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ICICI Bank · ICICIBANK

ICICI Bank's margin falls to 4.18%, with a refund-flattered base and a one-off dollar deposit scheme behind it

After four calls describing margins as range-bound, the last of which warned that its foreign-currency deposit drive could weigh on them, ICICI Bank reported a lower margin, tied to those deposits, and expects a further dip before a recovery.

Published · Inve Research Desk

ICICI Bank stock page → More news from 18 Oct 2026

A teller at a glass-fronted counter in a bank hall, with passbooks and a deposit form on the desk and morning light coming through tall windows.
Illustration: Inve Research Desk

4.18%

net interest margin in the latest quarter

Down from 4.36% the quarter before, after earlier calls guided margins as range-bound; management expects a lower figure again in Q3.

How they did last quarter

Lower than the 4.30% to 4.36% of the previous three quarters, after guidance that NIMs would be range-bound in FY27, with income still growing because the balance sheet expanded faster than the margin fell.

  • Net interest margin
    4.18%, against 4.36% the quarter before and 4.30% a year ago
    vs Guidance on 18 April 2026: "We do expect NIMs to be range-bound in FY27."
    An 18 basis point fall in one quarter, to below the 4.30% to 4.36% of the previous three quarters; the call did not restate the FY27 range-bound line.
  • Net interest income
    ₹25,339 crore, up 17.7% on a year ago
    vs ₹24,384 crore the quarter before, up 3.9%
    Income grew because the loan book grew faster than the margin shrank.
  • Loan growth against deposit growth
    Loans up 30.0% and deposits up 27.1% on a year ago, a gap of 2.9 points
    vs Excluding FCNR(B): loans up 24.1%, deposits up 17.0%, a gap of 7.1 points, calculated from reported rates
    Deposits kept pace with loans in the headline only because of the one-off foreign-currency scheme.

Margin fell after four calls describing it as range-bound

ICICI Bank's net interest margin, the spread between what it earns on loans and pays for funding as a share of earning assets, was 4.18% in the September 2026 quarter, against 4.36% the quarter before. It is the lowest of the last five quarters. Management also said the margin will dip again next quarter and recover in the one after.

That breaks the pattern of a line the bank had repeated. On calls in October, January, April and July management described margins as range-bound, the last time on the condition that policy interest rates did not move. In that same July answer management added that the FCNR(B) deposit drive and the lending against it could have 'some impact on margins'. The margin had stayed in a narrow band through that stretch.

A refund in the base and a bigger overseas book

Part of the drop is a one-off. The quarter before included interest on an income-tax refund; without it the like-for-like fall is 10 basis points. Domestic margin excluding the refund slipped only 4 basis points. Management put the rest down to mix.

The mix changed because of a funding scheme. Under an RBI swap facility the bank gathered about $18 billion of FCNR(B) deposits, foreign-currency deposits from non-resident customers, and a large part of that went into loans the bank made back to those same depositors. Overseas lending earns a margin of about 1%, against more than 4% at home, and the term-deposit surge lowered the CASA ratio, and cost of deposits rose. Asked by analysts to put a basis-point figure on the FCNR(B) effect, management declined, saying it can be calculated in many ways.

Deposits matched loans only through the one-off scheme

Headline deposit growth of 27.1% a year looks close to loan growth of 30.0%. Management's own carve-outs show something else: excluding FCNR(B), deposits grew 17.0% and loans 24.1%, a much wider gap, calculated from those reported rates. The pair is not perfectly matched, since the carve-outs remove different pieces of each side, and the carved-out figures are management's rather than ones Inve can check in the filed numbers.

Management said: "The FCNR (B) opportunity was a one-off opportunity." It added that the effect on margins is transient. The balance sheet moved too: over six months deposits rose 14.3% and borrowings 34.2%, against 13.0% for total assets; management said the bank also raised bonds and loans in the quarter to fund the lending against FCNR(B) deposits.

Borrowings and total assets, last four balance-sheet dates

Borrowings were flat from March 2025 to March 2026 (Sep-2025 not reported) and rose 34.2% in the six months to September 2026, against 13.0% for total assets.

₹ crore

DebtTotal assets
Mar 20252,18,88326,42,241
Sept 2025–26,86,485
Mar 20262,20,26429,14,498
Sept 20262,95,56132,92,953

Management expects the recovery from Q4

Management's timetable is that the deposits raised during the quarter weigh fully on the average balance sheet in Q3, and margins improve from Q4. In its words: "I would expect margins to come back in a pretty healthy way as these factors start to reverse out". Management gave three supports: the mix effects it says "start to reverse out", spare liquidity being lent out over the next two quarters, and the rate hike already taken, which lifts yields on the 57% of domestic loans linked to the repo rate and other external benchmarks. None is sized.

Three points cut against reading this as a plain miss. The July line assumed no policy rate movement, and the call says a rate hike has already taken place; and the domestic margin barely moved. In July management had already said the FCNR(B) drive could have some impact on margins. Income also kept rising: net interest income kept growing on a year ago, because the balance sheet grew faster than the margin shrank. Inve has no return on equity for the quarter, so whether the extra assets earn an adequate return is open. The Q3 margin, which management expects to be lower, is the first check on the timetable, and Q4 is where the recovery should show.

ICICI Bank stock page →

The record: notes, full financial tables

Notes

  1. Impact 3/5 Risk Negative

    ICICI Bank's ₹1,283 crore agri provision: update now hoped for within two quarters

    The bank still holds the additional provision the RBI directed on its agricultural priority-sector loans, and management said it wants the regulator satisfied with its fixes before anything changes. The provision, first disclosed in January 2026, equals 8.6% of the September 2026 quarter's standalone profit of ₹14,843 crore, calculated from the call's figures. In April management expected an update in about a quarter, and in July it declined to give a date; now it says an update may come over the next two quarters.

    “hopefully, we should have an update on that over the next 2 quarters”— Anindya Banerjee

  2. Impact 3/5 Risk Mixed

    ICICI Bank's 0.20% credit cost compares with the about 50 basis points it calls normal

    Total provisions were INR 8.51 billion, 0.20% of average advances and 4.1% of core operating profit, against INR 9.14 billion a year earlier. Management said one large corporate recovery held the figure down and extra general provisioning on loans against FCNR(B) deposits pushed it up; it also adjusts for seasonality in farm-loan provisioning, and after all three it puts normalised credit cost at about 50 basis points; in the Q&A it said up to 50 basis points. Net bad loans fell to 0.30% of advances from 0.35% the quarter before. In April management cited reported credit cost under 50 basis points for FY26.

    “adjusted for all this, we would continue to believe that up to 50 basis points is where the credit cost would be”— Anindya Banerjee

  3. Impact 3/5 Demand Mixed

    ICICI Bank's corporate loans rose 10.4% in a quarter; management cites demand, low base

    Domestic corporate loans grew 10.4% on the quarter and 30.6% on a year ago, while retail and rural loans grew 3.2% and 14.8%. Lending to NBFCs and housing finance companies rose 12.3% on the quarter to INR 1,033.78 billion, calculated from the call's figures. Asked whether the corporate rise was FCNR(B) money parked in loans, management said it reflects client demand and its view on pricing, and also pointed to a low base a year earlier. Overall loan growth was 19.6% on a year ago in the quarter before, against 30.0% now, or 24.1% excluding loans made against FCNR(B) deposits.

    “It is really a response to client demand and our view on pricing.”— Anindya Banerjee

  4. Impact 2/5 Demand Negative

    ICICI Bank's credit card book shrank 9.7% on a year ago, which management calls timing

    The credit card portfolio fell 9.7% on a year ago and 0.2% on the quarter. That follows year-on-year declines of 3.5% in the quarter to December 2025 and 5.6% to March 2026. Management said last year's book build-up came at the end of September and this year's will fall in Q3, and described underlying growth as maybe marginally positive. Q3 will show whether the timing explanation holds.

    “The decline is more of just a date and base issue.”— Anindya Banerjee

Financials

Income statement, last 8 quarters

₹ crore; YoY and margin in %
Quarter endSalesYoYOther incomePBTNet profit
Sept 202655,992+16.2%32,16923,11517,389
Jun 202652,241+6.4%27,44821,30716,276
Mar 202649,594+2.5%35,02020,74415,681
Dec 202548,364+2.8%28,41817,75413,481
Sept 202548,181+4.0%27,96619,06514,318
Jun 202549,080+10.1%25,49619,49414,456
Mar 202548,387+13.6%31,36119,11314,354
Dec 202447,037+15.1%27,58918,48313,847

Balance sheet

₹ crore
As ofEquityDebtInvestmentsFixed assetsCWIPTotal assets
Sept 20263,87,6622,95,5619,48,72817,5400.032,92,953
Mar 20263,63,0602,20,2648,70,72027,9700.029,14,498
Sept 20253,33,236–8,99,79816,5620.026,86,485
Mar 20253,13,9062,18,8838,86,37724,2720.026,42,241