Whalesbook
Profit Jumps, But Costs Grow Faster
ICICI Bank posted a consolidated net profit of ₹14,755 crore for the March quarter, marking a 9.3% increase year-on-year. On a standalone basis, net profit grew 8.5% to ₹13,702 crore. For the full fiscal year 2025-26, standalone net profit rose 6.2% to ₹50,147 crore. A key factor was a sharp 89% drop in provisions to ₹96 crore, down from ₹891 crore a year ago. This signals stronger asset quality and less risk on its books.
Asset Quality Improves, But Margins Tested
The bank's gross non-performing asset (GNPA) ratio improved to 1.40% from 1.53% last quarter and 1.67% a year ago. Net NPAs held steady, showing effective recovery and underwriting. However, operating expenses jumped 12% to ₹12,089 crore, fueled by higher staff and operational costs. This expense growth outpaced the 8.4% rise in net interest income (NII) to ₹22,979 crore. This raises concerns about potential margin squeeze and whether rising costs will affect earnings growth. Non-interest income grew a more modest 5.6% to ₹7,415 crore.
Valuation Compared to Peers
ICICI Bank trades at a trailing twelve-month (TTM) P/E of about 16.7x, with a market cap near ₹9.64 lakh crore. This is higher than SBI's P/E of roughly 9.71x, but lower than HDFC Bank's P/E of around 20.78x. On price-to-book (P/B) metrics, ICICI Bank is at 2.82x, compared to HDFC Bank at 2.20x and SBI at 2.41x. Despite its earnings, ICICI Bank's stock has dropped 4% in the last year, lagging the Bank Nifty index, which has gained 6.49% over the same period.
Analyst Views and Concerns
Most analysts rate ICICI Bank a 'Strong Buy' with a target price of ₹1,689.76, indicating potential upside. However, a contrasting view surfaced in early February 2026. One analyst downgraded the bank from 'Hold' to 'Sell', pointing to weak technical signals and recent financial results. This included a drop in cash holdings and lower profit after tax versus prior averages. The faster rise in operating costs than NII growth is a key worry, suggesting potential challenges that could counter improved asset quality and lower provisions. This trend has contributed to the stock's recent sluggishness, unlike SBI's strong 70% rally during a similar period.
Dividend and Capital Strength
The bank's board proposed a dividend of ₹12 per equity share, pending shareholder approval, yielding about 0.82% on recent prices. Capital adequacy remains strong, with a total capital adequacy ratio of 17.18% at the end of FY26, exceeding regulatory requirements. Analysts are largely optimistic about continued growth, though the rapid rise in expenses warrants close monitoring.