Why ICICI Bank Shares are in Focus After Q3FY26 Earnings & RBI Directive

ICICI Bank released its financial performance review for the quarter ended December 31, 2025 (Q3-2026), painting a picture of a lender with strong core operational muscles navigating a tightening regulatory environment. While the headline profit after tax (PAT) saw a slight year-on-year dip of 4 per cent, the underlying data suggests a bank that continues to expand its footprint and maintain stellar asset quality.

Core Performance Remains Robust

The bank’s core operating profit—a key indicator of health that excludes treasury and provisions—grew by 6.0 per cent year-on-year, reaching Rs 17,513 crore. This growth was largely fueled by a 7.7 per cent increase in Net Interest Income (NII), which climbed to Rs 21,932 crore. Despite a competitive deposit market, the Bank managed to keep its Net Interest Margin (NIM) stable at 4.30 per cent, consistent with the previous quarter and slightly up from 4.25 per cent in the same period last year.

Non-interest income also provided a significant boost, rising 12.4 per cent to Rs 7,525 crore. Retail, rural and business banking fees remain the backbone of this segment, contributing nearly 78 per cent of the total fee income.

The "RBI Factor": Provisioning and Agri-Lending

The primary reason for the 4 per cent slide in standalone net profit (which stood at Rs 11,318 crore) was a sharp spike in provisions. Total provisions for the quarter reached Rs 2,556 crore, compared to just Rs 1,227 crore in Q3-2025.

A major portion of this—Rs 1,283 crore—was an additional standard asset provision mandated by the Reserve Bank of India (RBI). This directive followed an annual supervisory review regarding a specific portfolio of agricultural priority sector credit facilities. The RBI identified that the terms of these facilities were not fully compliant with the regulatory requirements for classification as agricultural priority sector lending (PSL).

It is important to note that the bank clarified there is no change in asset classification or borrower behaviour; the provision is a technical regulatory requirement that will likely be reversed once the loans are renewed or repaid in line with current guidelines.

Accelerating Credit and Deposit Growth

ICICI Bank continues to witness healthy demand for credit. The domestic loan portfolio grew by 11.5 per cent year-on-year, led by:

• Business Banking: 22.8 per cent growth
• Rural Portfolio: 4.9 per cent growth
• Domestic Corporate: 5.6 per cent growth
• Retail Loans: 7.2 per cent growth (accounting for over half of the total loan book)

On the liability side, average deposits grew by 8.7 per cent, with a healthy average CASA (Current Account and Savings Account) ratio of 39.0 per cent. The bank’s physical expansion remains aggressive, having added 402 branches in the first nine months of the fiscal year, bringing its total network to 7,385 branches.

Top-Tier Asset Quality

One of the most encouraging takeaways from the Q3-2026 review is the continued improvement in asset quality. The Net NPA ratio dropped to a record low of 0.37 per cent, compared to 0.42 per cent a year ago. The Gross NPA ratio also improved to 1.53 per cent. Even with seasonal additions from the kisan credit card portfolio, the bank’s recoveries and upgrades remained strong at Rs 3,282 crore.

Subsidiary Performance and Leadership Stability

The consolidated profit after tax for the quarter was Rs 12,538 crore, supported by solid performances from subsidiaries:

• ICICI Prudential AMC: PAT grew to Rs 917 crore.
• ICICI Prudential Life: Value of New Business (VNB) increased to Rs 1,664 crore for 9M-2026.
• ICICI Lombard General Insurance: Reported a profit of Rs 659 crore.

In a move to ensure leadership continuity, the Board also approved the reappointment of Sandeep Bakhshi as MD & CEO for a further period of two years, effective October 2026.

About the Company

ICICI Bank Limited is India’s second-largest private sector bank and a systemically important financial institution. Headquartered in Mumbai, it offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and specialised subsidiaries.

The bank operates across multiple segments, including retail banking, wholesale banking and treasury operations. Its services span from personal loans, mortgages and credit cards to sophisticated investment banking and trade finance for large corporations. Through its subsidiaries, the ICICI Group also has a dominant presence in life and general insurance, asset management and stockbroking, making it a comprehensive "financial supermarket" for millions of Indian and international customers.

Disclaimer: The article is for informational purposes only and not investment advice.