ICICI Bank: retail, rural loan stress

If loan defaults are growing faster than loan growth for any bank, it is a sign of worry. Take ICICI Bank, for instance. It increased the retail and rural loan portfolio by 11% year-on-year (y-o-y) in the December quarter (Q3FY25). Yet, this was accompanied by a 17% growth in gross non-performing asset (NPA) additions or fresh defaults in the segment.

- Manish Joshi

Contrast this with the corporate and business banking (CBB) loan portfolio, which grew by 21% and saw a drop in gross NPA additions. The trend in CBB's gross NPA additions has been stable at about ₹800 crore quarter-on-quarter (q-o-q). Overall, ICICI's gross NPA ratio trend shows improvement, with a linear decline to 1.96% in Q3FY25 from 2.3% in Q3FY24.

ICICI has achieved q-o-q stability in net interest margin at 4.25%. However, in a media interaction after the Q3FY25 results, the bank's management reiterated the obvious fact that a lower interest rate regime is negative for banks as far as NIM is concerned.