ICICI Bank Q1 Preview: Modest growth likely as margins come under pressure

ICICI Bank Q1 earnings: Margins shrink, costs rise — investors eye guidance and retail demand

ICICI Bank, India’s second-largest private lender, is expected to report modest growth in its net interest income (NII) and profit for the June quarter, as shrinking margins from lower repo rates might weigh on its performance, according to analysts. The lender is set to announce its Q1FY26 results on July 19, 2025.

According to Moneycontrol's poll, ICICI Bank’s NII is likely to grow by about 8 percent year-on-year, reaching approximately Rs 21,091 crore in the first quarter of FY26, compared to Rs 19,552 crore in the same period last year. Similarly, its profit after tax (PAT) is projected to rise by a modest 9.5 percent to around Rs 12,112 crore, up from Rs 11,059 crore a year ago.

Estimates of analysts polled by Moneycontrol are shown to be in a narrow range, meaning any positive or negative surprises may elicit a sharp reaction in the stock price. Among the brokerages polled, Anand Rathi rolled out the most bullish projections while Equirus Research forecasted the slowest growth for ICICI Bank.

What factors are driving the earnings?

Margin compression: Analysts at Kotak Institutional Equities expect ICICI Bank’s net interest margin (NIM) to decline by 31 basis points year-on-year, falling to 4 percent in Q1FY26 from 4.4 percent a year ago. This is largely because over half (53 percent) of the bank’s loans are linked to the repo rate, which has come down in recent months.

Rising operating expenses: The bank’s operating expenses are expected to grow 8.4 percent year-on-year to Rs 11,419 crore in Q1FY26. Ashika Institutional Equity attributed this rise to continued investments in technology upgrades, digital channels, and process improvements, aimed at enhancing resilience and managing operational risks.

Higher provisions: Provisions are expected to increase sequentially because the previous quarter included a one-time benefit from the sale of Rs 2,786 crore of non-performing assets (NPAs), of which Rs 314 crore was received in cash. However, Ashika analysts do not anticipate any major surprises in asset quality for the quarter.

What should investors keep an eye on this quarter?

Investors are likely to focus on the management’s commentary on net interest margin (NIM) guidance, trends in unsecured retail credit and overall retail loan demand as well as updates on asset quality metrics.

During the April–June period, shares of ICICI Bank rose by 7 percent, outperforming the Nifty 50, which gained around 5 percent in the same time.

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