Icici Bank Ltd Q3 FY2025 Earnings Call

Ladies and gentlemen, good day, and welcome to ICICI Bank Limited Q3 FY '25 Earnings Conference Call. Please note that this conference is being recorded. I now hand the conference over to Mr. Sandeep Bakhshi, MD and CEO, ICICI Bank. 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 Q3 of FY '25. Joining us today on this call are Sandeep Batra, Rakesh, Ajay, Anindya and Abhinek. The operating environment for the banking system continues to be dynamic based on evolving global and domestic economic factors. We would continue to monitor domestic inflation, liquidity, rates and uncertainties in the global environment. 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 12.8% year-on-year and 3.2% quarter-on-quarter to INR 152.89 billion in this quarter. The core operating profit increased by 13.1% year-on-year and 2.9% quarter-on-quarter to INR 165.16 billion in this quarter. Excluding dividend income from subsidiaries, the core operating profit increased by 14.7% year-on-year and 3.3% quarter-on-quarter to INR 160.07 billion in this quarter. The profit after tax grew by 14.8% year-on-year to INR 117.92 billion in this quarter. Total deposits grew by 14.1% year-on-year and 1.5% sequentially at December 31, 2024. During the quarter, average deposits grew by 13.7% year-on-year and 2.1% sequentially and average current and savings account deposits grew by 12.6% year-on-year and 2.3% sequentially. The bank's average liquidity coverage ratio for the quarter was about 123%. The domestic loan portfolio grew by 15.1% year-on-year and 3.2% sequentially at December 31, 2024. The retail loan portfolio grew by 10.5% year-on-year and 1.4% sequentially. Including non-fund-based outstanding, the retail portfolio was 43.9% of the total portfolio. The rural portfolio grew by 12.2% year-on-year and 0.9% sequentially. The business banking portfolio grew by 31.9% year-on-year and 6.4% sequentially. The domestic corporate portfolio grew by 13.2% year-on-year and 4.3% sequentially. The overall loan portfolio, including the international branches portfolio, grew by 13.9% year-on-year and 2.9% sequentially at December 31, 2024. The net NPA ratio was 0.42% at December 31, 2024, compared to 0.42% at September 30, 2024, and 0.44% at December 31, 2023. The total provisions during the quarter were INR 12.27 billion or 7.4% of core operating profit and 0.37% of average advances. The provisioning coverage ratio on non-performing loans was 78.2% at December 31, 2024. In addition, the bank continues to hold contingency provisions of INR 131 billion or about 1% of total loans at December 31, 2024. The capital position of the bank continued to be strong with a CET1 ratio at 15.93% and total capital adequacy ratio at 16.6% at December 31, 2024, including profits for 9 months 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 customers, 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, technology initiatives, portfolio trends and the performance of subsidiaries. Sandeep covered the loan growth across various segments. Coming to the growth across retail products, the mortgage portfolio grew by 11.4% year-on-year and 2.1% sequentially. Auto loans grew by 6.6% year-on-year and 1.7% sequentially. The commercial vehicles and equipment portfolio grew by 7.4% year-on-year and 1.7% sequentially. Personal loans grew by 8.8% year-on-year and declined 1.3% sequentially. The credit card portfolio grew by 17.9% year-on-year and 2.8% sequentially. The personal loans and credit card portfolio were 9.2% and 4.3% of the overall loan book, respectively, at December 31, 2024. The overseas loan portfolio in U.S. dollar terms declined 21.2% year-on-year at December 31, 2024. The overseas loan portfolio was about 2.4% of the overall loan book at December 31, 2024. Of the overseas corporate portfolio, about 90% comprises Indian corporates. Moving on to credit quality. The gross NPA additions were INR 60.85 billion in the current quarter compared to INR 59.16 billion in the first quarter of the current fiscal year and INR 50.73 billion in the previous quarter, that is the second quarter. Recoveries and upgrades from gross NPAs, excluding write-offs and sales, were INR 33.92 billion in the current quarter compared to INR 32.92 billion in the first quarter of the current fiscal year and INR 33.19 billion in the previous quarter. The net additions to gross NPAs were thus INR 26.93 billion in the current quarter compared to INR 26.24 billion in the first quarter of the current fiscal year and INR 17.54 billion in the previous quarter. The gross NPA additions from the retail and rural portfolios were INR 53.04 billion in the current quarter compared to INR 52.04 billion in the first quarter of the current fiscal year and INR 43.41 billion in the previous quarter. We typically see higher NPA additions from the Kisan credit card portfolio in the first and third quarter of our fiscal year. There were gross NPA additions of about INR 7.14 billion from the Kisan credit card portfolio in the current quarter compared to INR 7.21 billion in the first quarter of the current fiscal year. Recoveries and upgrades from the retail and rural portfolios were INR 27.86 billion compared to INR 25.32 billion in the first quarter of the current fiscal year and INR 25.92 billion in the previous quarter. The net additions to gross NPAs in the retail and rural portfolios were INR 25.18 billion compared to INR 26.72 billion in the first quarter of the current fiscal year and INR 17.49 billion in the previous quarter. The gross NPA additions from the corporate and business banking portfolios were INR 7.81 billion compared to INR 7.32 billion in the previous quarter. Recoveries and upgrades from the corporate and business banking portfolios were INR 6.06 billion compared to INR 7.27 billion in the previous quarter. There were net additions to gross NPAs of INR 1.75 billion in the corporate and business banking portfolios compared to net addition of INR 0.05 billion in the previous quarter. The gross NPAs written off during the quarter were INR 20.11 billion. There was a sale of NPAs of INR 0.58 billion for cash in the current quarter compared to INR 0.16 billion in the previous quarter. The non-fund-based outstanding to borrowers classified as non-performing was INR 31.6 billion as of December 31, 2024, compared to INR 33.82 billion as of September 30, 2024. The provisions on this non-fund-based outstanding declined to INR 17.12 billion at December 31, 2024, from INR 19.11 billion at September 30, 2024, reflecting the decline in the outstanding itself. The total fund-based outstanding to all standard borrowers under resolution as per various guidelines declined to INR 21.07 billion or about 0.2% of the total loan portfolio at December 31, 2024, from INR 25.46 billion at September 30, 2024. Of the total fund-based outstanding under resolution at December 31, 2024, INR 19.36 billion was from the retail and rural portfolios and INR 1.71 billion was from the corporate and business banking portfolios. The bank holds provisions of INR 6.91 billion against these borrowers, which is higher than the requirement as per RBI guidelines. Moving on to the P&L details. Net interest income increased by 9.1% year-on-year to INR 203.71 billion in this quarter. The net interest margin was 4.25% in this quarter compared to 4.27% in the previous quarter and 4.43% in Q3 of last year. The impact of interest on income tax refund on net interest margin was 1 basis point in the current quarter, nil in the previous quarter and 4 basis points in Q3 of last year. The domestic NIM was 4.32% in this quarter compared to 4.34% in the previous quarter and 4.52% in Q3 of last year. The cost of deposits was 4.91% in this quarter compared to 4.88% in the previous quarter. Of the total domestic loans, interest rates on 52% of the loans are linked to the repo rate, 16% to MCLR and other older benchmarks and 1% to other external benchmarks. The balance 31% of loans have fixed interest rates. Non-interest income, excluding treasury, grew by 12.1% year-on-year to INR 66.97 billion in Q3 of 2025. Fee income increased by 16.3% year-on-year to INR 61.8 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 5.09 billion in this quarter compared to INR 6.5 billion in Q3 of last year. Dividend income from subsidiaries was INR 19.44 billion in 9 months of the current year compared to INR 15.89 billion in 9 months of last year. On costs, the bank's operating expenses increased by 5% year-on-year in this quarter. Employee expenses increased by 3.1% year-on-year, and non-employee expenses increased by 6.2% year-on-year in this quarter. Our branch count has increased by 129 in Q3 and 219 in the 9 months of the current year. We had 6,742 branches as of December 31, 2024. The technology expenses were about 10.5% of our operating expenses in 9 months of the current year. The total provisions during the quarter were INR 12.27 billion or 7.4% of core operating profit and 0.37% of average advances compared to the provisions of INR 12.33 billion in the previous quarter. The provisioning coverage on non-performing loans was 78.2% as of December 31, 2024. In addition, we hold INR 6.91 billion of provisions on borrowers under resolution. Further, the bank continues to hold contingency provision of INR 131 billion as of December 31, 2024. At the end of December, the total provisions other than specific provisions on fund-based outstanding to borrowers classified as non-performing, were INR 225.69 billion or 1.7% of loans. The profit before tax, excluding treasury, grew by 12.8% year-on-year to INR 152.89 billion in Q3 of this year. Treasury gains were INR 3.71 billion in Q3 as compared to a treasury gain of INR 1.23 billion in Q3 of the previous year. As you're aware, the treasury gains for the current quarter vis-a-vis the same quarter last year would not be comparable due to the implementation of the revised investment accounting guidelines from the 1st of April of the current year. The tax expense was INR 38.68 billion in this quarter compared to INR 34.02 billion in the corresponding quarter last year. The profit after tax grew by 14.8% year-on-year to INR 117.92 billion in this quarter. We continue to enhance the use of technology in our operations to provide simplified solutions to customers. The bank has introduced DigiEase, a digital platform designed to streamline the customer onboarding process for business banking. This enhances operational efficiency and the customer experience by integrating multiple digital services into a single seamless workflow. iLens, the retail lending platform is being upgraded on an ongoing basis with retail credit cards now integrated in the platform along with mortgages, personal loans and education loans. We continue to make investments in the computing infrastructure and upgrade digital channels to further strengthen system resilience and simplify processes by enhancing customer experience. We have provided details on our retail, rural and business banking portfolios on Slides 25 to 28 of the investor presentation. The loan and non-fund-based outstanding to performing corporate borrowers rated BB and below was INR 21.93 billion at December 31, 2024, compared to INR 33.86 billion at September 30, 2024. This portfolio was about 0.2% of our advances at December 31, 2024. Other than one account, the maximum single borrower outstanding in the BB and below portfolio was less than INR 5 billion at December 31, 2024. The bank holds provisions of INR 0.92 billion against this portfolio at December 31, 2024. The total outstanding to NBFCs and HFCs was INR 893.6 billion at December 31, 2024, compared to INR 880.27 billion at September 30, 2024. The total outstanding loans to NBFCs and HFCs were about 6.8% of our advances at December 31, 2024. The builder portfolio, including construction finance, lease rental discounting, term loans and working capital was INR 586.36 billion at December 31, 2024, compared to INR 542.16 billion at September 30, 2024. The builder portfolio was about 4.5% 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 1.7% of the portfolio at December 31, 2024, was either rated BB and below internally or was classified as non-performing compared to 1.9% at September 30, 2024. Finally, the consolidated results. The consolidated profit after tax grew by 16.6% year-on-year to INR 128.83 billion in this quarter. The details of the financial performance of key subsidiaries are covered in Slides 36 to 38 and 57 to 62 in the investor presentation. The annualized premium equivalent of ICICI Life was INR 69.05 billion in the 9 months ended December 31, 2024, compared to INR 54.3 billion in the 9 months of last year. The value of new business was INR 15.75 billion in the 9 months ended December 31, 2024, compared to INR 14.51 billion in 9 months of last year. The value of new business margin was 22.8% in these 9 months compared to 26.7% in the 9 months of last year and 24.6% in FY 2024. The profit after tax of ICICI Life was INR 8.03 billion in 9 months ended December 31, 2024, compared to INR 6.79 billion in 9 months of last year and INR 3.26 billion in the current quarter compared to INR 2.27 billion in Q3 of last year. Gross direct premium income of ICICI General was INR 62.14 billion in the current quarter compared to INR 62.3 billion in Q3 of last year. The combined ratio stood at 102.7% in the current quarter compared to 103.6% in Q3 of last year. The profit after tax was INR 7.24 billion in the current quarter compared to INR 4.31 billion in Q3 of last year. With effect from October 1, 2024, long-term products are accounted on a 1/n basis as mandated by IRDAI, hence, the Q3 numbers are not fully comparable. The profit after tax of ICICI AMC as per Ind AS was INR 6.32 billion in this quarter compared to INR 5.46 billion in Q3 of last year. The profit after tax of ICICI Securities as per Ind AS on a consolidated basis was INR 5.04 billion in this quarter compared to INR 4.66 billion in Q3 of last year. ICICI Bank Canada had a profit after tax of CAD 19.6 million in this quarter compared to CAD 15.9 million in Q3 of last year. ICICI Bank U.K. had a profit after tax of USD 5.1 million in this quarter compared to USD 6.7 million in Q3 of last year. As per Ind AS, ICICI Home Finance had a profit after tax of INR 2.03 billion in the current quarter compared to INR 1.86 billion in Q3 of last year. With this, we conclude our opening remarks, and we will now be happy to take your questions.

The first question is from Mahrukh Adajania from Nuvama Wealth.

My first question is on provisioning. So what would be the utilization or reversal of provisions this quarter because provisioning on non-fund has gone down and you explained that, that's because the exposure has only gone down and then restructuring or resolution provisions have also gone down. So what would be the number? Or it's just the 2 of...

No, we don't provide the number of write-backs separately. Overall, what we are observing in terms of credit costs is that the retail and business banking portfolios remain quite stable. In the corporate portfolio, there is essentially no credit cost or NPL provisioning, and we are witnessing consistent improvements in the quality of our portfolios that we have mentioned over the years, such as non-fund outstanding compared to NPLs, restructured assets, and the BB and below portfolio. We are also continuing to see recoveries from accounts that were written off in the past, which contributes to the provision line. Generally, as we've indicated previously, provisions may fluctuate from quarter to quarter due to variations in the loan book and other factors. For instance, in the previous few quarters, we experienced fluctuations in AIF-related provisioning. However, we remain within the range of 50 basis points that we have discussed in earlier calls, with the reported number for this quarter being 37 basis points.

Got it. Fair enough. And just on deposit growth, so the sequential run rate is a bit softer this time. That's just because of the liquidity environment or any comments there?

I think it's because of the funding requirement. So if you see system loan growth did slow down a little bit, which is, to a lesser extent, reflected in our portfolio as well. There was a CRR cut effective the middle of December. And we also saw some reduction if you look at our investor presentation in our RIDF portfolio and so on. So it's really a function of the requirement. We also were able to take in some very cost-effective refinance borrowings. So it's really that we continue to maintain very strong liquidity. Our LCR actually went up slightly this quarter average for the quarter was 123%. So it's more driven by the requirement than anything else.

Okay. I just wanted one last clarification. So you have called out gross farm slippages. I mean, you always do call out. So thank you for that. But would there be a comparable number for second quarter or it's just first and third only, like if you want to...

Largely, it comes in the first and third only.

Next question is from the line of Rikin Shah from IIFL.

I have one question regarding operating costs, specifically operating expenses. They have remained relatively stable over the last three quarters, despite the technology expenses you've been facing. I would like to know how much more flexibility you have to manage OpEx at the current levels, or when you anticipate they might begin to rise in line with your business growth. Additionally, could you provide the outstanding employee headcount as of the end of December?

The headcount is continually adjusted in accordance with our staffing needs. We are actively investing in branches, having added 129 in the current quarter. Regarding costs, we acknowledge that we have a substantial cost base, and there are always opportunities for improving efficiencies by streamlining internal processes, integrating workflows, and eliminating unnecessary redundancies. This is an ongoing effort aimed at optimizing our cost base while also investing in the growth needs of the business and areas like IT security and reliability. We aim to enhance our cost management and believe there does not need to be a direct relationship between costs and revenue growth.

Perfect. Very helpful. And would you be able to quantify the outstanding headcount as of December?

We give that number on an annual basis now. So we've not been giving it.

Next question is from the line of Kunal Shah from Citigroup.

Yes. Firstly, on the yield side. So last time you indicated the impact of number of days also being there. So this time, when we look at the overall decline in yields of 8-odd basis points, is it primarily on account of KCC or has there been any impact of the days? And would it be fair to assume that this day count would entirely unwind in 4Q and there should be a positive bias towards the yields?

As for the movement from Q2 to Q3, you're correct that it's largely due to the KCC, as there's a longer period of interest accrual that gets reversed in that quarter. Regarding the day count impact moving forward, we previously mentioned that Q4 has fewer days, so mathematically, you would see some unwinding.

Okay. So that should be there. And secondly, on the corporate banking side, generally, maybe we are more focused in terms of the risk return approach. This quarter, we have seen a decent level of growth on the corporate side, while retail, there is some slowdown because of the unsecured lending. But otherwise, maybe is the pricing intensity easing over there? Would it be slightly margin dilutive? We have not seen the impact this quarter. So how should we look at the overall corporate banking growth?

I think it's important to note that we don't expect this to negatively impact our margins. Our approach focuses on the overall relationship with corporations. We are not interested in taking on risky, finely priced long-term loans just for the sake of loan growth. Instead, we maintain an ongoing relationship with corporate clients, which may include periodic working capital, short-term lending, or longer-term needs that align with our financial goals. We remain active in engaging with corporate clients across various sectors and continually seize opportunities to collaborate when they arise and fit our strategy.

And there was an increase also in BBB and above, by almost like 210-odd basis points. So this is maybe incremental growth coming in from there or maybe business banking, how should we read that, yes?

I believe it will mostly be an upgrade from the BB since, as you can see, the BB portfolio has decreased.

Yes, that's 60 basis points, yes.

That will reflect partly in the increase in the BBB. Of course, we could be doing incremental BBB lending also. I mean it's investment grade for that but we have limits on how much of that we would do.

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

Congrats on another steady quarter. Just firstly, on retail products, a couple of ones, mortgages, we were growing at 16%, 17%, now down to 11%. Is that more a function of pricing in the industry or just overall slowdown? And same for vehicle loans, we understand that this year was a slowdown but what's your house outlook for next year?

So, regarding mortgages, there is certainly some price competition that has been ongoing for a while. However, the additional disbursements have not been increasing significantly, although they are maintaining their levels. Overall, there seems to be ongoing strength in the mid- and higher segments of the market, while the more affordable segment might be experiencing some softness. As for vehicle loans, the situation is influenced more by the specific asset class. We primarily finance new cars, and while there was a strong performance last year and at the beginning of this year, the market has recently slowed. It will likely experience fluctuations as customers replace their vehicles or as new models are introduced, which typically generates excitement in the market. Therefore, it seems that performance will vary between strong and weak quarters moving forward.

Okay. Okay. Fair enough. Secondly, just on business banking, now this has been a product that you'll as well as your peers have gone really strong on, what really can go wrong for the industry 2 years later? Because today, everything looks hunky-dory but is there some part, which you are missing here because it seems like almost a fairy-tale business.

If you look at how this business has progressed over the last few years, there has been significant formalization at the customer level, particularly with the introduction of GST and increased digitization in the sector. Digital adoption among this customer segment has also been notable, alongside a reasonable credit discipline. In India, having a commercial bureau further supports this. Consequently, the combination of formalization, digitization, and credit discipline makes this customer segment more suitable for underwriting by banks like ours. We approach this segment comprehensively, maintaining a strong focus on Customer 360, which encompasses not only lending but also transaction banking and liabilities. From a credit standpoint, this segment is fairly secure, especially within the more granular areas of the portfolio where collateral is present. The overall portfolio is diverse and should ideally behave more like a retail portfolio rather than a corporate one, where a single borrower could pose a greater risk. However, constant monitoring is essential. Much of the portfolio involves working capital, which allows us to observe how accounts are managed and perform. Thus, it's critical to manage this closely, focusing not only on initial underwriting but also on ongoing borrower behavior with effective portfolio monitoring. Currently, we feel very confident about the quality of our portfolio.

Got it. And it's fair to say that the credit cost in this business are lower than your retail book, right?

Yes, currently, that would be the case, yes.

Next question is from Nitin Aggarwal from Motilal Oswal.

So I have a few questions. First is on the fee income. We have seen a good traction in fee income this quarter. So now with margins being constantly like under pressure and likely to remain so as the cycle turns, is it fair to say that fee income will continue to gain share as a percentage of total income? And what kind of opportunities in particular are we looking at in respect to transaction banking over the year?

We don't delve into the specifics of the proportion. Our main focus is on achieving our overall PPOP objective and finding ways to maximize it. Regarding fees, we believe our transacting platforms are quite robust. Our goal is to increase adoption among existing customers while also attracting new customers, ranging from large corporates to small businesses. We're also concentrating on cards and payments, which have been performing well for us. We've experienced significant growth in areas such as cards and payments, transaction banking, foreign exchange and derivatives within transaction banking, as well as fees linked to lending, including loan disbursals, renewals, and sanctions. We will continue to explore ways to enhance the adoption of our platforms as much as possible.

Right. And the second question is around the trade-off between, say, growth and the focus around asset quality. Because if I see while bank has done a very good job in navigating through this environment, and yet delivering one of the better growth among the larger banks. But if I look at in context to that, the slippages have also been just 6% Y-o-Y growth in slippages and the slippage rate has actually come down. So how are we like assessing this asset quality situation and strategizing on growth? Because it's a very sort of a fine line we need to maintain between the 2. So are we tightening too much? Or how are we actually reading it on the growth part?

I believe that concerns regarding asset quality are not hindering our growth trajectory. We can clearly identify promising growth opportunities. The corporate sector, which constitutes 20% of our portfolio, is performing exceptionally well. Additionally, we are witnessing some recovery from prior provisions or losses we've accounted for. Presently, nearly 20%, specifically 17% to 18%, of our portfolio lies within the business banking area, which we've discussed in detail, and we see strong growth potential there. On the retail front, particularly with secured loans, slippage rates have remained relatively steady. While the absolute numbers will increase as the portfolio expands and matures, our credit experience has been stable. In terms of unsecured loans, we've noted a rise in delinquencies and non-performing loans across the industry over the past six quarters, prompting us to implement corrective measures. This has led to a stabilization in our personal loan portfolio this quarter. Moving forward, as the effects of these actions materialize over the coming quarters, we anticipate potential improvements. For now, we are in a stable position, and any fluctuations are being effectively managed within a robust credit cost framework. Currently, I do not perceive a compromise in this balance, and where necessary, particularly concerning personal loans, we have made the appropriate adjustments.

Next question is from the line of Parasrampuria from Nomura.

Congratulations on another great quarter. Firstly, on CASA. So if I look at both your daily average CASA, which you report and the period end, for the last 3 quarters, both these numbers have actually been in a band, which is not the case for the rest of the system. And especially your SA growth is pretty healthy at 13%. I think most of your peer group would be at a low single-digit sort of number. So what is driving this outperformance?

So I guess the way we approach this is that we don't really pursue any particular type of deposit. I think what we want to achieve is that we should increase our share of business with existing customers and acquire new good customers, and they should do as much of their banking as possible through us. And whatever shape that takes, it could be CA or SA or a fixed deposit, we would want a bigger portion of that share. So we don't really, therefore, drive any particular number in this regard. I think this approach has worked well because I think probably the conversation with the customer is really about doing more banking with us rather than getting a particular deposit or type of deposit. I think our digital platforms do help because once the customer becomes digitally active and starts using those platforms, the stickiness and therefore, the balances tend to go up.

Okay. Got it, Anindya. But it's not any change in the product offering or pricing or any such thing at all, right?

No, no, no, none at all.

Okay. Fair enough. Secondly, Anindya, I don't know if you mentioned this earlier but just on the employee cost, the absolute number is down for 2 quarters in a row now. So what is driving that?

There are many variables, such as provisions for retirees and similar factors, that impact it on a sequential basis.

Okay. And headcount reduction as well, the gross number?

That is something, as I said, that's a moving number. There could be in a quarter some reduction, and then it will come back up later as and when we hire to meet our requirements.

Next question is from the line of Chintan Joshi from Autonomous.

Anindya, two questions. If I can pick up your comment about kind of the provisioning cost, you are indicating that the underlying level is comfortable around 50 basis points. Should we think about this also in the context of the next year? And the reason to ask the question is mainly because you've recycled about 30 basis points of provisions. Actually, that's incorrect. Your provisions to loans number has come down from 2% to 1.7%, and we are not sure how much of that is recycled through the P&L. So just trying to understand what could be a sustainable level as we look into the next 12, 18 months?

No, there is nothing called recycling. We provide that absolute number, and as you know, part of that figure is the INR 131 billion of contingency provision, which is essentially a fixed amount that we reached by March of 2023. Since then, we haven't made further contingency provisions. In addition to retail provisioning, there are always some releases on the corporate side that indicate improvement in the quality of the portfolio or recoveries we've made. That's how it works. The numbers are all available. We don't provide an outlook for next year, but as we've mentioned before, these numbers could increase slightly, though we don't see anything particularly concerning or any dramatic rise.

Okay. The second question was about the RIDF. Your RIDF requirement has been decreasing for a while. I'm curious if there are any potential shortfalls on the balance sheet that the RBI might require you to address later, or if you are in a strong position even in the more challenging segments of the PSL. I'm interested in understanding how sustainable this situation is and whether we should anticipate any increases in the future.

The current amount is so minimal that even with some increase, it won’t significantly affect us. We continue to make substantial PSLC purchases, especially for the small farmer segment. In most other categories, we maintain a surplus position. This has been reflected in the P&L over the years. We hope to meet compliance targets. However, with a portfolio of INR 15,000 crores on the balance sheet now, even if it rises a bit, it won't be very significant.

Okay. And a quick data question. How much of the business banking book is unsecured?

So we don't split that out.

Thank you very much. Ladies and gentlemen, we will take that as the last question. I'll now hand the conference over to the management for closing comments.

As always, thank you for taking time out on a Saturday evening and we can take any other questions you have offline. Thank you very much.

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.