Mahrukh Adajania

Mahrukh Adajania asked about the size of the portfolio impacted by the standard asset provision, its potential impact on OpEx, and the specific non-compliant classification issues. She also inquired about the bank's outlook on net interest margins (NIMs) given recent rate cuts and aggressive mortgage pricing, and the remaining scope for deposit repricing to support margins.

Answer

Anindya Banerjee (CFO, ICICI Bank) stated that the provision was INR 12.83 billion, affecting an underlying portfolio of INR 200-INR 250 billion, which the bank aims to bring into regulatory conformity to minimize provisioning and PSL impact. He declined to detail the specific regulatory observations. Regarding margins, Mr. Banerjee noted Q3 saw impacts from loan repricing (repo and MCLR) and seasonal KCC NPAs, offset by deposit repricing and a CRR cut. For Q4, he expects less non-accrual, continued loan repricing impact, and ongoing retail deposit repricing, leading to range-bound NIMs.

Mahrukh Adajania asked about the size of the portfolio affected by the standard asset provision, its impact on OpEx, and the nature of the non-compliant classification. She also inquired about the bank's outlook on margins, considering rate cuts and mortgage competition, and the potential for further deposit repricing to sustain current margin levels.

Answer

Anindya Banerjee, CFO of ICICI Bank, stated that the additional standard asset provision was INR 12.83 billion, related to an underlying portfolio of INR 200-INR 250 billion. He explained that the bank would work to bring this portfolio into conformity with PSL guidelines to minimize provisioning and PSL impact, declining to detail specific regulatory observations. Regarding margins, Mr. Banerjee noted that Q3 saw loan repricing and higher KCC NPA non-accrual, offset by deposit repricing and a CRR cut. He anticipates that Q4 will benefit from reduced KCC non-accrual and continued retail deposit repricing, expecting NIMs to remain range-bound.

Mahrukh Adajania inquired about the acceleration of loan growth, particularly if green shoots suggest reaching mid-teens by year-end, and the outlook for corporate loan growth. She also asked if the current net interest margins (NIMs) represent a bottom, expecting stability or improvement without rate cuts, and the impact of deposit repricing.

Answer

Anindya Banerjee, CFO, noted sequential growth pickup in Q2 across retail and strong business banking, expressing a positive outlook but refraining from specific year-end targets. For corporate loans, he highlighted corporate India's strong balance sheets and diverse funding sources, emphasizing the bank's focus on risk-calibrated PPOP and transaction banking over pure loan growth. Regarding NIMs, Mr. Banerjee stated they performed better than expected, aided by systemic liquidity and pricing discipline, anticipating them to be largely range-bound for the next couple of quarters due to various market dynamics.

Mahrukh Adajania of Nuvama Wealth Management inquired about the impact of the new Net Interest Margin (NIM) calculation method on Q4 FY25 results and questioned the outlook for loan growth revival amid sector-wide challenges.

Answer

Anindya Banerjee, Group CFO of ICICI Bank, confirmed the approximate basis point adjustment for the previous quarter's margin under the new method, noting it would smooth out future reporting. Regarding growth, he stated it was too early to predict a revival due to global events but acknowledged that monetary easing could provide a positive impact, suggesting a clearer view would emerge in the next quarter.

Mahrukh Adajania of Nuvama Wealth Management inquired about the impact of the revised Net Interest Margin (NIM) calculation method on the previous quarter's results and questioned the outlook for loan growth revival across the sector.

Answer

Anindya Banerjee, Group CFO of ICICI Bank, confirmed that the reported NIM for Q4 would have been a few basis points lower under the new methodology. Regarding loan growth, he stated that it was too early to predict a revival, citing global events, and suggested waiting another quarter to form a clearer view.

Mahrukh Adajania of Nuvama inquired about ICICI Bank's loan growth strategy, asking if the bank has adopted a more cautious approach in segments like personal loans, credit cards, and corporate lending, and questioned the outlook for deposit growth amid improving liquidity.

Answer

Executive Anindya Banerjee clarified that the moderation in loan growth is a function of systemic factors and pricing discipline rather than new credit caution, although prior tightening in unsecured loans is now reflected in the growth figures. He expressed confidence in sustained deposit growth, supported by improved liquidity and the ongoing transmission of policy rate cuts.

Mahrukh Adajania of Nuvama Institutional Equities asked about ICICI Bank's loan growth strategy amid tight deposit conditions, its comfort with the current loan-to-deposit ratio (LDR), the estimated impact of new LCR guidelines, and the outlook for retail loan recoveries.

Answer

Executive Anindya Banerjee responded that the bank does not set specific loan growth targets but finds deposit flows healthy enough to support lending opportunities. He stated the bank is comfortable with its domestic LDR in the low-to-mid-80s range. Banerjee estimated the impact of revised LCR guidelines to be a 10-15 percentage point reduction and noted that the pace of retail recoveries is normalizing as expected.

Mahrukh Adajania inquired about the drivers behind the accelerated 6% quarter-over-quarter deposit growth, the outlook for sustaining high-teens growth, the potential for the cost-to-income ratio to remain below 40%, and any regulatory remarks on the bank's CSITE audit.

Answer

Anindya Banerjee, Executive Director, explained that the strong deposit growth was a result of improved CASA flows in Q4 rather than a strategic shift. He refrained from giving a specific growth outlook but noted no major challenges. Banerjee stated the bank doesn't manage to a specific cost-to-income ratio but expects cost growth to moderate. Regarding the audit, he emphasized that regulatory interactions are confidential and the bank prioritizes operational resilience.

Mahrukh Adajania inquired about the strong NPL recoveries, asking if they were due to an improved environment or a one-off event. She also questioned if the bank's exit margin guidance remained on track and how the Loan-to-Deposit Ratio (LDR) would evolve given recent deposit and loan growth trends.

Answer

Srinivasan Vaidyanathan (CFO) clarified that a significant portion of the NPL improvement was a one-off upgrade, contributing approximately 10 basis points, and that contingent provisions were increased by INR 1,600 crore. Regarding margins, he explained that asset yields had largely repriced, while cost of funds would see further improvement over the next 4-5 quarters, making the bank optimistic about exit margins in a stable rate scenario. For LDR, he stated the strategic objective is to bring it below 90% from 96%, with the direction of travel being more important than quarter-to-quarter linearity.

Mahrukh Adajania of Nuvama inquired about HDFC Bank's margin trajectory, specifically the repricing timeline for its EBLR-linked loan book following rate cuts, and asked about the key triggers expected to revive loan growth from its current subdued levels.

Answer

Chief Financial Officer Srinivasan Vaidyanathan explained that while the February and April rate cuts are mostly priced in, the June cut's impact will lag, affecting yields. MD & CEO Sashidhar Jagdishan detailed that growth will be triggered by improved consumption from fiscal policies and low inflation, particularly during the upcoming festive season. He highlighted opportunities in rural, MSME, and corporate segments as the bank shifts focus back to growth after successfully lowering its credit-deposit ratio.

Mahrukh Adajania of Nuvama asked about the repricing timeline for the EBLR-linked loan book following recent rate cuts and inquired about the specific triggers expected to revive loan growth from current levels.

Answer

CFO Srinivasan Vaidyanathan clarified that while earlier rate cuts are mostly priced in, the 50 basis point cut from June is not, as repricing takes one to three months. CEO Sashidhar Jagdishan identified several growth triggers, including improved domestic demand from fiscal policies, benign inflation, the upcoming festive season, and renewed momentum in rural, MSME, and corporate segments.

Mahrukh Adajania questioned if the improved liquidity position could support healthy deposit growth for the system and the bank, given recent deposit rate cuts. She also asked for details on how the bank manages its priority sector lending (PSL) progress and the potential ROA impact of any shortfalls.

Answer

CFO Srinivasan Vaidyanathan responded that deposit rate cuts are an industry-wide transmission of policy changes and that HDFC Bank's growth relies on its distribution reach and customer engagement, not price. On priority sector lending, he confirmed the bank meets the aggregate 40% target but has a small shortfall in sub-segments. This is managed through market instruments or RIDF, with a similar and manageable impact on returns regardless of the method used.

Mahrukh Adajania of Nuvama inquired about the bank's confidence in sustaining healthy deposit growth following recent industry-wide rate cuts and asked for details on how the bank manages priority sector lending (PSL) shortfalls and the potential impact on ROA.

Answer

Executive Srinivasan Vaidyanathan stated that deposit rate cuts are a standard industry transmission of policy changes and that HDFC Bank's growth relies on its distribution reach and customer engagement, not on price competition. On priority sector lending, he confirmed the bank meets the 40% aggregate requirement. For sub-segment shortfalls, he explained that the bank uses various instruments like Inter-Bank Participation Certificates (IBPCs), Priority Sector Lending Certificates (PSLCs), or contributions to the Rural Infrastructure Development Fund (RIDF), noting that the financial impact on returns is similar across these alternatives.

Mahrukh Adajania asked about HDFC Bank's target for its loan-to-deposit ratio (LDR), the potential trade-off between slower loan growth and market share, and the reasons for high provisioning at HDB Financial Services.

Answer

Executive Director Sashidhar Jagdishan explained that while there is no prescribed LDR target, it is in the bank's interest to lower it faster than anticipated to ensure profitable growth, noting Q1's loan growth was a temporary adjustment. CFO Srinivasan Vaidyanathan added that HDB Financial's higher provisions were seasonal, driven by collection challenges that impacted early-stage delinquencies, while overall NPAs remained stable.

Mahrukh Adajania asked about HDFC Bank's target for its Loan-to-Deposit Ratio (LDR) and the expected timeframe to achieve it, the potential impact of slower loan growth on market share, and the reasons for high provisioning at HDB Financial.

Answer

Executive Director Sashidhar Jagdishan explained that while there is no regulatory LDR target, it is in the bank's interest to lower it faster than initially planned, balanced with profitable growth. He noted Q1's slower loan growth is an adjustment and not indicative of the full-year plan. CFO Srinivasan Vaidyanathan added that HDB Financial's higher provisions were seasonal, driven by collection challenges from heatwaves and elections, while underlying NPAs remained stable.

Mahrukh Adajania inquired about the components of the strong fee income growth, specifically asking if it included securitization income, and requested clarification on the accounting for such transactions. She also asked about the movement in contingent provisions.

Answer

Srinivasan Vaidyanathan, CFO, clarified that the 17% fee income growth was driven by a 32% year-on-year increase in third-party distribution products, while retail and wholesale fees grew around 15.5% and 5% respectively. Executive Director Sashidhar Jagdishan added that securitization income is not part of fees; it is treated as excess spread and amortized over the loan's life, having no upfront impact. Regarding provisions, Vaidyanathan explained that the reduction in contingent provisions was due to a release of AIF-related provisions following regulatory clarification, and was not related to credit quality.