ICICI Bank Sets Record with ₹11 Dividend Amid Strong Financials

ICICI Bank has announced a record dividend of ₹11 per share for the fiscal year 2024-25, marking its highest cash payout in over a decade. The recommendation, subject to shareholder approval at its upcoming Annual General Meeting (AGM), underscores the bank’s robust financial health and strategic focus on rewarding investors. With net profit surging 18% year-on-year to ₹12,629.58 crore in Q4 FY2025, this dividend reflects a decade of gradual increases and signals renewed confidence in India’s second-largest private sector lender.

A Decade of Rising Dividends

The ₹11 per share payout represents a significant milestone, nearly doubling the ₹6 dividend in 2017 and far exceeding the ₹2 paid in 2021 (see Figure 1). This trend aligns with ICICI Bank’s improving profitability, driven by strong loan growth and disciplined cost management.

Financial Fortitude Behind the Payout

The dividend recommendation is backed by solid fundamentals:
1. Profit Growth: Net profit for FY2025 rose 18% YoY, fueled by a 11% increase in net interest income (NII) to ₹21,192.94 crore. Non-interest income also grew 18.4% to ₹7,021 crore.
2. Asset Quality: Gross non-performing assets (NPAs) fell to 1.67% in Q4 FY25, down from 1.96% in the prior quarter, while net NPAs dipped to 0.39%.
3. Capital Strength: Total capital adequacy and CET-1 ratios stood at 16.55% and 15.94%, respectively—well above regulatory requirements.

Loan and Deposit Dynamics Fuel Expansion

The bank’s aggressive lending strategy is paying off:
- Loan Growth: Domestic advances rose 13.9% YoY to ₹13.10 lakh crore, with retail loans accounting for 52.4% of the portfolio.
- Deposit Surge: Total deposits hit ₹16.10 lakh crore, a 14% YoY increase, supported by a branch network of over 5,000 branches and digital banking initiatives.

Risks and Considerations

While the dividend reflects ICICI Bank’s strength, investors should note:
- Approval Risk: The payout hinges on AGM approval, though this is largely procedural given the board’s recommendation.
- CASA Ratio Decline: The current and savings account (CASA) ratio dipped to 40.5% in Q3 FY25, down from 45.83% in 2023. A lower CASA ratio increases funding costs, potentially squeezing net interest margins (NIM).
- Unusual Liquidity Metrics: A reported “Current Ratio” of 0 for Q4 FY25 (likely an error or accounting quirk) warrants monitoring, though other liquidity metrics remain robust.

Market Perception and Valuation

ICICI Bank’s stock price has underperformed peers in recent months, trading at a P/B ratio of 3.27x—still above its 10-year average of 2.78x. Analysts highlight the dividend as a positive catalyst, particularly for income-focused investors.

Conclusion: A Payout Reflecting Resilience

The ₹11 dividend is more than a financial gesture—it’s a testament to ICICI Bank’s ability to navigate macroeconomic challenges and sustain growth. With net profit growth outpacing peers, a clean balance sheet, and a dividend yield of 0.71%, the bank is positioning itself as a reliable player in India’s banking sector.

Investors should watch for AGM approval, but the broader narrative is clear: ICICI Bank’s strong fundamentals justify this record payout. As India’s economy continues to expand, the bank’s focus on retail lending and digital innovation could further solidify its position—a compelling case for long-term investors.

Final Note: The dividend’s final approval and payment timeline will be confirmed post-AGM. Always consult financial advisors before making investment decisions.