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Informist, Thursday, Oct. 16, 2025

 

By Priyasmita Dutta

 

NEW DELHI – ICICI Bank Ltd. is expected to see a humble on-year rise in net profit for the September quarter, tracking the sectoral trend of subdued profitability from margin compression, muted loan growth, and lack of significant contribution to the bottom line from treasury income. Yet, ICICI Bank could be one of the outliers, showing positive momentum in loan growth, according to brokerages tracking the lender. 

 

"We expect 2QFY26 to be the weakest quarter of this earnings cycle for banks, with sector profitability bottoming out before a recovery in 2HFY26," JM Financial Institutional Securities Pvt Ltd. said. "We believe this quarter will mark the inflection point, with earnings momentum set to improve from 3QFY26 as margin pressure eases and growth/asset quality trends improve," it added. 

 

Analysts believe most banks have passed on the Reserve Bank of India's rate cuts in the reporting quarter, with net interest margin declining more than in the previous quarter. However, adjusted margin compression for ICICI Bank is expected to remain in low single digit, outperforming most peers, Motilal Oswal Financial Services Ltd. said in a report. 

 

The large private sector lender is expected to report a 4.8% rise in net profit for the September quarter at INR 123.15 billion, according to the average of the estimates of 10 brokerages. However, sequentially, the net profit is seen falling 3.6%. YES Securities (India) Ltd. has the lowest estimate for net profit at INR 116.36 billion, while Anand Rathi Share and Stock Brokers Ltd. has the highest at INR 132.46 billion. India's second-largest private sector lender is scheduled to report its September quarter earnings on Saturday.

 

The RBI has cut the benchmark interest rate by 100 basis points to 5.50% in 2025 so far, and a majority of this rate transmission is expected to have taken place in the reporting quarter. The MPC had reduced the repo rate by 25 bps each in February and April, before effecting a 50-bps repo rate cut in June. "We have not quantified it (the effect of the repo rate cuts on the bank's loan book), but if you look at (the) February cut, I think it would have largely flown through almost entirely. The April cut also would have substantially flown through, maybe we have a little bit more to happen... The June cut I would say has not flown through much, and most of that will come through in Q2," ICICI Bank's management had said in a post-earnings analyst call in July.

 

ICICI Bank's net interest margin could see 5-25 bps compression on a year-on-year basis to 4.09-4.33%, according to estimates from five brokerages. Sequentially, the fall could be to the tune of 9-17 bps. ICICI Bank's net interest margin had declined to 4.34% at the end of June from 4.41% in the March quarter and 4.36% in the June quarter last year.

 

"We are building NIM to decline due to faster re-pricing of loans this quarter," Kotak Securities said. The brokerage had the lowest estimate for ICICI Bank's net interest margin at 4.09%. "Margin may fall by 9 bps due to fall in yields outpacing fall in cost of funds," Prabhudas Lilladher Pvt. Ltd. said while giving the most optimistic margin view of 4.33%. 

 

The private sector lender's net interest income is expected to be INR 215.78 billion in the quarter under review, up 7.6% on year and down just 0.3% on quarter, according to the average of estimates from 10 brokerages. Estimates for net interest income ranged between INR 211.44 billion and INR 222.54 billion. 

 

Brokerages broadly agree that while loan growth was lacklustre industry-wide, ICICI Bank's loan growth during the quarter was better than the industry average. "Loan growth is likely to be at 12% yoy (expect slowdown in all segments though still better than industry average)," Kotak Securities said. Prabhudas Lilladher Pvt. Ltd. had the most conservative estimate of 10% on-year loan growth in the September quarter, followed by Motilal Oswal with a 10.1% estimate. Nomura Equity Research expects the loan growth to be 11% higher on year. "Expect strong loan and steady deposit growth," Nomura said.  

 

For the September quarter, brokerages expect credit cost to remain benign, supported by robust asset quality. Slippages would also be lower on a sequential basis due to seasonality, they said. "Slippages to trend down due to lower KCC NPAs (Kisan Credit Card non-performing assets)," Emkay said. The Kisan Credit Card scheme is a government initiative that provides farmers credit for their agricultural, animal husbandry, fisheries and allied activities.

 

Key developments to look out for will be the bank management's outlook on margins and loan and deposit growth. "Key discussion areas would be recovery of NIM and improvement in loan growth trajectory," Kotak Securities said. 

 

In the June quarter, the bank had reported a net profit of INR 127.68 billion, up around 16% on year. As of Jun. 30, ICICI Bank's total deposits were INR 16.09 trillion, up almost 13% on year, while total advances were INR 13.64 trillion, up 11.5%. The current account-savings account ratio was 41.2% as of Jun. 30. Since the bank announced its June quarter results, its stock has fallen 1%. At 1227 IST, shares of ICICI Bank were at INR 1,412.40 on the National Stock Exchange. 

 

Of the 24 brokerage reports on the lender available with Informist, 23 have a 'buy' rating on the stock with an average target price of INR 1,600 per share. Only one brokerage has a 'hold' rating on the lender. 

 

Following are the Jul-Sept earnings estimates for ICICI Bank from 10 brokerages in descending order of the estimate of net profit in INR million:

 

Brokerage	Net interest income	Net profit
Anand Rathi Share and Stock Brokers Ltd	222,544	132,458
Emkay Global Financial Services Ltd	214,926	127,492
Nirmal Bang Equities Pvt Ltd	213,023	127,360
Nuvama Wealth Management Ltd	216,300	127,199
Nomura Equity Research	215,200	123,000
JM Financial Institutional Securities Pvt Ltd	217,007	121,709
Motilal Oswal Financial Services Ltd	211,453	119,401
Prabhudas Lilladher Pvt Ltd	214,590	119,340
Kotak Institutional Equities	211,443	117,161
YES Securities (India) Ltd	221,329	116,357
Average	215,781.50	123,147.70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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