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Informist, Saturday, Jul. 18, 2026

 

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MUMBAI/NEW DELHI – Raising foreign currency non-resident bank deposits under the Reserve Bank of India's zero-cost swap facility announced in June is likely to lead to dilution of the bank's net interest margin, the management of ICICI Bank said at a press conference post the release of its June quarter earnings Saturday. 
 

"Our expectations of NIM is that in FY27, it should be range-bound, assuming no (repo) rate movements. Of course, there will be some impact on account of FCNR(B) deposit programme and loans against FCNR deposits, which could be sort of slightly NIM-dilutive," the bank's management said. ICICI Bank reported a net interest margin of 4.36% for the June quarter, up from 4.32% in the March quarter and 4.34% in the year-ago quarter.

 

The private sector lender's executives refrained from providing a figure on the size of such deposits the bank has raised till date since the scheme was rolled out, but said they expect the pace of raising these deposits to pick up in the next few weeks. The executives also did not provide details on the leveraging scheme on FCNR(B) deposits the bank is offering, but said that the bank has collaborated with partner banks to provide leverage. The bank will offer leverage based on customer profiles and limits of partner banks, they said.  

 

The bank is committed to ensuring the success of the various measures the RBI and the Centre rolled out last month to boost foreign capital, its management said. Rates on foreign currency non-resident bank deposits could change over time, but the bank does not see a need to raise rates currently, it said. ICICI Bank currently offers interest of 6% per annum on dollar-denominated foreign currency non-resident bank deposits of three to five-years, as per the bank's website. This is an increase of upto 310 basis points compared to the rates it had offered before the RBI rolled out the swap facility.

 

The rise in the bank's net interest margin in the reporting quarter was due to tax refunds and repricing of term deposits, the bank's officials said. The tax refunds led to a rise of 3 basis points in the bank's net interest margin in Apr-Jun, they said. The bank's net profit beat analysts' estimates to rise nearly 16% on year to INR 148.05 billion in the June quarter.

 

Demand for working capital supported the bank's corporate loan book in the reporting quarter, the executives said. The bank also capitalised on underperformance of the equity and bond markets to boost its loan book, it said. The bank's total advances showed robust on-year growth of nearly 20% in the June quarter at INR 16.31 trillion, of which its domestic corporate book made up INR 3.27 trillion, up nearly 19% on year. 

 

Amid the continued West Asia conflict, the bank does not expect any rise in its non-performing loans currently, the management said. A seasonal rise in stressed assets due to agriculture-linked books is usually visibile in the June quarter, it said. Retail non-performing assets have moderated, especially under unsecured loans, while there are "virtually" no fresh non-performing assets in the corporate segment, it said. The bank's gross non-performing asset ratio inched lower from the March quarter to 1.38% as of Jun. 30, while its net non-performing asset ratio rose to 0.35% as of Jun. 30, from 0.33% as of Mar. 31. The bank expects its cost of funds to be range-bound in the rest of the financial year 2026-27 (Apr-Mar). The bank reported cost of funds of 4.51% as of Jun. 30, down from 4.53% in the March quarter and 5.02% in the year-ago period. 

 

The bank said it continues to implement the use of artificial intelligence in areas such as portfolio monitoring, onboarding of customers, detection of fraud, document extraction and summarisation, and customer servicing, it said. The bank has invested in an enterprise AI platform, terming it "a secure environment for development, hosting, and development of AI and generative AI use cases". The implementation of AI at the bank is unlikely to have a material impact on its employees, its management said. 

 

On Friday, shares of ICICI Bank ended at INR 1,444.30 on the National Stock Exchange, up 1.8%.  End

 

Reported by Cassandra Carvalho and Aaryan Khanna

Edited by Avishek Dutta

 

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