Icici Bank Ltd Q4 FY2025 Earnings Call

Ladies and gentlemen, good day, and welcome to the Q4 FY '25 Earnings Conference Call of ICICI Bank. Please note that this conference is being recorded. I now hand the conference over to Mr. Sandeep Bakhshi, Managing Director and Chief Executive Officer of 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 Q4 of FY 2025. Joining us today on this call are Sandeep Batra, Rakesh, Ajay, Anindya and Abinay. 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 13.2% year-on-year to INR 165.34 billion in this quarter and by 11.4% year-on-year to INR 607.13 billion in financial year 2025. The core operating profit increased by 13.7% year-on-year to INR 174.25 billion in this quarter and by 12.5% year-on-year to INR 653.96 billion in financial year 2025. The profit after tax grew by 18% year-on-year to INR 126.30 billion in this quarter. For the fiscal year 2025, the profit after tax grew by 15.5% year-on-year to INR 472.27 billion. The consolidated profit after tax grew by 15.7% year-on-year to INR 135.02 billion in this quarter, and by 15.3% year-on-year to INR 510.29 billion in financial year 2025. The Board has recommended a dividend of INR 11 per share for financial year 2025, subject to requisite approvals. Total deposits grew by 14% year-on-year and 5.9% sequentially at March 31, 2025. During the quarter, average deposits grew by 11.4% year-on-year and 1.9% sequentially. And average current and savings accounts deposits grew by 10% year-on-year and 0.5% sequentially. The bank's average liquidity coverage ratio for the quarter was about 126%. The domestic loan portfolio grew by 13.9% year-on-year and 2.2% sequentially at March 31, 2025. The retail loan portfolio grew by 8.9% year-on-year and 2% sequentially. Including non-fund-based outstanding, the retail portfolio was 43.8% of the total portfolio. The rural portfolio grew by 5.1% year-on-year and declined by 1.5% sequentially. The Business Banking portfolio grew by 33.7% year-on-year and 6.2% sequentially. The domestic corporate portfolio grew by 11.9% year-on-year and declined by 0.4% sequentially. The overall loan portfolio, including the international branches portfolio, grew by 13.3% year-on-year and 2.1% sequentially at March 31, 2025. The net NPA ratio was 0.39% at March 31, 2025, compared to 0.42% at December 31, 2024, and 0.42% at March 31, 2024. The total provisions during the quarter were INR 8.91 billion or 5.1% of core operating profit and 0.27% of average advances. The provisioning coverage ratio on nonperforming loans was 76.2% at March 31, 2025. In addition, the bank continues to hold contingency provision of INR 131 billion or about 1% of total advances at March 31, 2025. The capital position of the bank continued to be strong with a CET1 ratio of 15.94% and a total capital adequacy ratio of 16.55% at March 31, 2025, after reckoning the impact of proposed dividends. 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 a brand. We are laying strong emphasis on strengthening our operational resilience for seamless delivery of services to customers. We remain focused on maintaining a strong balance sheet with prudent provisioning and healthy levels of capital. The principles of return on 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% year-on-year and 2.8% sequentially. Auto loans grew by 4.6% year-on-year and 0.4% sequentially. The commercial vehicles and equipment portfolio grew by 7% year-on-year and 2.9% sequentially. Personal loans grew by 4.2% year-on-year and 0.6% sequentially. The credit card portfolio grew by 11.7% year-on-year and 0.9% sequentially. The personal loans and credit card portfolio were 9.1% and 4.3% of the overall loan book, respectively, at March 31, 2025. The overseas loan portfolio in U.S. dollar terms declined by 10.2% year-on-year at March 31, 2025. The overseas loan portfolio was about 2.3% of the overall loan book at March 31, 2025. Of the overseas corporate portfolio, about 91% comprises Indian corporates. On credit quality, the gross NPA additions were INR 51.42 billion in the current quarter compared to INR 60.85 billion in the previous quarter. Recoveries and upgrades from gross NPAs, excluding write-offs and sales, were INR 38.17 billion in the current quarter compared to INR 33.92 billion in the previous quarter. The net additions to gross NPAs were INR 13.25 billion in the current quarter compared to INR 26.93 billion in the previous quarter. The gross NPA additions from the retail and rural portfolios were INR 43.39 billion in the current quarter compared to INR 53.04 billion in the previous quarter. Recoveries and upgrades from the retail and rural portfolios were INR 30.39 billion compared to INR 27.86 billion in the previous quarter. The net additions to gross NPAs in the retail and rural portfolios were INR 13 billion compared to INR 25.18 billion in the previous quarter. The gross NPA additions from the corporate and business banking portfolios were INR 8.03 billion in the current quarter compared to INR 7.81 billion in the previous quarter. Recoveries and upgrades from the corporate and business banking portfolios were INR 7.78 billion compared to INR 6.06 billion in the previous quarter. There were net additions to gross NPAs of INR 0.25 billion in the corporate and business banking portfolios compared to net additions of INR 1.75 billion in the previous quarter. The gross NPAs written off during the quarter were INR 21.18 billion. Further, there was a sale of NPAs of INR 27.86 billion in the current quarter compared to INR 0.58 billion in the previous quarter. These were fully provided NPAs, and in lieu of sale, the bank received INR 16.05 billion of security receipts and INR 3.14 billion in cash, with the balance INR 8.67 billion being written off, which is in addition to the write-offs mentioned earlier. The bank continues to hold 100% provision against these security receipts. The non-fund-based outstanding to borrowers classified as nonperforming was INR 30.75 billion as of March 31, 2025 compared to INR 31.60 billion as of December 31, 2024. The provisions on this non-fund-based outstanding were INR 16.60 billion at March 31, 2025, compared to INR 17.12 billion at December 31, 2024. The total fund-based outstanding to all standard borrowers under resolution as per various guidelines declined to INR 19.56 billion or about 0.1% of the total loan portfolio at March 31, 2025 from INR 21.07 billion at December 31, 2024. Of the total fund-based outstanding under resolution at March 31, 2025, INR 17.55 billion was from the retail and rural portfolio, and INR 2.01 billion was from the corporate and business banking portfolio. The bank holds provisions of INR 6.43 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 11% year-on-year to INR 211.93 billion in this quarter. The net interest margin was 4.41% in this quarter compared to 4.25% in the previous quarter and 4.4% in Q4 of last year. The impact of interest on tax refunds was about 2 basis points in the current quarter compared to about 1 basis point in the previous quarter and nil in Q4 of last year. The net interest margin for the full year FY 2025 was 4.32%. The domestic NIM was 4.48% in this quarter compared to 4.32% in the previous quarter and 4.49% in Q4 of last year. The cost of deposits was 5% in this quarter compared to 4.91% in the previous quarter. Of the total domestic loans, interest rates of about 53% of the loans are linked to the repo rate, 15% 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 18.4% year-on-year to INR 70.21 billion in Q4 of 2025. Fee income increased by 16% year-on-year to INR 63.06 billion in this quarter. Fees from retail, rural, and business banking customers constituted about 80% of the total fees in this quarter. Dividend income from subsidiaries was INR 6.75 billion in this quarter compared to INR 4.84 billion in Q4 of last year. Dividend income from subsidiaries was INR 26.19 billion in FY 2025 compared to INR 20.73 billion in FY 2024. The year-on-year increase in dividend income was primarily due to higher dividends from ICICI Bank Canada, ICICI Prudential Asset Management Company, and ICICI Securities primary dealership. On costs, the bank's operating expenses increased by 11.2% year-on-year in this quarter and 8.3% year-on-year in FY 2025. Employee expenses increased by 10.3% year-on-year, and non-employee expenses increased by 11.7% year-on-year in this quarter. Our branch count has increased by 241 in Q4 and 460 in FY 2025. We had 6,983 branches as of March 31, 2025. Technology expenses were about 10.7% of our operating expenses in FY 2025. The total provisions during the quarter were INR 8.91 billion or 5.1% of core operating profit and 0.27% of average advances compared to the provisions of INR 12.27 billion in the previous quarter. The total provision during FY 2025 increased by 28.5% year-on-year to INR 46.83 billion. The bank on a prudent basis continues to hold provisions against securities received guaranteed by the government, which will be reversed on actual receipt of recoveries or approval of claims, if any. The provisioning coverage on non-performing loans was 76.2% as of March 31, 2025. In addition, we hold INR 6.43 billion of provisions on borrowers under resolution. Further, the bank continues to hold contingency provisions of INR 131 billion as of March 31, 2025. At the end of March, the total provision other than specific provisions of fund-based outstanding to borrowers classified as non-performing were INR 226.51 billion or 1.7% of loans. The profit before tax, excluding treasury grew by 13.2% year-on-year to INR 165.34 billion in Q4 of this year, and by 11.4% year-on-year to INR 607.13 billion in FY 2025. Treasury gains were INR 2.39 billion in Q4 as compared to a treasury loss of INR 2.81 billion in Q4 of the previous year. The treasury loss in Q4 of the previous year includes the transfer of negative balance of INR 3.4 billion in foreign currency translation reserve related to the bank's offshore banking unit in Mumbai to the profit and loss account in lieu of the proposed closure of the unit. The tax expense was INR 41.43 billion in this quarter compared to INR 36.13 billion in the corresponding quarter last year. The profit after tax grew by 18.0% year-on-year to INR 126.3 billion in this quarter. The profit after tax grew by 15.5% year-on-year to INR 472.27 billion in FY 2025. On technology, we continue to enhance the use of technology in our operations to provide simplified solutions to customers and make investments in our digital channel. We continue to further strengthen system resilience and simplify our process. We have provided details on our retail, rural, and business banking portfolios on Slides 25 to 28 of the investor presentation. The loans and non-fund-based outstanding to performing corporate borrowers rated BB and below were INR 28.54 billion at March 31, 2025, compared to INR 21.93 billion at December 31, 2024. This portfolio was about 0.2% of our advances at March 31, 2025. Other than two accounts, the maximum single borrower outstanding in the BB and below portfolio was less than INR 5 billion at March 31, 2025. The bank holds provision of INR 4.38 billion against this portfolio at March 31, 2025. The total outstanding to NBFCs and HFCs was INR 918.38 billion at March 31, 2025 compared to INR 893.60 billion at December 31, 2024. The total outstanding to NBFCs and HFCs was about 6.8% of our advances at March 31, 2025. The builder portfolio, including construction finance, lease rental discounting, term loans, and working capital stood at INR 616.24 billion at March 31, 2025 compared to INR 586.36 billion at December 31, 2024. The builder portfolio was about 4.6% 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 builder portfolio at March 31, 2025, was either rated BB and below internally or was classified as non-performing compared to 1.7% at December 31, 2024. Moving on to the consolidated results, the consolidated profit after tax grew by 15.7% year-on-year to INR 135.02 billion in this quarter. The consolidated profit after tax grew by 15.3% year-on-year to INR 510.29 billion in FY 2025. 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 104.07 billion in FY 2025 compared to INR 90.46 billion in FY 2024. The value of new business was INR 23.7 billion in FY 2025 compared to INR 22.27 billion in FY 2024. The value of new business margin was 22.8% in FY 2025 compared to 24.6% in FY 2024. The profit after tax of ICICI Life was INR 11.89 billion in FY 2025 compared to INR 8.52 billion in FY 2024 and was INR 3.86 billion in the current quarter compared to INR 1.74 billion in Q4 of last year. The gross direct premium income of ICICI General was INR 247.76 billion in FY 2024 compared to INR 268.33 billion in FY 2025. The combined ratio stood at 102.8% in FY 2025 compared to 103.3% in FY 2024. Excluding the impact of CAT losses of INR 0.94 billion in FY 2025 and INR 1.37 billion in FY 2024, the combined ratio was 102.4% and 102.5%, respectively. The profit after tax was INR 25.08 billion in FY 2025 compared to INR 19.19 billion in FY 2024. The profit after tax was INR 5.1 billion in this quarter compared to INR 5.19 billion in Q4 of last year. The profit after tax of ICICI AMC as per Ind AS was INR 6.92 billion in this quarter compared to INR 5.29 billion in Q4 of last year. The profit after tax of ICICI Securities as per Ind AS on a consolidated basis was INR 3.81 billion in this quarter compared to INR 5.37 billion in Q4 of last year. Pursuant to the scheme of arrangement among ICICI Bank Limited and ICICI Securities Limited and their respective shareholders, ICICI Securities Limited has been delisted from stock exchanges on March 24, 2025, and become a wholly owned subsidiary of the bank. ICICI Bank Canada had a profit after tax of CAD 12.5 million in this quarter compared to CAD 19.9 million in Q4 of last year. ICICI Bank U.K. had a profit after tax of USD 6 million in this quarter compared to USD 9.5 million in Q4 of last year. As per Ind AS, ICICI Home Finance had a profit after tax of INR 2.41 billion in the current quarter compared to INR 1.69 billion in Q4 of last year. With this, we conclude our opening remarks, and we will now be happy to take your questions.

Thank you very much. We will now begin the question-and-answer session. The first question is from the line of Mahrukh Adajania from Nuvama Wealth Management.

First of all, congratulations on a very strong set. I just had a few questions. Firstly, on loan growth. So have you tightened or have you been cautious on some segments, especially PLCC, overall retail, corporate growth? Because while the loan growth is good, it's a tad lower than your last few quarters. So is there any cautious approach? And if there is, why? Or is this the general demand that the bank is presented with? So that's my first question. And then I have another question on deposits.

So as far as the loan growth is concerned, I don't think anything specific incrementally in terms of caution on the credit side. I think we are pretty comfortable with what we are underwriting. Of course, on personal loans and cards, as you know, we had tightened a few quarters ago, and that is showing up in the volumes over the last couple of quarters and the loan growth. But other than that, no specific caution on the credit side, I would say it's largely a function of what is happening in the system. And also, I guess, on the pricing side, some consciousness given that during this quarter, we were at the sort of cusp of the downward movement in benchmark rates. So we had to be, I think, a little more, I would say, disciplined in terms of the spreads, et cetera, that we were charging over the benchmark. But other than that, no specific caution on the credit side.

And on deposit growth, my question was that, obviously, banks are cutting deposit rates to transmit policy rates, but there has been a lot of tightness in deposits, not recently, but over the last 1.5 years. So with the liquidity situation improving, is there confidence that a sustained deposit growth will now flow through?

I guess that's reflected in what is happening. We have seen liquidity improve substantially over the last couple of months with all the measures that the Central Bank has taken and deposit growth for us has continued to be quite strong. You would have seen the numbers for the fourth quarter have also been pretty strong for us. And as the rate now, of course, if you look at it, the repo rate has fallen by 50 bps, so that will start to see a transmission into deposit rates, which is what has started. So I think that's in the natural course of things.

The next question is from the line of Kunal Shah from Citigroup.

So the question was on margins. When we look at it in terms of the yields, particularly, there has been a 21 basis points expansion. So firstly, obviously, there could be some elements of lower reversals on KCC. But besides that, anything else to look into this, was there maybe in the recovery, there was a one-off interest or something which was there? Besides the interest on income tax refund, was there any other one-offs in the yield on advances?

So there was no one-off in the yield on advances. I think probably the largest component driving up the yield was what we had spoken of in, I think, Q2 and Q3 last year, which is the benefit of the day count, which brought down the yield in Q2 vis-a-vis Q1, and we had mentioned at that time that this would reverse out largely in Q4, which has happened. So that is one factor. The second factor is what you alluded to, the absence of the KCC non-accrual in Q4 relative to Q3. We did speak about the 2 bps of interest on tax refund. Other than that, I think nothing one-off in that sense, there would be maybe some better returns on liquidity deployment, a little better interest collection on NPLs, things like that, but no single item that requires to be called out, I would say.

So this derecognition would be a significant component of it because it was thought to be like earlier when you indicated, it seems like there is a benefit of 3 to 4 odd basis points, which is coming in margin, but then it seems like that component was quite high.

I'm sorry, what component?

This derecognition?

Yes, that would be a notable figure, but I believe the larger figure is primarily due to the day count convention. As we mentioned, the margin figure we should concentrate on is actually 4.3% for the full year, which would be more indicative.

Yes. And in terms of also going forward, in fact, you have always been indicating that maybe if it's a shallow rate cut cycle, we should be able to manage the margins, but now if we expect like, say, 100 bps kind of a repo rate cut over, say, 4 MPCs, would you still believe it to be shallow rate? And maybe from here on in terms of the margin trajectory, if we have to look at it, how do we see it on the repricing of the yields? Do we follow like a monthly restate and business banking happens immediately, and maybe that will entirely flow through? And are there any levers available to improve margins or maybe to take care of the EBLR repricing impact?

I don't believe that the extent of the rate cut, whether it is lesser or greater, will not have an effect on margins since deposit rates will be repriced with a delay while loan repricing will happen right away. Expectations for rate cuts have increased compared to a couple of months ago, with more significant cuts anticipated. Additionally, as we mentioned earlier, deposit rates have begun to decline. We will need to monitor how this unfolds as we proceed, but it is clear there will be a definite impact on margins. The exact nature of that impact will become clearer as we progress through the year, as various factors will influence it. Overall, we need to assess the overall risk-adjusted pre-provision operating profit and identify the various levers we can optimize, including growth margins, and that's what we will continue to focus on.

The next question is from the line of Anand Swaminathan from Bank of America.

I had a couple of questions. One is on the elasticity of savings rate cuts. What according to you is the kind of modeling you've done in going ahead with a concerted all banks have done a 25 bps rate cut? And is there theoretically a base limit that we should think about for savings rate cuts? Or can it kind of continue to mirror the repo rate cuts over the next few quarters? That's my first question.

We will need to monitor the situation as we proceed. I don't believe there is a clear direct correlation at this time. The repo rate has decreased by 25 basis points, and there have been significant liquidity measures implemented. We'll have to observe how things develop from here. At this stage, there doesn't appear to be any quantifiable direct relationship.

Okay. But theoretically, there is no limit to how much savings rate can go down from here?

It's a rate which each bank can set for itself in that sense, so it can move as per what a bank thinks is optimal.

Okay. My second question is on the business banking side. The loan growth has been exceptionally good, especially it seems to have accelerated in the last few quarters. Can you help us understand what is the risk in this business? How are you assessing the incremental risk? How much riskier is it versus your corporate book? If you can give us something in terms of how much is the self-funded nature of the business? Is it kind of going to contribute to a slightly higher wage credit cost down the line. Some color on this to get a better understanding would be good.

Last quarter, we provided detailed insights during the earnings call about how we've developed this business over the years. We have focused our investments on three main areas: first, enhancing our distribution to ensure more branches assist business banking and self-employed customers; second, improving our credit underwriting models and processes for better assessment and timely credit delivery; and third, advancing our digital technology and transaction banking capabilities, which have positively contributed to our growth in both lending and fees. Regarding the risk profile, our portfolio is quite granular and well-diversified across different regions and industries. Additionally, it is not characterized by high yields, as it does not reach the mid-teens lending rates—rather, it is at the higher end of the quality spectrum among banks. We've also gained a comprehensive understanding of our customers, which has allowed us to deliver various services effectively. The credit performance has been strong; for instance, five years ago, at the start of the pandemic, we were particularly wary about this portfolio since it was relatively new to us. However, it turned out to perform significantly better than expected. Even at a systemic level, metrics like ECLGS utilization have remained low for this portfolio. Currently, credit costs are quite low, similar to what we observe on the corporate side, though we will continue to monitor and manage the portfolio closely as needed.

And Anindya, what will be the average yield on this business versus your corporate business, just to understand how much more profitable this is?

We don't really give the segment-wise yield. It would be somewhat higher. But I think more importantly, it is the holistic PML of the business in terms of the full customer 360, the liability side, transaction banking, and the ability to manage delivery costs and credit costs, which yield the bigger benefit. And of course, the granularity of it.

The next question is from Nitin Aggarwal from Motilal Oswal Financial Services.

Congratulations on a very strong performance. So first question is around asset quality. So if I look back like the normalization trend that started at the beginning of the year has reached a fair degree of stability, so just wanted to know your view like how comfortable you feel about asset quality now versus how, say, the situation was 6 months back? And how is that trending now in unsecured retail products?

Actually, we were always quite comfortable, so we were never too worried. But I would say that what we have been saying holds true. I think the corporate portfolio continues to behave extremely well as does business banking. On the retail side, the secured products, I think, are behaving quite well. On unsecured, I think that generally, the NPL formation has broadly stabilized, I would say. We would hope for it to come down, but let us wait for that to happen; maybe it will take another couple of quarters. And all of that is getting absorbed in the credit costs that we are reporting. This quarter, of course, we had a very low credit cost of some 30 basis points. But even if we kind of were to try and adjust out the fact that they were KCC provisions in the previous quarter, and we had some write-back this quarter and so on, it will still be just about 40-odd bps or so. So things are quite stable. Of course, as we go into the year, I think what happens to the overall economy globally and in India and this whole trade-related issues is something we'll have to watch out for. But as of today, we are very comfortable with the portfolio.

And Anindya, second question is around growth again. So we have seen very healthy growth, continued growth across business banking, but the retail growth has moderated if you compare it over the prior years. Now looking forward, with other banks becoming more and more aggressive in lending in certain products where ICICI Bank is. So how do you see the trend about the overall loan growth, where it remains skewed in favor of select products, which fits our PPOP and on the profitability thresholds? Or one can expect more broad-based growth?

We are very focused on risk-adjusted PPOP. As we concentrate on this, we have the flexibility to make tactical pricing decisions for specific customers, segments, or products when necessary. However, our overall emphasis remains on PPOP. Currently, we anticipate continued healthy growth in business banking. For retail, we'll observe how the market develops. As the rate environment stabilizes over the year, pricing may also stabilize. On the unsecured side, growth has likely bottomed out, and we might begin to see some improvement in growth from this point forward.

And lastly, on the PSL front line, I see the stronger growth in business banking, but slightly down growth in retail and rural. How is the bank faring on the PSL front?

So I think it's pretty similar to what we have seen in past quarters. We meet our overall PSL requirement. We also meet our MSME requirement. In fact, overall, and MSME, we have some surplus. In some of the categories like the small farmer and weaker section, et cetera, we do have a shortfall, which we have addressed through either buyouts or through purchase of the PSLC certificates. So pretty much the same continues.

The next question is from the line of M.B. Mahesh from Kotak Securities.

Just a couple of questions. First one is on the income, if any, which moves on the interest income line on a recovery of bad loans, like NSR receipts have come in on a cash basis, does anything of it move to the interest income line as well?

So the cash portion of the NPA sale would be reflected as a write-back in provisions, not as interest income.

And there is nothing there in the interest income line from bad loans?

There will always be some interest recovery on NPLs in any quarter. It may vary a little quarter-to-quarter, but it will always be there.

The second question relates to the current difference in benchmark loans between private sector banks and public sector banks. How much does this impact you at the moment? Could you provide some insight, as the transmission appears to be clearer from the private sector banks compared to the public banks?

Are you talking about competition in the lending rates?

Yes, because as I look at some of the housing loans...

Yes, it is certainly a concern. In retail, it's not solely about pricing; you need to have distribution, scale, and processing capacity to support your pricing. It's not just a pricing issue. However, there are larger, capable competitors who are priced significantly lower than us, which presents challenges for growth. But that's part of the business landscape. We will need to continue addressing this as we proceed and explore ways to drive other factors that can help us maintain profitable growth.

And one clarification. Unsecured loans, today, you would say that we are well past the peak in terms of fresh slippages? Or is there any amount of uncertainty?

So I would say it has broadly stabilized. We are yet to see it coming down meaningfully. But I think more importantly, the behavior of portfolios originated more recently, say, what we originated post making some of the credit changes, which we did maybe 18 months ago, the behavior of those portfolios gives us a fair degree of comfort on building the portfolio incrementally.

The next question is from the line of Harsh Modi from JPMorgan.

I just want to understand on RWA growth, it's 17% year-on-year for growth of around 13%. Could you please explain what drove the faster growth in risk-weighted assets? I have a follow-up question after that.

It's a changing mix of different categories of loans and how they are classified in terms of risk weight. By the end of the year, market risk increased as we took on larger positions when the interest rate environment became favorable for trading.

Got it. The follow-up is on just the use of capital. You have significant capital generation. CET1 is at 15.94% and the way it seems your incremental RWA of INR 2.4 trillion growth versus profit of almost INR 0.5 trillion, so let's say, over the next 2 to 3 years, how do you see the use of capital at the bank, assuming given your competitive position and the modes, you may be able to generate significant amount of capital over the next 2 to 3 years?

I see a few key points. Firstly, there are expectations among stakeholders and the market regarding the level of capital that a large private sector bank should hold. I believe our capital levels align well with those of most of our peers in this regard. Concerning future capital generation and how much will be utilized for growth, we'll observe that as time progresses. However, maintaining an adequate level of capital is crucial for both strategic planning and building market confidence.

Right. My question relates to the organic growth you are experiencing, particularly with your focus on risk-adjusted PPOP. Given that your RWA growth is currently five times your net profit, is there any possibility, for strategic reasons, of where you might consider allocating capital over the next 2 to 3 years?

We believe that our franchise provides ample opportunities for growth and capital leverage. If necessary, we can consider options like increasing payouts. However, for now, we are confident that our current franchise offers significant potential for expansion.

The next question is from the line of Param Subramanian from Investec Capital.

Firstly, on the net worth movement in the quarter, so it's up INR 20,000 crores quarter-on-quarter, which is higher than the PAT. So is that the AFS mark-to-market that's happened?

The primary focus for this quarter is the share issue related to the additional investment in ISEC. We would have issued shares to ISEC's shareholders, which, although neutral in terms of capital expenditures, would have significantly increased our net worth. This is the most significant item to note.

Okay, I understand there's not as much AFS. Moving on, regarding the outlook on CASA, the CASA ratio for the bank has remained nearly flat year over year, which is a positive outcome considering the circumstances. However, compared to the pre-COVID period when CASA was at 48% or 49%, we are currently lower. Given the accommodative stance of the RBI on liquidity, do you believe there is potential for this ratio to increase in the future, especially from a macroeconomic standpoint?

Yes, I think we need to consider the overall amount and cost of funding available to us, which should be better than our competitors since CASA trends are likely to be similar across the large banks. Therefore, it makes more sense to focus on the total funding available and its cost, as well as how deployable that funding is. Very volatile CASA might not necessarily be beneficial. We are looking at it from that perspective and do not have a specific outlook on CASA itself.

Okay. Would you think that the worst of the CASA pressures for yourself and the sector are largely behind, if I were to put it that way?

Logically, that should be so.

The next question is from the line of Piran from CLSA.

Firstly, just on the previous question of Param, why did you say that the CASA pressure is over? Sorry, I missed that.

I said, logically, that should be so given the monetary easing, the improvement in system liquidity. And to the extent that it was a factor the sort of some calm in capital markets, but it's something we'll have to see as we go ahead.

Okay, okay. That's the reason, fair enough. Just moving on to my questions. Firstly, on vehicle growth slowdown, how do we really interpret this? Is this just a function of more competition at the counter? Or are you all intentionally scaling back due to asset quality or pricing? Or is it just something else?

I think it's more the underlying demand and maybe at the margin a little bit on the pricing side. Nothing on asset quality per se.

Anindya, regarding the cost of deposits, it was gradually increasing by 2 to 3 basis points each quarter, which was reasonable. However, this quarter, it has risen by nearly 10 basis points, and the decline in the CASA ratio likely accounts for around 2 to 3 basis points of that increase. What accounts for the remaining portion?

Yes, it would be partly a number of days.

Okay, okay. And just my last question. Out of your buildup portfolio of INR 60,000 crores, how much would be LRD?

We have not given that breakup. There will be some component of LRD there.

Would it be significant or more minor?

I don't think it will be minor, but we have not given the breakup. I think it will be a reasonable number.

Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.

Thank you, everyone, and we'll be happy to take any other questions offline. Thank you.

Thank you.

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