to do within our frameworks, and we keep calibrating based on the interest rate environment and the competitive environment.
Speaker #3: But I think we don't—we will keep looking at that as we go along. But that is not something that is holding us back currently.
[Analyst] (Autonomous Research): No. I appreciate looking at yourself and not at others, the asset pricing kind of gets impacted by those things, right? That's why I was asking that question.
Speaker #4: No, I appreciate looking at yourself and not at others. But the asset pricing kind of gets impacted by those things, right? That's why I was asking that question.
Anindya Banerjee: So we-
Speaker #4: Are you seeing asset pricing improve?
[Analyst] (Autonomous Research): Are you seeing asset pricing improve?
Speaker #3: I think it's a large market, and there is enough for us to do. So, for example, some of the rates that get quoted—we are not doing that kind of business.
Anindya Banerjee: I think it's a large market and there is enough for us to do. We are, for example, some of the rates that get quoted, we are not doing that kind of business. There is enough other business where we are comfortable with risk-adjusted returns on a customer basis, which we do.
Speaker #3: But there is enough other business where we are comfortable with these adjusted returns on a customer basis, which we do.
Speaker #4: Okay. Thank you so much.
[Analyst] (Autonomous Research): Okay. Thank you so much.
Speaker #2: Thank you. Next question is from the line of Abhishek Murarka from HSBC. Please go ahead.
Operator 3: Thank you. Next question is from the line of Abhishek Murarka from HSBC. Please go ahead.
Speaker #5: Yeah. Hi, good evening, and congratulations on the strong quarter. So I just wanted to go back to the fee income question. You mentioned that it is largely disbursement-linked, and disbursements have gone up.
Abhishek Murarka: Yeah. Hi, good evening, and congratulations on the strong quarter. I just wanted to go back to the fee income question. You mentioned that it is largely disbursement linked and disbursements have gone up. If I just look at the overall growth of 23%, assuming card fees is also a chunk of your fee and card balances are lower, is the rest of it just disbursement linked or is there any other fee line item that has picked up significantly? That's my first question.
Speaker #5: But if I just look at the overall growth of 23%—assuming card fees are also a chunk of your fees and the card balance is lower—is the rest of it just disbursement-linked, or is there any other fee line item that has picked up significantly?
Speaker #5: So that's.
Speaker #3: No, I didn't. I did not say that it is disbursement-linked. I just said that overall business volumes and business growth have gone up.
Anindya Banerjee: I did not say that it is disbursement linked. I just said that overall business volumes and business growth has gone up. That will partly reflect in it, particularly the increase, for example, on the corporate side, continued increase or continued growth on the business banking side and the pickup in retail. Our fee income has a range of components, cards, as you mentioned, the loan processing fees, transaction banking and trade, forex, and derivatives. All those elements, the deposit-linked fees, all those have seen a growth and at different times, there may be more opportunity in one segment than the other, which we have to keep making sure that we are there across the opportunity spectrum within our risk framework, which is what we do.
Speaker #3: So that will partly reflect in it, particularly the increase, for example, in the corporate side—continued increase, continued growth on the business banking side, and the pickup in retail.
Speaker #3: So, we have our fee income, which has a range of components—cards, as you mentioned; transaction banking and trade; forex; and derivatives.
Speaker #3: So there are all those deposit-linked fees, and at different times, there may be more opportunity in one segment than the other. We have to keep making sure that we are there across the opportunity spectrum within our kind of risk framework, which is what we do.
Anindya Banerjee: Also, as I said, there is some base effect last year, because last year, the Q1 was indeed not a good quarter from a fee perspective.
Speaker #3: And also, as I said, there is some base effect from last year because Q1 last year was indeed not a good quarter from a fee perspective.
Speaker #5: Right. So in these.
Abhishek Murarka: Right.
Anindya Banerjee: If you look at it sequentially, the increase in the fee line, Q1 over Q4 is about INR 5 billion or so.
Speaker #4: If you look at it sequentially, the increase in the fee line in the June quarter over the March quarter is about ₹5 billion or so.
Speaker #5: Yeah, yeah. But I'm just looking at it because sequential seasonality will be there. But I'm just trying to wonder, in these five or six buckets that you have highlighted, which are the ones where you see significant opportunity or pickup right now?
Abhishek Murarka: Yeah. I'm just looking at because sequential seasonality will be there, I'm just trying to wonder, in these five or six buckets that you have highlighted, which are the ones where you see significant opportunity or pickup right now? Are there any one or two buckets which are contributing-
Speaker #5: Are there any one or two buckets which are contributing?
Anindya Banerjee: No, I think opportunity is there across the board. As you said, maybe cards is one area where fee growth is less than what we would want it to be. Although, at a PBT level, the business has done very well because of the reduction in credit costs. There is opportunity across the board.
Speaker #3: No, I think, as I said, maybe cards is one area where fee growth has been less than what we would want it to be. Although at a PBT level, the business has done very well because of lower credit costs.
Speaker #3: But there is opportunity across the board.
Speaker #5: Right. Okay. And I wanted to check on cards and PN. How do you—I mean, we've been saying that overall we're comfortable with the environment.
Abhishek Murarka: Right. Okay. I wanted to check on cards and PL. We've been saying that overall, we're comfortable with the environment, but growth has not picked up a whole lot, right? I think in cards, you were also trying to sort of clean up the portfolio a bit, if I remember correctly. Can you give an update on how you see the growth in these two businesses, let's say from a next 12-month, 15-month perspective?
Speaker #5: But growth has not picked up a whole lot, right? And I think in cards, you were also trying to sort of clean up the portfolio a bit, if I remember correctly.
Speaker #5: So, can you give an update on how you see the growth in these two businesses? Let's say, from a next 12-month or 15-month perspective.
Anindya Banerjee: PL has picked up quite a bit, actually, 12% year on year and 4% sequential growth. I think it's after a long time that we are seeing those kinds of numbers. Cards, I think the revolver rates are lower, so that is impacting the book growth. We will see how to optimize that as we go along.
Speaker #3: So, PN has picked up quite a bit, actually—12% year-on-year and 4% sequential growth. I think it's after a long time that we are seeing those kinds of numbers.
Speaker #3: Cards—there, I think the revolver rates are lower, so that is impacting the book growth. But we will see how to optimize that as we go along.
Abhishek Murarka: PL, the growth is sustainable? This 4%, kind of 3%, 4% Q over Q growth.
Speaker #5: So, PN, the growth is sustainable? This 3-4% kind of yo-yo?
Anindya Banerjee: I don't want to really give an outlook per se. I think we had gone down to a declining portfolio. From that we are at 4% sequential growth. I don't see anything today that will reduce growth, but we will take it as it comes.
Speaker #3: High growth—we really want to give an outlook, per se. I think we had gone down to a declining portfolio from that. We are at 4% sequential growth.
Speaker #3: I we are not I don't see any need to I don't see anything today that will that will reduce growth. But we will take it as it comes.
Speaker #5: Got it. And just finally, on ECLGS, how's the offtake? How much disbursement have you done? Can you just give some sort of an update on what kind of offtake you're seeing on that product?
Abhishek Murarka: Got it. Just finally, on ECLGS, how is the offtake? How much disbursements have you done? Can you just give some sort of an update on what kind of offtake you're seeing on that product?
Speaker #3: No, I think I answered that. We are getting some inquiries and we are doing some of that. It's part of the increase in the business banking book.
Anindya Banerjee: No, I think I answered that. We are getting some inquiries and we are doing some of that. It's part of the increase in the business banking book. That is something that is being done for the benefit of the customer and as wherever it is appropriate, we are doing it.
Speaker #3: But so, that is something that has been done for the benefit of the customer. And, wherever it is appropriate, we are doing it.
Speaker #5: Okay. Okay. All right. All right. Thank you, and all the best.
Abhishek Murarka: Okay. All right. Thank you, and all the best.
Speaker #2: Thank you. Next question is from the line of M.B. Mahesh from Kotak Securities. Please go ahead.
Operator 3: Thank you. Next question is from the line of M B Mahesh from Kotak Securities. Please go ahead.
Speaker #4: Let me just ask a couple of questions. First is on corporate loans. This recovery and growth that we are seeing in your bank was also seen in some of the other banks as well.
M B Mahesh: I have just a couple of questions. First is on this corporate loans. This recovery in growth that we are seeing in your bank and also in some of the other banks as well. If you just kind of give us some color as to how much of it is a demand-led growth that one is seeing because of CapEx versus probably a credit substitution or a short-term working capital demand that has come through.
Speaker #4: If you could just kind of give us some sense of how much of it is demand-led growth that's being driven by capex, versus how much is probably a result of credit substitution or a short-term working capital demand that has come through.
Anindya Banerjee: See, the corporates were always doing what they were doing, they are doing CapEx to the extent that they were doing CapEx. I think certainly bond markets this quarter have not favored the corporate sector. If you see, we have a reasonable increase in our NBFC portfolio as well. Part of it is a shift from bond markets. Part of it is, I would say working capital utilization. Part of it may be corporates taking on some borrowings and just maintaining some liquidity buffers as they also want to sort of have greater resilience in the uncertainties of the environment. To the extent that they are investing or were investing, that also continues. Maybe the source of financing has shifted a little.
Speaker #3: See, the corporates were always doing what they were doing. So, they are doing capex to the extent that they were doing capex. But I think, certainly, bond markets this quarter have not favored the corporate sector.
Speaker #3: If you see, we have a reasonable increase in our NBFC portfolio as well. So, part of it is a shift from bond markets. Part of it is, I would say, working capital utilization.
Speaker #3: Part of it may be corporates taking on some borrowings and just maintaining some liquidity buffers as they also want to be sort of have greater resilience in this in the uncertainties of the environment.
Speaker #3: And to the extent that they are investing or were investing, that also continues. Maybe the source of financing has shifted a little.
M B Mahesh: You don't see any meaningful increase in, let's say, loan proposals relating to fresh CapEx over what you've seen earlier. Would that be correct?
Speaker #4: But you don't see any meaningful increase in, let's say, loan proposals relating to fresh capex over what you've seen earlier. Would that be fair to say?
Speaker #3: No, I'm hesitant to make a comment that can get extrapolated at a system level. We are dealing with our customer base and catering to their needs.
Anindya Banerjee: No, I am hesitant to make a comment which can get extrapolated at a system level. We are dealing with our customer base and catering to their needs. I think the customers are doing a range of things, and they were doing and are doing CapEx and new investments as well. Obviously, in addition to that, some shift in funding mix is also there. I think this quarter in particular, we saw a healthy pipeline at reasonable rates. That is what has led to this growth.
Speaker #3: I think the customers are doing a range of things, and they were doing and are doing capex and new investments as well. But obviously, in addition to that, some shift in funding mix is also there.
Speaker #3: And I think this quarter in particular, we saw a healthy pipeline at reasonable rates. So that is what has led to this growth.
Speaker #4: Perfect. The next question—this is pertaining to the retail side. I know you've done well on loan growth in that part of the market. Just kind of comment on this entire IT corridor, both on the asset side as well as on the liability side.
M B Mahesh: Perfect. Second question. This is pertaining to the retail side. I know you've done well on loan growth on that part of the market. Just if you could just kind of comment on this entire IT corridor, both on the asset side as well as on the liability side. How is the demand for retail assets and have you seen any change on the liability side? Thank you.
Speaker #4: How is the demand for retail assets, and have you seen any change on the liability side? Thank you.
Anindya Banerjee: No, we have not seen any change actually. I think in terms of inflows into the savings, et cetera, they are quite stable. We've not seen any change. As you can see, the performance of the retail portfolio has only improved. In fact, additions have come off and in particular, if you look at it on a year-on-year basis, unsecured additions have come off. I think things are quite stable from that perspective.
Speaker #3: No, we have not seen any change actually. So, I think in terms of inflows into the savings, etc., they are quite stable. We've not seen any change.
Speaker #3: And as you can see, the performance of the retail portfolio has only improved. In fact, additions have come off and, in particular, if you look at it on a year-on-year basis, unsecured additions have come off.
Speaker #3: So, I think things are quite stable from that perspective.
Speaker #4: Perfect. Thank you. Thank you.
M B Mahesh: Okay, great. Thank you.
Speaker #2: Thank you. Ladies and gentlemen, we'll take that as the last question for today. I would now like to hand the conference back to management for closing comments.
Operator 3: Thank you. Ladies and gentlemen, we'll take that as the last question for today. I would now like to hand the conference back to management for closing comments. Over to you, sir.
Speaker #2: Over to you, sir.
Anindya Banerjee: Thank you very much for making time for the call, and we will take any other questions that you have as we interact going forward. Thank you.
Speaker #3: Thank you very much for making time for the call. We will take any other questions that you have as we interact going forward. Thank you.
Speaker #2: Thank you. On behalf of ICICI Bank, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.
Operator 3: Thank you. On behalf of ICICI Bank, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.
Anindya Banerjee: Thank you.
Abhishek Murarka: Hello?
