Icici Bank Ltd Q2 FY2025 Earnings Call

Ladies and gentlemen, good day, and welcome to ICICI Bank's Q2 FY '25 Earnings Conference Call. On the call, we have with us Mr. Sandeep Bakhshi, Managing Director and CEO, ICICI Bank; and Mr. Anindya Banerjee, Group Chief Financial Officer, ICICI Bank. Please note that this conference is being recorded. I now hand the conference over to Mr. Sandeep Bakhshi. Thank you, and over to you, sir.

Thank you. Good evening to all of you, and welcome to the ICICI Bank earnings call to discuss the results for Q2 of financial year 2025. Joining us today on this call are Sandeep Batra, Rakesh, Ajay, Anindya and Abhinek. The Indian economy remains resilient based on its long-term growth drivers and the actions and initiatives of the policymakers. The global and domestic inflation, liquidity and rate environment continue to evolve, and we would continue to monitor the same. 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. We continue to operate within our strategic framework to strengthen our franchise. Maintaining high standards of governance, deepening coverage and enhancing delivery capabilities are focus areas for our risk-calibrated profitable growth. The profit before tax, excluding treasury, grew by 7.9% year-on-year and 5.2% quarter-on-quarter to INR 148.10 billion in this quarter. The core operating profit increased by 12.1% year-on-year and 4.1% quarter-on-quarter to INR 160.43 billion in this quarter. Excluding dividend income from the subsidiaries and associates, the core operating profit increased by 13.4% year-on-year and 6.8% quarter-on-quarter to INR 155.02 billion in this quarter. The profit after tax grew by 14.5% year-on-year and 6.2% quarter-on-quarter to INR 117.46 billion in this quarter. Total deposits grew by 15.7% year-on-year and 5% sequentially at September 30, 2024. Term deposits increased by 15.9% year-on-year and 5.5% sequentially at September 30, 2024. During the quarter, average deposits grew by 15.6% year-on-year and 3.6% sequentially and average current and savings account deposits grew by 10.4% year-on-year and 1.8% sequentially. The bank's average liquidity coverage ratio for the quarter was about 120%. The domestic loan portfolio grew by 15.7% year-on-year and 4.6% sequentially at September 30, 2024. The retail loan portfolio grew by 14.2% year-on-year and 2.9% sequentially. Including non-fund-based outstanding, the retail portfolio was 44.9% of the total portfolio. The rural portfolio grew by 16.5% year-on-year and 1.7% sequentially. The business banking portfolio grew by 30% year-on-year and 10.7% sequentially. The domestic corporate portfolio grew by 11.8% year-on-year and 4.9% sequentially. The overall loan portfolio, including the international branches portfolio, grew by 15% year-on-year and 4.4% sequentially at September 30, 2024. We have revised the presentation of loans to reflect a consolidated view of the business banking portfolio, which Anindya will explain later on the call. The net NPA ratio was 0.42% at September 30, 2024, compared to 0.43% at June 30, 2024, and 0.43% at September 30, 2023. The total provisions during the quarter were INR 12.33 billion or 7.7% of core operating profit and 0.38% of average advances. The provisioning coverage ratio on nonperforming loans was 78.5% at September 30, 2024. In addition, the bank continues to hold contingency provisions of INR 131 billion or about 1% of the total loans at September 30, 2024. The capital position of the bank continued to be strong with a CET1 ratio of 15.96% and total capital adequacy ratio of 16.66% at September 30, 2024, including profits for H1 2025. Looking ahead, we see many opportunities to drive risk-calibrated profitable growth. We believe our focus on Customer 360-degree, extensive franchise and collaboration within the organization, backed by our focus on enhancing delivery systems and simplifying processes will enable us to deliver holistic solutions to customers in a seamless manner and grow market share across key segments. We will continue to make investments in technology, people, distribution and building our brand. We are laying strong emphasis on strengthening our operational resilience for seamless delivery of services to customers. We will remain focused on maintaining a strong balance sheet with prudent provisioning and healthy levels of capital. The principles of Return of Capital, Fair to Customer, Fair to Bank and One Bank, One Team will continue to guide our operations. We remain focused on delivering consistent and predictable returns to our shareholders. I now hand the call over to Anindya.

Thank you, Sandeep. I will talk about loan growth, credit quality, P&L details, growth in digital offerings, portfolio trends and performance of subsidiaries. As Sandeep mentioned, we have revised the presentation of loans to reflect a consolidated view of the business banking portfolio. This comprises all borrowers with a turnover of up to INR 7.5 billion, which was earlier reflected in the reported SME and business banking portfolio as well as rural business credit forming part of the rural portfolio, dealer funding forming part of the retail portfolio and lending to mid-corporate forming part of the corporate portfolio. Over the past few years, the bank has seen healthy loan growth in this category and has adopted an integrated approach to coverage, credit and delivery to these customers. Aligning with the same, we would be reporting the retail, rural, business banking and corporate portfolios on this revised basis. The comparable data for previous periods have been provided on Slide 67 of the investor presentation. Coming to the growth across retail products, the mortgage portfolio grew by 13.2% year-on-year and 3.2% sequentially. Auto loans grew by 9.6% year-on-year and 0.8% sequentially. The commercial vehicles and equipment portfolio grew by 9.1% year-on-year and was flat sequentially. Personal loans grew by 17.3% year-on-year and 3.5% sequentially. The credit card portfolio grew by 27.9% year-on-year and 3.4% sequentially. The personal loan and credit card portfolio were 9.6% and 4.3% of the overall loan book, respectively, at September 30, 2024. The overseas loan portfolio, in U.S. dollar terms, declined by 6.9% year-on-year at September 30, 2024. The overseas loan portfolio was about 2.6% of the overall loan book at September 30, 2024. Of the overseas corporate portfolio, about 92% comprises Indian corporates. Moving on to credit quality. The gross NPA additions were INR 50.73 billion in the current quarter compared to INR 59.16 billion in the previous quarter. Recoveries and upgrades from gross NPAs, excluding write-offs and sales, were INR 33.19 billion in the current quarter compared to INR 32.92 billion in the previous quarter. The net additions to gross NPAs were INR 17.54 billion in the current quarter compared to INR 26.24 billion in the previous quarter. The gross NPA additions from the retail and rural portfolio were INR 43.41 billion in the current quarter compared to INR 52.04 billion in the previous quarter. We typically see higher NPA additions from the Kisan credit card portfolio in the first and third quarter of a fiscal year. Recoveries and upgrades from the retail and rural portfolios were INR 25.92 billion compared to INR 25.32 billion in the previous quarter. The net additions to gross NPAs in the retail and rural portfolios were INR 17.49 billion compared to INR 26.72 billion in the previous quarter. The gross NPA additions from the corporate and business banking portfolios were INR 7.32 billion compared to INR 7.12 billion in the previous quarter. Recoveries and upgrades from the corporate and business banking portfolios were INR 7.27 billion compared to INR 7.6 billion in the previous quarter. There were net additions to gross NPAs of INR 0.05 billion in the corporate and business banking portfolios compared to net dilution of INR 0.48 billion in the previous quarter. The gross NPAs written off during the quarter were INR 33.36 billion. There was sale of NPAs of INR 0.16 billion for cash in the current quarter compared to INR 1.14 billion in the previous quarter. The non-fund-based outstanding to borrowers classified as nonperforming was INR 33.82 billion as of September 30, 2024, compared to INR 35.43 billion as of June 30, 2024. The bank holds provisions amounting to INR 19.11 billion against this non-fund-based outstanding. The total fund-based outstanding to all standard borrowers under resolution as per various guidelines declined to INR 25.46 billion or about 0.2% of the total loan portfolio at September 30, 2024, from INR 27.35 billion at June 30, 2024. Of the total fund-based outstanding under resolution at September 30, 2024, INR 21.29 billion was from the retail and rural portfolio and INR 4.17 billion was from the corporate and business banking portfolios. The bank holds provisions of INR 8.12 billion against these borrowers, which is higher than the requirement as per RBI guidelines. Moving on to the P&L details. The net interest income increased by 9.5% year-on-year to INR 200.48 billion in this quarter. The net interest margin was 4.27% in this quarter compared to 4.36% in the previous quarter and 4.53% in Q2 of last year. The impact of interest on income tax refund on net interest margin was nil in the current quarter, the previous quarter and Q2 of last year. The movement in net interest margin from Q1 to Q2 of the current year includes the impact of the higher number of days in the current quarter, which should seasonally reverse in Q4. The domestic NIM was 4.34% in this quarter compared to 4.44% in the previous quarter and 4.61% in Q2 of last year. The cost of deposits was 4.88% in this quarter compared to 4.84% in the previous quarter. Of the total domestic loans, interest rate on 51% of the loans are linked to the repo rate, 1% to other external benchmarks and 16% to MCLR and other older benchmarks. The balance 32% of loans have fixed interest rates. Noninterest income, excluding treasury, grew by 10.8% year-on-year to INR 64.96 billion in Q2 of 2025. Fee income increased by 13.3% year-on-year to INR 58.94 billion in this quarter. Fees from retail, rural and business banking customers constituted about 78% of the total fees in this quarter. Dividend income from subsidiaries was INR 5.41 billion in this quarter compared to INR 6.48 billion in Q2 of last year. Dividend income from subsidiaries and associates was INR 14.35 billion in H1 of the current year compared to INR 9.40 billion in H1 of the last year. On costs, the bank's operating expenses increased by 6.6% year-on-year in this quarter. Employee expenses increased by 11% year-on-year and non-employee expenses increased by 3.8% year-on-year in this quarter. The technology expenses were about 10% of our operating expenses in H1 of the current year. Our branch count has increased by 90 in H1 of the current year. We had 6,613 branches as of September 30, 2024. The total provisions during the quarter were INR 12.33 billion or 7.7% of the core operating profit and 0.4% of average advances compared to the provisions of INR 13.32 billion in Q1 of 2025. The provisions in Q1 of 2025 also included the impact of release of AIF provisions of INR 3.89 billion, pursuant to clarity on the regulatory requirements. The provisioning coverage on nonperforming loans was 78.5% as of September 30, 2024. In addition, we hold INR 8.12 billion of provisions on borrowers under resolution. Further, the bank continues to hold a contingency provision of INR 131 billion as of September 30, 2024. At the end of September, the total provisions other than specific provisions on fund-based outstanding to borrowers classified as nonperforming were INR 231.91 billion or 1.8% of loans. The profit before tax, excluding treasury, grew by 7.9% year-on-year to INR 148.10 billion in Q2 of this year. Treasury gains were INR 6.80 billion in Q2 as compared to a treasury loss of INR 0.85 billion in Q2 of the previous year, primarily reflecting realized and mark-to-market gains in equities and fixed income securities. The tax expense was INR 37.44 billion in this quarter compared to INR 33.85 billion in the corresponding quarter last year. The profit after tax grew by 14.5% year-on-year to INR 117.46 billion in this quarter. Growth in digital offerings. We continue to enhance the use of technology in our operations to provide simplified solutions to customers. About 72% of trade transactions were done digitally in Q2 of 2025. The volume of transactions done through trade online grew by 20% year-on-year in Q2 of 2025. We have provided details on our retail, rural and business banking portfolios on Slides 29 to 32 of the investor presentation. In line with the revised presentation of composition of the loan portfolio, we would be providing the BB and below corporate portfolio from the current quarter onwards. The loan and non-fund-based outstanding to performing corporate borrowers rated BB and below was INR 33.86 billion at September 30, 2024, compared to INR 41.64 billion at June 30, 2024. This portfolio was about 0.3% of our advances at September 30, 2024. Other than 2 accounts, the maximum single borrower outstanding in the BB and below portfolio was less than INR 5 billion at September 30, 2024. As of that date, we held provisions of INR 6.26 billion on the BB and below portfolio compared to INR 8.41 billion at June 30, 2024. While the SME portfolio has been carved out from this disclosure, the loan and non-fund-based outstanding to performing SME borrowers rated BB and below also declined in the current quarter. The total outstanding to NBFCs and HFCs was INR 880.27 billion at September 30, 2024, compared to INR 854.12 billion at June 30, 2024. The total outstanding loans to NBFCs and HFCs were about 6.9% of our advances on September 30, 2024. The sequential increase in the outstanding to NBFCs and HFCs is mainly due to disbursement to entities having long vintage and entities owned by well-established corporate groups. The builder portfolio, including construction finance, lease rental discounting, term loans and working capital was INR 542.16 billion at September 30, 2024, compared to INR 521.30 billion at June 30, 2024. The builder portfolio was about 4.2% 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 1.9% of the builder portfolio at September 30, 2024, was either rated BB and below internally or was classified as nonperforming compared to 2.1% at June 30, 2024. Moving on to the consolidated results. The consolidated profit after tax grew by 18.8% year-on-year to INR 129.48 billion in this quarter. The details of the financial performance of key subsidiaries are covered in Slides 40 to 42 and 61 to 66 in the investor presentation. The annualized premium equivalent of ICICI Life was INR 44.67 billion in H1 of this year as compared to INR 35.23 billion in H1 of last year. The value of new business was INR 10.58 billion in H1 of this year compared to INR 10.15 billion in H1 of last year. The value of new business margin was 23.7% in H1 of this year compared to 24.6% in FY 2024 and 28.8% in H1 of last year. The profit after tax of ICICI Life was INR 4.77 billion in H1 of this year compared to INR 4.51 billion in H1 of last year and INR 2.52 billion in Q2 2025 compared to INR 2.44 billion in Q2 2024. The gross direct premium income of ICICI General was INR 67.21 billion in Q2 of 2025 compared to INR 60.86 billion in Q2 of 2024. The combined ratio stood at 104.5% in Q2 of 2025 compared to 103.9% in Q2 of 2024. Excluding the impact of cash losses of INR 0.94 billion in the current quarter and INR 0.48 billion in the corresponding quarter previous year, the combined ratio was 102.6% and 102.8%, respectively. The profit after tax was INR 6.94 billion in Q2 of 2025 compared to INR 5.77 billion in Q2 of 2024. The profit after tax of ICICI AMC as per Ind AS was INR 6.94 billion in this quarter compared to INR 5.01 billion in Q2 of last year. The profit after tax of ICICI Securities as per Ind AS on a consolidated basis was INR 5.29 billion in this quarter compared to INR 4.24 billion in Q2 of last year. ICICI Bank Canada had a profit after tax of CAD 19.1 million in this quarter compared to CAD 21.1 million in Q2 last year. ICICI Bank U.K. had a profit after tax of USD 8 million in this quarter compared to USD 3.3 million in Q2 of last year. As per Ind AS, ICICI Home Finance had a profit after tax of INR 1.83 billion in the current quarter compared to INR 1.12 billion in Q2 of last year. With this, we conclude our opening remarks, and we'll now be happy to take your questions.

The first question is from Mahrukh Adajania from Nuvama Wealth.

Congratulations on an impressive set of numbers. My question pertains to general asset quality. Your slippages have performed well this quarter. While you have been growing your unsecured loans at a slower rate, it remains quite healthy, correct? The growth in your mortgage and unsecured loans on a quarter-over-quarter basis is comparable. Despite this, there appears to be no signs of stress on your loans, whereas other lenders are experiencing some level of stress in unsecured loans, including credit cards. How do you view your loan portfolio moving forward? Do you anticipate this divergent trend from the sector will continue? What do you believe you are doing effectively compared to others?

Mahrukh, we've observed an increase in delinquencies and the formation of non-performing loans in unsecured loans, particularly in credit cards and personal loans, over the past three to four quarters. During this time, and even before, we've implemented several measures to enhance our underwriting and sourcing strategies in terms of customer segments, pricing, and other factors. Consequently, the year-on-year growth in personal loans has dropped significantly; from 40% in the September quarter last year to about 17% this year. Although slippages have increased over time in this portfolio, we haven't noticed any further sequential increases in the current quarter, and we will continue to monitor the situation. The credit card segment is somewhat different from personal loans, as it plays a crucial role in our customer relationships and is a high-touch product. This is a business we aim to keep growing. However, we have also made changes in sourcing patterns here, and we have seen delinquencies and credit costs rise, yet it remains a profitable and growing segment. The combined unsecured loans from these two products account for 14% of our loan book. Some increase in delinquency or credit costs in these areas has led to a normalization of credit costs. That said, we're still within the 40 to 50 basis point range overall, and that's the approach we plan to maintain moving forward.

Okay. Perfect. And just my second question is on funding costs. I mean I know the deposit mix is also kind of changing, but would funding costs have bottomed out now? I mean peaked out now? Just some outlook on margins in terms of costs.

If you examine the retail deposit rates, they have increased by about 15 basis points in the current calendar year, with around 10 basis points in the fourth quarter and 5 basis points earlier this year. This will contribute to a rise in the cost of deposits by a basis point or two over time. However, the significant increase in deposit rates has mostly occurred between the second half of fiscal 2023 and the second half of fiscal 2024, so we do not anticipate much further increase in retail deposit rates from this point. On the wholesale side, rates remain somewhat higher than expected. As mentioned previously, the typical decline in wholesale rates during the first quarter did not occur, and rates have stayed elevated for one year plus deposits. However, with improved liquidity and a slight easing in credit growth, we hope this will improve going forward, but we will need to monitor the situation. Overall, we might see small increases in the cost of term deposits. This quarter, the overall cost of deposits rose by about 4 basis points, reflecting a slight increase in term deposit costs and a slight reduction in the average CASA ratio, indicating we could still see minor increases.

The next question is from Rikin Shah from IIFL Securities.

Two questions. First one is on margin and more specifically on yield on advances. So the yield on advances have been softening since a couple of quarters. Probably this quarter would be a function of mix change. But if you could allude to what's driving slight pressure on the yields on advances and an outlook on that in the near term? And the second question is on the treasury gains. If you could just provide some color as to why the treasury gains have been higher for the second quarter as well. 1Q, you did mention a few reasons. If you could just provide more color on that for this quarter as well.

Yes. Regarding the first question, certain portfolios are accounted for using a 30/360 interest income basis. In quarters with more days, the yield on advances appears slightly lower mathematically, but this balances out over the year. Overall, nothing specific to report about the yield on advances. In market lending, we are seeing significant competitive pressure, and we aim to maintain discipline in this environment. As for margins, we anticipate they will remain generally stable in the second half compared to the first half until a rate cut cycle begins. Concerning treasury operations, since April 1, the revised investment guidelines have been in effect, and many positions are now marked to market, excluding the held-to-maturity portfolio. Most of our portfolio, aside from the SLR book and subsidiaries, is either available for sale or fair value through profit and loss. The mark-to-market on the fair value through profit and loss portfolio is reflected in the quarterly results. This quarter, a significant portion of the approximately billion INR gain can be attributed to our treasury and trading operations across both fixed income and equities, with additional positive mark-to-market reflecting changes since June 30 in the fair value through profit and loss portfolio.

Next question is from the line of Piran Engineer from CLSA India.

Yes. So just talking about OpEx, you all have done a good job in controlling OpEx. Can you just give us some glimpse of where this is coming from? Where are we getting these benefits from? What should we expect in the coming, say, FY '25-'26?

We have been discussing for the past four quarters that the operating expense growth rate of over 20 percent, which we experienced in the previous four to six quarters and possibly the last couple of years, would begin to slow down. This is mainly due to the fact that our cost base is now quite substantial, and we have found ways to optimize it. This has led to a reduction in the growth of our costs. In the fourth quarter, the adjusted cost growth was around 13 percent. For the first half of this year, although the second quarter showed a year-on-year growth of just 6.6 percent, the overall growth for the first half was approximately 8.5 percent. We might see a slight increase in the second half due to seasonal spending during the festive period and additional technology expenditures we have planned. Generally, we expect to maintain costs around this level, allowing for a few percentage points of variation in the near term.

Got it. Okay. And your branch openings have also slowed down this year compared to the run rate that we are running at earlier. So any particular reason? And is this also reason why OpEx growth has been trending a bit lower?

No, I don't think that, that's a very big driver that maybe there's some contribution of that. So on branches, as we have said in the past, we are not really fixated on a particular number or that we have to open so many in such a period of time. It's a very bottom-up organic process based on the teams which are managing different markets, what is the branch addition that they need to do. And it's always looked at within the overall current and potential PPOP kind of framework. So based on that, we have not consciously held back on opening any branches nor as we pushed any branch opening. It's just an organic process which happened. I would guess this number will be materially higher in H2, but it's not like we have any particular number that we want to achieve.

Got it. And just lastly, if I can squeeze in your credit card delinquencies. Any difference between the co-branded ones and the regular ones?

We don't really give out this data.

The next question is from Saurabh at JPMorgan.

I have two questions. First, regarding your CASA growth, particularly in savings accounts, you've outperformed other banks. Can you explain why you are experiencing better traction in CASA compared to them, especially in savings accounts? Second, about your slippages, how much will be attributed to linked accounts? Would it be accurate to say that in your cards and personal loan portfolio, the non-performing loans will see a higher increase in cards or that the write-offs will be greater in cards compared to personal loans, given the stress you are observing? Most of this seems to be concentrated in the outside-to-bank channel. These are my two questions.

On the CASA side, we focus on what we refer to as money in the bank. We do not emphasize the distribution across current accounts, savings accounts, or term deposits. Our main goal is to have good customers and to be their primary bank, capturing a significant share of their financial activities. Our customer base includes retail, business banking, and corporate clients, and it is ultimately up to them how they choose to hold their funds.

No sir, you are connected.

I believe that our focus on the overall financial relationship with the customer, rather than just specific types of deposits, has been beneficial, along with an emphasis on acquiring quality customers. Regarding non-performing loans (NPLs), it is important to understand that the regulations require us to identify and report NPLs on a borrower basis rather than per loan account. This has been our consistent practice for some time. While we haven't disclosed specific delinquency comparisons between personal loans and credit cards, it’s clear that delinquencies in these portfolios have increased over the past 1 to 1.5 years, as anticipated, and we are actively taking corrective measures in our sourcing practices. We hope to see stabilization moving forward, but there is nothing significant to highlight between the two. Personal loans and credit cards serve different roles; credit cards are a more integral part of the banking relationship and come with unique operational challenges and opportunities for differentiation. This is how we view both segments of our business.

The next question is from Kunal Shah from Citigroup.

Yes. Congratulations for the great set of numbers. So sorry, if you can just highlight in terms of within the retail, how would be the proportion between the secured and unsecured in terms of the incremental formation? And any change in last couple of quarters vis-à-vis the last year?

No, we have not really given any breakup of that kind. I mean at a broad level, as I said earlier, we have been saying for I think 8 quarters that the retail NPL formation at a gross level and at a net level will move up, will normalize upwards. So within that, there has been an increase, of course, in the credit card and personal side. But finally, one has to look at it in the context of the overall portfolio and the overall numbers at a credit cost of 40 to 50 bps of advances, how much more breakups will...

Yes. So when we look at the overall credit cost till maybe below 40-odd basis points, not yet the normalized one, we would have seen some kind of a catch-up on the unsecured side as well. But are we comfortable that maybe 40 to 50 would be the broad range for credit cost and it's maybe beyond 50 doesn't seem like any incremental data points would suggest or maybe the delinquency bucket suggest that it should cross 50 basis points of credit cost?

It's very difficult to say with that kind of precision. We have consistently been saying that there will be a gradual normalization, but it is anyway much below historical levels and we will see it as it comes. I don't think there is anything today which is alarming us in terms of causing us to believe that it will go up very substantially. But could it inch up over a period of time? It could.

Yes, yes. Okay. And just last data point, LCR, you mentioned 120?

Yes.

The next question is from the line of Nitin Aggarwal from Motilal Oswal.

Congratulations on another impressive performance. I have a question regarding the rating distribution. It seems that the rating distribution of the corporate portfolio has improved this quarter, which differs from the trend in previous quarters. Do you maintain any thresholds in this regard? Also, do you compare yourself to peers when it comes to the mix of credit ratings?

As we have explained, we have separated the SME portion into business banking, and now the corporate portfolio consists of corporates with a turnover above INR 7.5 billion, which reflects the rating adjustment we have made. Previously, there was some confusion because we included SMEs while others did not. This should provide a more comparable assessment. The numbers for the previous period are also available on the same slide, showing a stable trend. We do have certain internal limits regarding caps on loan origination in the lower-rating categories, but those are specific to our internal practices.

The next question is from Param Subramanian from Nomura.

Firstly, just data, what is the recovery from written-off accounts in the quarter or the first half of the year?

We don't give that number separately. It's already adjusted in the provision's line item.

Okay. Sure. Anindya, what is driving the higher write-off in this quarter? It doesn't seem to have come with any significant P&L impact, so is this largely fully provided loans and technical?

Yes, these are all 100% provided loans. Our write-off policy for broad retail portfolios is based on days past due, while for corporate and SME portfolios, it is handled on a case-by-case basis. This quarter, we wrote off some older fully provided non-performing loans, which qualifies as a technical write-off. We will continue to pursue cash recovery efforts on these fully provided corporate non-performing loans from past years.

Okay. Perfect. And just one last question, if I can. The NIM impact because of this longer quarter, any number you can highlight would be great. Congratulations on a great quarter.

Thank you. See, the total impact on yield or NIM is 7 basis points or so. So it will be something within that, not...

The next question is from Abhishek Murarka from HSBC.

Congratulations on an excellent quarter. I have two questions. The first one is about business and the second is about fees. Regarding business banking, could you provide some insights on demand trends and yields? Is growth occurring at lower yields, and how do you view the sustainability of this growth? Additionally, concerning credit cards and personal loans, you implemented several tightening measures earlier. With your current sequential run rate, is this typical, or do you anticipate further effects from those tightening measures to manifest in the sequential run rate? Now, for my brief question on fees: with your changing loan mix as personal loans, private financing, and vehicle finance decrease in proportion, do you foresee your core fee to assets ratio, currently at 1.2%, also declining? I would appreciate some clarification on this.

On the business banking side, we were not significant players in this segment around 8 or 9 years ago. Over this time, we've dedicated substantial resources to expanding this business. We've improved our credit underwriting models and capabilities and equipped almost our entire branch network to serve these customers. Additionally, our digital offerings have played a vital role, coinciding with increased digital adoption in this segment driven by various government initiatives and market evolution. This foundation has allowed us to grow in this area. We focus heavily on understanding our customers' needs because we often capture a substantial share of their business across credit, transaction banking, deposits, and foreign exchange. We assess our overall portfolio profitability. Although pure lending is competitive, especially with other major private sector competitors who have a longer history in this space, I wouldn't describe it as a high-yield business. However, it remains profitable because we genuinely consider all our interactions with the customer.

If I may, it's been several years since we've rapidly grown this business and gained significant market share. Even now, maintaining a sequential run rate of 10% is quite a challenge. Do you think this is because your market share remains low, or do you believe that this level of sequential growth may not be sustainable going forward?

So I don't want to talk about sequential growth numbers. But fundamentally, I don't think that our market share is saturated at all. I think we have a long way to go in terms of entities, we can tap and cover and reach. And there are lots of very large potential customer bases out there, both in terms of people and their existing banking plus this is also a segment which is growing. I mean the people are setting up new manufacturing units. They are setting up new service businesses. So there is enough and more to be done. I don't see any challenge to the market opportunity for us in this segment at all. What was your second question? It's about fee?

On cards and PL?

Fees from cards continue to grow at a strong rate. As for personal loans, I don't expect disbursal volumes to decrease significantly, although they have already reduced quite a bit compared to 3 or 4 quarters ago. Repayments also factor in. From a portfolio growth perspective, we’ve seen a drop from 40% to 17%, and I anticipate it will decline further in the coming quarters. Regarding fees, we don’t strictly manage to that metric. Our focus is more on overall pre-provision operating profit and credit costs, rather than a specific fee-to-income ratio. We see potential for growth in fee income in areas like transaction banking and foreign exchange, as well as in cards and other sectors. Overall, the growth opportunity in fees is present, and I'm not overly concerned about personal loans decreasing and affecting our performance.

Next question is from the line of Rahul from Goldman Sachs.

Just 2 questions. One is your Slide #31 talks about the mix of 2 customers in PL and CC, 60 being existing to bank, 40 would imply being new to bank customers. So just wanted to understand maybe qualitatively how the behavior in each of these buckets are you seeing on the delinquency side? And this is stemming from the fact that we've seen a reasonably higher degree of delinquency in the customer that may not necessarily be existing to bank or those who are open market customers for different entities. So just wanted to get some color as to how you're seeing the behavior in these 2 portfolios?

I think as we mentioned earlier, overall in these portfolios, credit costs have increased. Delinquencies have risen. We have implemented measures, including slowing down growth in the case of PL. We hope to see stability and some improvement in the future. That's all I have to mention. These portfolios make up 14% of the loan book, and the changes within this book are being managed within the 40 to 50 basis points of credit cost.

So the behavior would be similar, so let's say, argumentatively if existing to bank is having X percent of delinquency, would new-to-bank would also be at X percent or they would be 1.2x, 1.5x?

No, it can vary. An existing bank customer with a not-so-great quality account from the past tends to show poorer outcomes compared to a quality account sourced today, particularly in card products, which require more attention. So there can be differences, and we continuously conduct internal analyses on various segments. The most significant factor is the credit profile of the customer, which can vary across these different segments.

And in terms of growth of this portfolio, the growth is now going to be more driven by, I would imagine, existing the bank customers or you would continue to hunt for customer outside of this banking relationships also?

No, I think if you look at credit cards, we have a large untapped base within our existing customer pool of quality customers who either do not have our card or, if they do, are not using it as frequently as we would like. However, it's also a strong product for acquiring new customers. For instance, if we are banking a large corporation or a multinational company, I would be very pleased to offer credit cards to their employees who meet certain criteria. Ultimately, it's more about the quality of the customer to whom we issue cards rather than just focusing on existing customers, as that could create a misleading sense of security.

Ladies and gentlemen, we will take that as the last question. I now hand the conference back over to the bank. Please go ahead.

Thank you for taking time on a Saturday afternoon, and wish you all a very, very happy Diwali from ICICI Bank in advance. Thank you.

Thank you very much. On behalf of ICICI Bank Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.