ICICI Bank Q1 Review: Profitability Remains Strong Even As Growth Moderates, Say Brokerages

ICICI Bank Ltd. reported a strong set of first-quarter results for FY26, marked by continued profitability, stable asset quality, and healthy net interest income growth, even as loan growth moderated in a challenging macroeconomic environment, brokerages noted.

In Q1 FY26, the bank posted a 15% year-on-year rise in standalone net profit to Rs 12,768 crore, beating Bloomberg's consensus estimate of Rs 11,770 crore. Net interest income rose by 11% year-on-year to Rs 21,635 crore, with net interest margin at 4.34%, a minor sequential dip from 4.41% in Q4 FY25.

Loan growth moderated to 11.5-12% year-on-year, and deposit growth came in at 13%, as the bank focused on quality and profitability. Asset quality remained stable, with gross NPLs at 1.7% and credit cost at 0.5%.

Bernstein maintained its 'Market-Perform' rating with a price target of Rs 1,440, observing that ICICI Bank’s Return on Assets held firm at 2.44%.

The brokerage noted that, “The story of stellar margins offsetting weak growth continues,” adding “loan and deposit growth came in below consensus, but current account and saving account growth at 14% YoY was notably strong.”

While credit costs rose to 50 basis points (equivalent to 0.50%) from a low base of 27 bps in the prior quarter, Bernstein viewed this as a "normalisation" rather than a deterioration.

"A healthy increase in net operating income (21% Year-over-Year) offset the marginal increase in operating expenses and credit cost, leading to a stellar return on assets," the note highlighted.

Overall, Bernstein deemed the performance “a good set of numbers that justifies its valuation premium,” although it flagged growth moderation as the only persistent concern.

Jefferies reiterated its "Buy" rating with an upgraded price target of Rs 1,760, calling ICICI Bank one of its “top picks in the sector.”

“ICICI's profit beat estimates, aided by strong core NII and non-core income like tax refunds and treasury gains,” Jefferies noted. “Loan growth moderation is a concern, but the management expects a recovery led by retail and business banking segments," the note added.

The brokerage added that the margins were trending better than expected, due to lower funding costs, and it expected growth to rebound to 14% in FY26 and 15% in FY27.

“Asset quality was largely stable ... slippages were at 2% of past-year loans with buffer provisions at 1% of loans,” the report said. Jefferies also highlighted the bank's healthy CASA growth at 14% YoY as a differentiator amid a weak savings environment.

Jefferies has tweaked its FY26 earnings estimates down by 1% due to near-term NIM compression, but expects 11% compound annual growth rate in profits through FY28.

CLSA maintained an "Outperform" rating with a target of Rs 1,700, and lauded ICICI Bank’s resilience in a difficult quarter. “ICICI Bank is the only bank under our coverage so far to report sequential growth in NII, despite the sharp rate cut environment,” the brokerage stated. “Margins were down only 5bps QoQ, better than peers," it added.

The note acknowledged the loan growth slowdown to 12%, primarily due to sluggish demand and the bank’s selective lending strategy. Retail loan growth dropped to 7% YoY, with mortgages being the sole bright spot, the note said.

“Business banking grew around 30% YoY — a clear outperformer within the portfolio,” CLSA said.

On the asset quality front, gross slippages moderated to 1.9%, and credit costs stood at 50-55 basis points, broadly in line with expectations. They maintained estimates for FY26, while trimming FY27-28 forecasts slightly due to growth concerns.

“ICICIB remains among the best positioned in this retail asset cycle,” CLSA noted. “ROE should remain strong at 16%, about 2-4 percentage points above peers," it further added.