ICICI Bank Delivers Strong Q4 Earnings Amid Robust Growth and Improved Asset Quality

ICICI Bank Limited has reported its financial results for the quarter ended March 31, 2025 (Q4 FY2025), showcasing a resilient performance driven by double-digit net profit growth, improved asset quality, and strong balance sheet metrics. The bank’s results underscore its ability to navigate macroeconomic challenges while capitalizing on robust credit demand and disciplined risk management.

Net Profit Jumps 18% YoY, Outperforming Estimates

The bank’s standalone net profit surged to ₹12,630 crore in Q4 FY2025, a 18% year-on-year increase, comfortably exceeding the CNBC-TV18 poll estimate of ₹11,956.4 crore. Full-year profits rose 15.5% to ₹47,227 crore, reflecting sustained profitability. Consolidated net profit also grew 15.7% to ₹13,502 crore, highlighting the contributions of its subsidiaries, including ICICI Lombard and ICICI Prudential Life Insurance.

Revenue Growth Driven by NII Expansion and Strong Fee Income

Key revenue drivers included:
- Net Interest Income (NII): Up 11% YoY to ₹21,193 crore, surpassing estimates.
- Net Interest Margin (NIM): Improved to 4.41% in Q4 FY2025, up from 4.25% in the previous quarter and 4.40% a year ago, signaling better pricing discipline and asset mix optimization.
- Non-Interest Income: Rose 18.4% YoY to ₹7,021 crore, with fee income increasing 16% to ₹6,306 crore, bolstered by strong retail and corporate banking activities.

Asset Quality Shows Significant Improvement

The bank’s asset quality metrics strengthened further, with:
- Gross NPAs: Falling to 1.67% of total advances (₹24,166.2 crore), down from 1.96% in Q3 FY2025.
- Net NPAs: Declining to 0.39% (₹5,589.4 crore), the lowest in over a decade.
- Provision Coverage Ratio: At 76.2%, indicating ample buffers against potential defaults.

The reduction in gross NPA additions (₹5,142 crore in Q4 vs. ₹6,085 crore in Q3) and higher recoveries (₹3,817 crore) highlighted effective risk management.

Loan and Deposit Growth Reflects Strong Liquidity Management

• Advances: Total loans grew 13.3% YoY to ₹13.42 lakh crore, with retail loans accounting for 52.4% of the portfolio. Corporate lending expanded 11.9% YoY, though dipped slightly quarter-on-quarter.
• Deposits: Period-end deposits rose 14% YoY to ₹16.10 lakh crore, with CASA (current and savings account) ratio holding steady at 38.4%.

The bank’s focus on retail lending and CASA growth positions it to benefit from higher stickiness and lower interest rate sensitivity.

Capital Strength and Dividend

• Capital Adequacy: The Total CAR stood at 16.55%, comfortably above regulatory requirements (11.70%), and the CET-1 ratio was 15.94%, ensuring ample headroom for growth.
• Dividend: A proposed ₹11 per equity share dividend, up from ₹10 in FY2024, signals confidence in the bank’s financial health.

Subsidiaries Shine in Insurance and Wealth Management

• ICICI Lombard: PAT rose 30.7% YoY to ₹2,508 crore, with an improved combined ratio of 102.8%.
• ICICI Prudential Life Insurance: PAT jumped 39.5% to ₹1,189 crore, driven by a 15% YoY rise in Annualised Premium Equivalent.
• ICICI Securities: Annual PAT grew 14.4% to ₹1,942 crore, despite quarterly volatility.

Management Outlook and Risks

The bank emphasized strong credit demand across retail (home loans, auto loans) and select corporate sectors. However, it noted cautiousness in cyclical sectors amid slowing economic activity. Interest rate cuts on deposits (savings rates down 25 bps, FD rates 50 bps) aim to preserve NIMs while attracting customer deposits.

Conclusion: A Compelling Investment Case?

ICICI Bank’s Q4 results paint a picture of a bank in strong financial health, with multiple growth levers:
1. Profitability: The 18% YoY net profit growth and expanding NIM (now at 4.41%) reflect effective cost management and disciplined lending.
2. Asset Quality: Gross NPAs at 1.67% and a provision coverage ratio of 76.2% suggest minimal downside risks.
3. Balance Sheet Strength: A CAR of 16.55% and a proposed dividend of ₹11 per share indicate confidence in future earnings.
4. Subsidiary Growth: Insurance and wealth management arms delivered double-digit profit growth, diversifying revenue streams.

The bank’s focus on retail lending, CASA growth, and capital efficiency positions it well to capitalize on India’s economic recovery. While macroeconomic headwinds in corporate lending remain a risk, ICICI’s results suggest it can navigate these challenges. Investors seeking exposure to a well-managed Indian banking giant with improving fundamentals should take note.