ICICI Bank Reports 4% Drop in Q3 Net Profit Following RBI Directive
ICICI Bank announced its financial results for the third quarter ending December 2025. The private sector lender reported a profit after tax of Rs 11,318 crore. This figure represents a 4% decline compared to the same period last year when the bank recorded a net profit of Rs 11,792 crore.
RBI's Provision Requirement Impacts Bottom Line
The Reserve Bank of India directed ICICI Bank to make a standard asset provision of Rs 1,283 crore. This provision relates to a portfolio of agricultural priority sector credit facilities. The central bank found that the terms of these facilities did not fully comply with regulatory requirements for classification as agricultural priority sector lending.
Sandeep Batra, Executive Director of ICICI Bank, explained the impact of this provision. He told reporters that without this specific provision requirement, the bank would have shown a 4.1% growth in profit after tax instead of the 4% decline.
The bank clarified that this additional standard asset provision will continue until the loans are either repaid or renewed in conformity with priority sector classification guidelines.
Operating Performance and Financial Metrics
Despite the profit decline, ICICI Bank showed strength in several key areas. The bank's net interest income increased by 7.7% to reach Rs 21,932 crore during the October-December 2025 quarter. This compares favorably to the Rs 20,371 crore recorded in the same period of the previous fiscal year.
The net interest margin improved to 4.3% from 4.25% in the year-ago quarter. This metric indicates the bank's efficiency in managing its interest-earning assets relative to its interest-bearing liabilities.
Expense Management and Business Growth
Operating expenses saw a significant increase of 13.2% during the quarter. These expenses rose to Rs 11,944 crore from Rs 10,552 crore in Q3 of the previous fiscal year. The bank noted that this includes Rs 145 crore of provisions made on an estimated basis due to the new Labour Codes.
Deposit growth remained robust with a 9.2% year-on-year increase. Total deposits reached Rs 16,59,611 crore by the end of the quarter. Net domestic advances grew by 11.5% compared to the same period last year.
The retail loan portfolio showed steady expansion with a 7.2% year-on-year increase. Retail loans now comprise 51.2% of the bank's total loan portfolio as of December 31, 2025. The business banking portfolio demonstrated particularly strong growth at 22.8%.
Asset Quality Shows Improvement
ICICI Bank reported positive developments in asset quality metrics. The gross non-performing asset ratio improved to 1.53% from 1.96% at December 31, 2024. The net NPA ratio also showed improvement, declining to 0.37% from 0.42% in the previous year.
During the quarter, gross NPA additions amounted to Rs 5,356 crore. The bank achieved recoveries and upgrades of NPAs totaling Rs 3,282 crore, excluding write-offs and sales.
The bank's performance reflects both regulatory challenges and underlying business strength. While the RBI provision requirement impacted quarterly profits, core banking operations continue to show growth across multiple parameters.
