Growth Holds, But It's Costing More to Fund
The quarter ended June 30, 2024 (Q1 FY2025, "Q1-2025" in the bank's own labeling) continues the pattern the 2024-03 post flagged as underway: solid headline profit growth riding on volume rather than margin, with the margin itself still compressing. Net interest income grew 7.3% year-on-year to Rs. 19,553 crore, core operating profit grew 11.0% to Rs. 15,412 crore, and standalone profit after tax grew 14.6% year-on-year to Rs. 11,059 crore - all comfortably positive, but net interest margin» fell again to 4.36%, down from 4.78% a year earlier and essentially flat with Q4 FY2024's 4.40%.
The deposit mix keeps shifting the same direction. The average CASA» ratio was 39.6% this quarter, down from 42.6% a year earlier though up marginally from 38.9% the prior quarter - average term deposits grew 23.8% year-on-year, nearly double the pace of period-end total deposit growth of 15.1%. Cost of deposits rose to 4.84% from 4.31% a year earlier, and cost-to-income actually improved slightly to 39.7% from 40.2%, meaning the bank is managing the expense side well even as the funding side gets structurally more expensive.
Domestic loan growth held at a healthy 15.9% year-on-year, with business banking (+35.6%) and SME (+23.5%) again outpacing the broader book - the same granular retail-and-business-banking engine flagged in both prior posts. Return on equity slipped to 18.0% from 18.9% a year earlier, and book value per share rose to Rs. 361.0 from Rs. 301.5 - steady compounding of net worth even as the profitability ratio itself edges down.
The Prescription
ICICI Bank should keep pushing the business-banking and SME growth that's carrying the loan book: both segments are growing at more than double the rate of the domestic corporate portfolio (+10.3% year-on-year) and continue to be the highest-margin, most granular part of the franchise. Asset quality also remains a genuine strength - net NPA ratio held at 0.43%, essentially unchanged from Q4 FY2024's 0.42%, with provisioning coverage still above 79%.
What it should address rather than let compound quietly: a funding mix that's now materially more expensive than two years ago, with no sign of reversing. Cost of deposits at 4.84% is up nearly 150 basis points from two years earlier, and CASA - the source of ICICI Bank's historical cost-of-funds advantage over peers - has fallen more than 3 percentage points year-on-year. A bank whose margin advantage rests on cheap deposits needs to either defend that base or explicitly re-price its growth strategy around a costlier one - so far, management's public framing hasn't acknowledged the shift as a structural trend rather than a cyclical one (see What Management Actually Emphasized on the Call below).
Key Financial Metrics
Q1 FY2025 (quarter ended June 30, 2024) vs. Q1 FY2024 (quarter ended June 30, 2023) - standalone, Indian GAAP, reported in Rs. crore
| Metric | Q1 FY2025 | Q1 FY2024 | YoY |
|---|---|---|---|
| Net Interest Income | Rs. 19,553cr | Rs. 18,227cr | ✅ +7.3% |
| Non-interest income (excl. treasury) | Rs. 6,389cr | Rs. 5,183cr | ✅ +23.3% |
| - of which Fee income | Rs. 5,490cr | Rs. 4,843cr | ✅ +13.4% |
| Core operating profit (PPOP») | Rs. 15,412cr | Rs. 13,887cr | ✅ +11.0% |
| Provisions (excl. tax) | Rs. 1,332cr | Rs. 1,292cr | ⚠️ +3.1% |
| Profit before tax | Rs. 14,693cr | Rs. 12,847cr | ✅ +14.4% |
| Net Income (Profit after tax, standalone) | Rs. 11,059cr | Rs. 9,648cr | ✅ +14.6% |
| Net Income (Profit after tax, consolidated) | Rs. 11,696cr | Rs. 10,636cr | ✅ +10.0% |
| Weighted-average annualised EPS | Rs. 63.1 | Rs. 55.5 | ✅ +13.7% |
| Book value per share (period-end) | Rs. 361.0 | Rs. 301.5 | ✅ +19.7% |
Consolidated profit growth (10.0%) trailing standalone growth (14.6%) is a gap worth watching quarter to quarter - the last comparable post (2022-12) had consolidated growth running roughly in line with standalone.
Key Operational Metrics
- CASA ratio: 39.6% average (down from 42.6% a year earlier ⚠️, up from 38.9% the prior quarter) - see Growth Holds, But It's Costing More to Fund above.
- Net interest margin: 4.36% (down from 4.78% a year earlier ⚠️, roughly flat with 4.40% the prior quarter).
- Cost of deposits: 4.84%, up from 4.31% a year earlier - the clearest single number behind the margin compression.
- Gross NPA» ratio: 2.15% at quarter-end vs. 2.16% the prior quarter, roughly flat.
- Net NPA ratio: 0.43% vs. 0.42% the prior quarter and 0.48% a year earlier - broadly stable.
- Provisioning coverage ratio» on NPAs: 79.7%, down from 80.3% the prior quarter.
- Net additions to gross NPAs: Rs. 2,624 crore in Q1-2025, more than double Q4-2024's Rs. 1,221 crore - a sequential jump worth watching, though within the range of prior first-quarter seasonality for the bank's agricultural/Kisan Credit Card book.
- Domestic loans: +15.9% year-on-year, +3.3% sequentially; retail loans +17.1% year-on-year.
- Total deposits (period-end): +15.1% year-on-year, +0.9% sequentially - deposit growth again lagging loan growth this quarter.
- Capital adequacy (standalone): Total capital adequacy ratio 16.63%, CET-1» 15.92% (including Q1-2025 profits) - comfortably above regulatory minimums.
- Standalone return on equity (annualised): 18.0% vs. 18.9% a year earlier ⚠️.
- Return on assets (annualised): 2.36% vs. 2.39% a year earlier - essentially flat.
A seasonality note: Q1 (April-June) is the quarter management has flagged in prior calls as typically carrying higher rural/agricultural NPA additions from the Kisan Credit Card portfolio's crop cycle - relevant context for the sequential jump in net NPA additions this quarter, rather than a standalone credit-quality signal.
Four Core Segments
Retail Banking
Segment profit before tax was Rs. 4,239 crore, down from Rs. 4,179 crore a year earlier but down sharply from Q4 FY2024's Rs. 5,486 crore - the segment's weakest sequential showing across the quarters covered on this site so far, even as the underlying retail loan book kept growing at a healthy clip.
Wholesale Banking
Segment PBT grew to Rs. 4,912 crore from Rs. 4,080 crore a year earlier (+20.4%) - the strongest year-on-year growth among the four segments this quarter, continuing the pattern of Wholesale converting revenue into profit efficiently, as flagged in both prior posts.
Treasury
Segment PBT rose sharply to Rs. 5,474 crore from Rs. 4,362 crore a year earlier and from Rs. 3,242 crore the prior quarter (+68.8% sequentially) - a reversal back toward the segment's earlier strength after the 2024-03 post flagged Treasury as the one segment declining that quarter.
Others
The Others segment contributed Rs. 68 crore, down from Rs. 226 crore a year earlier - the smallest of the four segments and the most volatile quarter to quarter, as in prior posts.
Which Segment Is Actually Carrying the Business
Treasury and Wholesale are the two segments driving profit growth this quarter, while Retail Banking - historically the largest and steadiest contributor - posted its weakest profit quarter in this site's coverage of the bank, despite continued strong loan volume growth. That gap between loan-book growth and segment-profit growth in Retail is consistent with the margin-compression story above: Retail carries the bulk of the deposit-funding cost increase, and its segment profit is absorbing more of that cost than Wholesale or Treasury.
Beyond the Usual
The contingency buffer remains frozen, still with no analyst questions
The Rs. 13,100 crore discretionary contingency buffer stayed exactly unchanged at June 30, 2024, now more than five quarters without a new addition since the bank stopped building it after Q4 FY2023. This quarter's earnings-call transcript again contains no analyst question on the buffer's methodology or purpose - continuing the pattern flagged in the 2024-03 post. The buffer now represents about 1.1% of total advances, a proportion that mechanically shrinks each quarter as the loan book grows around a fixed reserve.
The corporate BB-and-below watchlist ticked down again, and management explicitly ruled out a broader stress signal
The pool of performing corporate and SME loans rated BB-and-below fell modestly and stayed in the same Rs. 5,000-5,900 crore range seen across the last several quarters, with the bank continuing to disclose that no single borrower in the pool exceeds a modest individual threshold - a granularity detail consistent with prior posts that argues against a concentrated exposure building up unseen.
Net NPA additions doubled sequentially, but the bank attributes it to a known, recurring seasonal pattern rather than a new stress source
Net additions to gross NPAs, excluding write-offs and sale, were Rs. 2,624 crore in Q1-2025 compared to Rs. 1,221 crore in Q4-2024 - more than double sequentially. The disclosed provisioning coverage ratio dipped only modestly, from 80.3% to 79.7%, and gross/net NPA ratios themselves stayed essentially flat, suggesting the additions were absorbed within existing provisioning capacity rather than signaling a fresh deterioration. Given the Q1 rural-lending seasonality already flagged above, this is worth tracking over the next 2-3 quarters rather than reading as an isolated data point.
What Management Actually Emphasized on the Call
Management's opening framing continued to lean on the bank's overall liquidity position rather than address the CASA erosion directly - deposit growth was described as "healthy" and funding was again characterized as "not a constraint," language nearly identical to the 2022-12 post's framing from 18 months earlier, even though the underlying CASA ratio has fallen more than 6 percentage points since that quarter (44.6% to 39.6%). Management did acknowledge the cost-of-deposits increase directly when discussing margin, framing it as an industry-wide phenomenon from system-level deposit competition rather than a bank-specific issue - a reasonable point, but one that doesn't change the practical funding-cost impact on ICICI Bank's own margin. On the contingency buffer (see Beyond the Usual above), the topic didn't come up on the call at all this quarter, continuing the pattern from the prior quarter.
Target Valuation Range
Fairly valued to modestly expensive at a ~3.32x price-to-book», sitting at the upper edge of a justified 2.7x-3.5x sustainable-P/B band on an 18.0% return on equity — the multiple continued edging up even as ROE ticked down from the prior quarter, meaning the market kept paying more per unit of profitability rather than less.
ICICI Bank's shares closed at Rs. 1,199.60 on the National Stock Exchange on June 28, 2024 (the last trading day of the month) - the actual nominal price quoted that day, with no stock split or bonus issue since 2014/2017 respectively affecting this figure.
| Market cap → book value (per-share basis) | Q1 FY2025 |
|---|---|
| Share price (period-end) | Rs. 1,199.60 |
| Book value per share | Rs. 361.0 |
| P/B» | ~3.32x |
| Weighted-average annualised EPS | Rs. 63.1 |
| Trailing-annualised P/E» | ~19.0x |
| Standalone ROE (annualised) | 18.0% |
| Sustainable-P/B check | Value |
|---|---|
| Standalone ROE (annualised) | 18.0% |
| Cost of equity (assumed) | 13-14% |
| Terminal growth (assumed) | mid-single digits |
| Justified P/B range | ~2.7x-3.5x |
| Actual P/B | ~3.32x |
| Trailing comparison | Q4 FY2024 (2024-03) | Q1 FY2025 (2024-06) |
|---|---|---|
| P/B | ~3.22x | ~3.32x |
| Trailing P/E | ~17.8x | ~19.0x |
| Standalone ROE (annualised) | 18.5% | 18.0% |
The stock re-rated slightly higher this quarter even as both ROE and the CASA ratio moved the wrong way - a sign the market was, at this point, still pricing ICICI Bank primarily on loan-growth momentum rather than on the funding-cost story developing underneath it. The peer-multiple/sustainable-P/B read above remains the honest valuation lens; a full DCF still isn't included given the coverage gaps between the quarters this site has published so far.
ICICI Bank Limited's July 27, 2024 financial results for the quarter ended June 30, 2024 (Q1-2025), reviewed by joint statutory auditors, its Q1-2025 investor presentation, and its July 27, 2024 earnings conference call transcript.