ICICI Bank Q3 Preview: Double-digit profit growth seen amid stable asset-quality

During the October-December period, ICICI Bank shares remained relatively flat

India’s second-largest private lender, ICICI Bank, is poised to deliver another steady performance in Q3FY25, with net profit projected to grow by 11 percent year-on-year (YoY), supported by stable asset quality and reduced slippages. However, analysts cautioned that softer sequential loan growth could weigh on the bank’s overall performance for the quarter.

According to Moneycontrol's poll of 8 brokerages, ICICI Bank's NII is expected to rise 10 percent YoY to Rs 20,618 crore in Q3FY25 from Rs 18,678 crore in Q3FY24. Net profit is projected to rise to Rs 11,437 crore, reflecting an 11 percent YoY increase compared to Rs 10,271 crore in the same period last year.

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, YES Securities rolled out the most bullish projections while Citi Research forecasted the slowest growth for HDFC Bank.

What factors are driving the earnings?

Yearly loan, deposit growth: Analysts at Nomura estimate a 14 percent YoY growth in the loan book, reaching Rs 13.1 lakh crore, and a similar 14 percent YoY surge in deposits to Rs 15.1 lakh crore. However, on a quarter-on-quarter (QoQ) basis, loan growth is expected to slow to 3 percent and deposit growth to just 1 percent, reflecting an industry-wide deceleration.

 Margin contraction: Kotak Insitutional Equities' analysts see ICICI Bank's net interest margins to see contraction of 27 basis points (bps) YoY to 4.2 percent in Q3FY25 from 4.5 percent in the year-ago period due to rise in funding costs.

Stable asset-quality: Motilal Oswal Financial Services predicts that the bank’s asset quality will remain steady, with the gross non-performing asset (GNPA) ratio flat at 2 percent QoQ and the net NPA (NNPA) ratio unchanged at 0.4 percent.

What to look out for in the quarterly show?

Investors will closely monitor ICICI Bank’s loan and deposit growth, asset quality metrics, and any challenges that could affect its growth trajectory.

During the October-December period, ICICI Bank shares remained relatively flat, edging up just 0.7 percent, even as the Nifty 50 declined by 4 percent.