ICICI Bank Ltd

NSE:ICICIBANK

Earnings Call Analysis

ICICI Bank Q1 FY25 Earnings Highlights Strong Growth

ICICI Bank reported a profit before tax increase of 11.8% to INR 140.80 billion, and a profit after tax growth of 14.6% to INR 110.59 billion year-on-year. The core operating profit rose by 11% to INR 154.12 billion. Total deposits grew by 15.1%, with term deposits up by 19.9%. The domestic loan portfolio saw a 15.9% rise, driven by a 17.1% increase in retail loans. The bank maintained a strong capital adequacy ratio of 16.63%. Technology and digital advances continued, with 71% of trade transactions conducted digitally in Q1 FY25.

Introduction

ICICI Bank's leadership opened the discussion by emphasizing the resilience of the Indian economy, highlighted by growth in key indicators such as manufacturing, services PMI, and higher tax collections.

Strategic Focus

ICICI Bank continues to focus on a comprehensive, customer-centric strategy aimed at growing profit before tax (excluding treasury) by leveraging ecosystem opportunities. This strategic approach helped the bank achieve a year-on-year profit before tax increase of 11.8% to INR 140.80 billion.

Financial Performance

For Q1 of FY 2025, ICICI Bank recorded a 14.6% increase in profit after tax to INR 110.59 billion. The core operating profit grew by 11% year-on-year to INR 154.12 billion. Net interest income increased by 7.3% year-on-year to INR 195.53 billion, with the net interest margin at 4.36%.

Deposit and Loan Growth

ICICI Bank saw total deposits grow by 15.1% year-on-year and 0.9% sequentially, reaching INR 15,164.85 billion by June 30, 2024. Term deposits saw a notable increase of 19.9% year-on-year. On the lending side, the domestic loan portfolio grew by 15.9% year-on-year and 3.3% sequentially.

Loan Portfolio Performance

The retail loan portfolio expanded by 17.1% year-on-year, contributing to a substantial part of the total loan book. The business banking portfolio experienced significant growth at 35.6% year-on-year. The SME and rural portfolios also demonstrated strong growth, with increases of 23.5% and 16.9% year-on-year, respectively.

Credit Quality and Provisions

The net NPA ratio stood at 0.43% as of June 30, 2024. Gross NPA additions were INR 59.16 billion during the quarter, with retail, rural, and business banking portfolios contributing significantly to these additions. Provisions during the quarter totaled INR 13.32 billion, indicating a year-on-year increase of 3.1%.

Non-Interest Income

Non-interest income, excluding treasury, grew by 23.3% year-on-year to INR 63.89 billion. Fee income increased by 13.4% year-on-year, mainly from retail, rural, business banking, and SME customers. Dividend income from subsidiaries saw a considerable rise due to dividends from ICICI Securities, ICICI Lombard General Insurance, and ICICI Prudential Life Insurance.

Operating Expenses

Operating expenses for the quarter increased by 10.6% year-on-year. Employee expenses rose by 12.5% due to annual increments and promotions. Non-employee expenses grew by 9.2%, primarily driven by retail business-related and technology expenses.

Technological Advancements

ICICI Bank continues to invest in technology to offer simplified banking solutions. The SmartLock initiative allows customers to lock or unlock services instantly via iMobile Pay. Approximately 71% of trade transactions were done digitally, reflecting a 21.5% increase in trade online platform usage year-on-year.

Subsidiaries Performance

ICICI Securities and ICICI AMC both reported strong profit after tax growth, with ICICI Securities posting INR 5.27 billion and ICICI AMC INR 6.33 billion for the quarter. ICICI Bank Canada and ICICI Bank U.K. also showed positive performance with profits reported at CAD 20.3 million and USD 7.7 million, respectively.

Capital Adequacy

The bank's capitalization remains robust with a CET1 ratio of 15.92% and a total capital adequacy ratio of 16.63% as of June 30, 2024. These ratios account for the increased risk-weighted assets for operational risk and new investment guidelines.

Forward-Looking Statements

Looking ahead, ICICI Bank aims for risk-calibrated profitable growth by focusing on Customer 360 strategies, leveraging franchise strengths, and enhancing operational resilience. Continued investments in technology, people, and brand building are planned to maintain strong balance sheets and deliver consistent returns to shareholders.

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to ICICI Bank's Q1 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sandeep Bakhshi, Managing Director and CEO of ICICI Bank. Thank you, and over to you, sir.

[Sandeep Bakhshi, executive]

Thank you. Good evening to all of you, and welcome to the ICICI Bank earnings call to discuss the results for Q1 of financial year 2025. Joining us today on this call are Sandeep Batra, Rakesh, Ajay, Anindya and Abhinek.

Indian economy continues to remain resilient as reflected by high-frequency indicators, showing growth momentum such as expansion in manufacturing and services PMI, higher tax collections, real estate buoyancies and pickup in rural demand, supported by the consistent actions and initiatives of the policymakers.

At ICICI Bank, our strategic focus continues to be on growing profit before tax, excluding treasury, through to the 360-degree customer-centric approach and by serving opportunities across ecosystems and micro markets. We continue to operate within our strategic framework to strengthen our franchise, maintaining high standards of governance, deepening coverage and enhancing delivery capabilities are focus areas for our risk-calibrated profitable growth.

The profit before tax, excluding treasury, grew by 11.8% year-on-year to INR 140.80 billion in this quarter. The core operating profit increased by 11% year-on-year to INR 154.12 billion in this quarter. The profit after tax grew by 14.6% year-on-year to INR 110.59 billion in this quarter.

Total deposits grew by 15.1% year-on-year and 0.9% sequentially at June 30, 2024. Term deposits increased by 19.9% year-on-year and 3.1% sequentially at June 30, 2024. During the quarter, average deposits grew by 17.8% year-on-year and 3.3% sequentially and average current and savings account deposits grew by 9.7% year-on-year and 5.1% sequentially.

The bank's average liquidity coverage ratio for the quarter was about 123%. The domestic loan portfolio grew by 15.9% year-on-year and 3.3% sequentially at June 30, 2024. The retail loan portfolio grew by 17.1% year-on-year and 2.4% sequentially. Including nonfund-based outstanding, the retail portfolio was 46.3% of the total portfolio.

The business banking portfolio grew by 35.6% year-on-year and 8.9% sequentially. The SME portfolio grew by 23.5% year-on-year and 4% sequentially. The rural portfolio grew by 16.9% year-on-year and 3.4% sequentially.

The domestic corporate portfolio grew by 10.3% year-on-year and 3.1% sequentially. The overall loan portfolio, including the international branches portfolio, grew by 15.7% year-on-year and 3.3% sequentially at June 30, 2024.

The net NPA ratio was 0.43% at June 30, 2024, compared to 0.42% at March 31, 2024, and 0.48% at June 30, 2023. During the quarter, there were net additions of INR 26.24 billion to gross NPAs excluding write-offs and sales, reflecting mainly the seasonal higher additions in the Kisan credit card portfolio and lower recoveries and upgrades compared to previous quarter.

The total provisions during the quarter were INR 13.32 billion or 8.6% of core operating profit and 0.43% of average advances. The provisioning coverage ratio on NPAs was 79.7% at June 30, 2024.

In addition, the bank continues to hold contingency provisions of INR 131 billion or about 1.1% of total loans at June 30, 2024. The capitalization of the bank continued to be strong with a CET1 ratio of 15.92% and total capital adequacy ratio of 16.63% at June 30, 2024, including profits for Q1 of 2025.

Looking ahead, we see many opportunities to drive risk-calibrated profitable growth. We believe our focus on Customer 360, extensive franchise and collaboration within the organization, backed by our focus on enhancing delivery systems and simplifying processes will enable us to deliver holistic solutions to customers in a seamless manner and grow market share across key segments.

We will continue to make investments in technology, people, distribution and building our brand. We are laying strong emphasis on strengthening our operational resilience for seamless delivery of services to customers. We remain focused on maintaining a strong balance sheet with prudent provisioning and healthy levels of capital.

The principles of return of capital, "Fair to Customer, Fair to Bank" and 'One Bank, One Team', will continue to guide our operations. We remain focused on delivering consistent and predictable returns to our shareholders.

I'll now hand the call over to Anindya.

[Anindya Banerjee, executive]

Thank you, Sandeep. I will talk about loan growth, credit quality, P&L details, growth in digital offerings, portfolio trends and performance of subsidiaries. Sandeep covered the loan growth across various segments.

Coming to the growth across retail products. The mortgage portfolio grew by 14.2% year-on-year and 2.5% sequentially. Auto loans grew by 14.8% year-on-year and 1.7% sequentially. The commercial vehicles and equipment portfolio grew by 13.9% year-on-year and 2.2% sequentially. Personal loans grew by 24.9% year-on-year and 1.5% sequentially. The credit card portfolio grew by 31.3% year-on-year and 4.2% sequentially. The personal loan and credit card portfolio were 9.7% and 4.4% of the overall loan book, respectively, at June 30, 2024.

The overseas loan portfolio in U.S. dollar terms grew by 5.4% year-on-year at June 30, 2024. The overseas loan portfolio was about 2.8% of the overall loan book at June 30, 2024. The non-India-linked corporate portfolio declined by 9% or about USD 24.8 million on a year-on-year basis. Of the overseas corporate portfolio, about 92% comprises Indian corporates, 6% overseas corporates with Indian linkage, 1% comprises companies owned by NRIs or PIOs and the balance 1% non-India corporate.

Moving on to credit quality. The gross NPA additions were INR 59.16 billion in the current quarter compared to INR 51.39 billion in the previous quarter. There were gross NPA additions of about INR 7.21 billion from the Kisan credit card portfolio in the current quarter.

We typically see higher NPA additions from the Kisan credit card portfolio in the first and third quarter of a fiscal year. Recoveries and upgrades from gross NPAs, excluding write-offs and sales, were INR 32.92 billion in the current quarter compared to INR 39.18 billion in the previous quarter.

The net additions to gross NPAs were thus INR 26.24 billion in the current quarter compared to INR 12.21 billion in the previous quarter. The gross NPA additions from the retail, rural and business banking portfolio were INR 57.32 billion in the current quarter compared to INR 49.28 billion in the previous quarter.

The additions for the quarter includes the KCC NPAs mentioned earlier. Recoveries and upgrades from the retail, rural and business banking portfolio were INR 29.33 billion compared to INR 32.17 billion in the previous quarter. The net additions to gross NPAs in the retail, rural and business banking portfolios were INR 27.99 billion compared to INR 17.11 billion in the previous quarter.

The gross NPA additions from the corporate and SME portfolio were INR 1.84 billion compared to INR 2.11 billion in the previous quarter. Recoveries and upgrades from the corporate and SME portfolio were INR 3.59 billion compared to INR 7.01 billion in the previous quarter. There were net dilutions of gross NPAs of INR 1.75 billion in the corporate and SME portfolio compared to INR 4.90 billion in the previous quarter.

The gross NPAs written-off during the quarter were INR 17.53 billion. There were sale of gross NPAs of INR 1.14 billion in the current quarter compared to INR 3.27 billion in the previous quarter. The sale of NPAs includes about INR 1.02 billion in cash.

The nonfund-based outstanding to borrowers classified as nonperforming was INR 35.43 billion as of June 30, 2024, compared to INR 36.71 billion as of March 31, 2024. The bank holds provisions amounting to INR 19.64 billion against this nonfund-based outstanding.

The total fund-based outstanding to all standard borrowers under resolution as per various guidelines declined to INR 27.35 billion or about 0.2% of the total loan portfolio at June 30, 2024, from INR 30.59 billion at March 31, 2024.

Of the total fund-based outstanding under resolution at June 30, 2024, INR 23.25 billion was from the retail, rural and business banking portfolio and INR 4.10 billion was from the corporate and SME portfolio. The bank holds provisions of INR 8.63 billion against these borrowers, which is higher than the requirement as per RBI guideline.

Moving on to the P&L details. Net interest income increased by 7.3% year-on-year to INR 195.53 billion in this quarter. The net interest margin was 4.36% in this quarter compared to 4.40% in the previous quarter and 4.78% in Q1 of last year.

The impact of interest on income tax refund on net interest margin was nil in the current and previous quarter and was 3 basis points in Q1 of last year. The domestic net interest margin was 4.44% in this quarter compared to 4.49% in the previous quarter and 4.88% in Q1 of last year.

The cost of deposits was 4.84% in this quarter compared to 4.82% in the previous quarter. Of the total domestic loans, interest rates on 50% of the loans are linked to the repo rate, 2% to other external benchmarks and 17% to MCLR and other older benchmarks. The balance 31% of loans have fixed interest rates.

Noninterest income, excluding treasury, grew by 23.3% year-on-year to INR 63.89 billion in Q1 of 2025. Fee income increased by 13.4% year-on-year to INR 54.90 billion in this quarter. Fees from retail, rural, business banking and SME customers constituted about 78% of the total fees in this quarter.

Dividend income from subsidiaries was INR 8.94 billion in this quarter compared to INR 2.91 billion in Q1 of last year. The year-on-year increase in dividend income was primarily due to a dividend from ICICI Securities, ICICI Lombard General Insurance and ICICI Prudential Life Insurance in Q1 of this year compared to Q1 of last year.

On costs. The bank's operating expenses increased by 10.6% year-on-year in this quarter compared to 19% in FY 2024. In Q4 of last year, the year-on-year increase was 12.9%, adjusted for a one-off in the previous year's base, as we had stated on the earnings call.

Employee expenses increased by 12.5% year-on-year in this quarter, reflecting mainly the impact of annual increments and promotions that takes place during the first quarter of every fiscal year. Nonemployee expenses increased by 9.2% year-on-year in this quarter, primarily due to retail business-related and technology expenses.

The technology expenses were about 9.3% of our operating expenses in this quarter. Our branch count has increased by 64 in the first quarter. We had 6,587 branches as of June 30, 2024. The total provisions during the quarter were INR 13.32 billion, a year-on-year increase of 3.1% over the provisions of INR 12.92 billion in Q1 of 2024.

This includes the impact of release of AIF-related provisions of INR 3.89 billion during the quarter, pursuant to clarity on the regulatory requirements. The provisions during the quarter were 8.6% of core operating profit and 0.43% of average advances compared to 9.3% of core operating profit and 0.49% of average advances in Q1 of 2024.

Adjusting for the AIF provision release and the seasonality of KCC provisioning, which comes in only in Q1 and Q3, the credit cost to advances would be about 50 basis points, which is the adjusted credit cost level we had spoken of in the earnings call for the previous 2 quarters as well.

The provisioning coverage on NPAs was 79.7% as of June 30, 2024. In addition, we hold INR 8.63 billion of provisions on borrowers under resolution, as I mentioned earlier. And the bank continues to hold contingency provision of INR 131 billion as of June 30, 2024. At the end of June, the total provisions other than specific provisions on fund-based outstanding to borrowers classified as nonperforming were INR 234.03 billion or 1.9% of loans.

The profit before tax, excluding treasury, grew by 11.8% year-on-year to INR 140.80 billion in Q1 of this year. Treasury gains increased to INR 6.13 billion in Q1 from INR 2.52 billion in Q1 of the previous year, primarily reflecting and realized and mark-to-market gains on equities and on security receipts.

As you are aware, from the first quarter of this year, the revised investment guidelines have become applicable under which the mark-to-market gain on investments classified as fair value through P&L flows through the P&L, which was not getting recognized prior to the introduction of these guidelines, and hence, the future course of treasury gains will depend on these market movements.

The tax expense was INR 36.34 billion in this quarter compared to INR 31.99 billion in the corresponding quarter last year. The profit after tax grew by 14.6% year-on-year to INR 110.59 billion in this quarter. Sandeep earlier talked about the capital adequacy position with the CET1 ratio, including profits for Q1 of 2025 of 15.92% -- Tier 1 ratio of 15.92% and total capital adequacy ratio of 16.63% at June 30, 2024.

These ratios includes the impact of increase in risk-weighted assets for operational risk, which is computed in the first quarter of every fiscal year and also the impact of the revised investment guidelines that applicable -- became applicable during the first quarter.

Growth in our digital offerings. We continue to enhance the use of technology in our operations to provide simplified solutions to customers. The bank has launched an industry-first initiative SmartLock that empowers customers to instantly lock or unlock key banking services such as UPI, debit cards and credit cards with just 1 click on iMobile Pay. About 71% of trade transactions were done digitally in Q1 of 2025 and the volume of transactions through our trade online platform grew by 21.5% year-on-year in Q1 of 2025.

We have provided details on our retail business banking and SME portfolio in Slides 25 to 32 of the investor presentation. The loan and nonfund-based outstanding to performing corporate and SME borrowers rated BB and below was INR 52.86 billion at June 30, 2024, compared to INR 55.28 billion at March 31, 2024.

This portfolio was about 0.43% of our advances at June 30, 2024. Other than 2 accounts, the maximum single borrower outstanding in the BB and below portfolio was less than INR 5 billion at June 30, 2024. At June 30, 2024, we had provisions of INR 8.49 billion on the BB and below portfolio compared to INR 9.03 billion at March 31, 2024. This includes provisions held against borrowers under resolution included in this portfolio.

The total outstanding to NBFCs and HFCs was INR 854.12 billion at June 30, 2024, compared to INR 770.68 billion at March 31, 2024. The total outstanding loans to NBFCs and HFCs were about 7% of our advances at June 30, 2024.

During the current quarter, the increase in the NBFC portfolio was primarily due to lending opportunities to higher rated borrowers as well as opportunities for investment via the bond market.

The builder portfolio, including construction finance, lease rental discounting, term loans and working capital was INR 521.30 billion at June 30, 2024, compared to INR 482.92 billion at March 31, 2024. The builder portfolio was about 4.3% of our total loan portfolio.

Our portfolio largely comprises well-established builders, and this is also reflected in the sequential increase in the portfolio. About 2.2% of the builder portfolio at June 30, 2024, was either rated BB and below internally or was classified as nonperforming compared to 2.7% at March 31, 2024.

Moving on to the consolidated results. The consolidated profit after tax grew by 10% year-on-year to INR 116.96 billion in this quarter. The details of the financial performance of subsidiaries and key associates are covered in Slides 40 to 42 and 62 to 67 in the investor presentation.

The annualized premium equivalent of ICICI Life increased to INR 19.63 billion in Q1 of 2025 from INR 14.61 billion in Q1 of 2024. The value of new business increased to INR 4.72 billion in Q1 of 2025 from INR 4.38 billion in Q1 of 2024. The value of new business margin was 24% in Q1 of 2025 compared to 24.6% in fiscal 2024.

The profit after tax of ICICI Life increased by 8.7% year-on-year to INR 2.25 billion in Q1 of 2025 compared to INR 2.07 billion in Q1 of 2024. The gross direct premium income of ICICI General was INR 76.88 billion in Q1 of 2025 compared to INR 63.87 billion in Q1 of 2024.

The combined ratio stood at 102.3% in Q1 of 2025 compared to 103.8% in Q1 of 2024. The profit after tax was INR 5.8 billion in Q1 of 2025 compared to INR 3.9 billion in Q1 of 2024. The profit after tax of ICICI AMC as per Ind AS was INR 6.33 billion in this quarter compared to INR 4.74 billion in Q1 of last year.

The profit after tax of ICICI Securities as per Ind AS on a consolidated basis was INR 5.27 billion in this quarter compared to INR 2.71 billion in Q1 of last year. ICICI Bank Canada had a profit of CAD 20.3 million in this quarter compared to CAD 16.4 million in Q1 last year.

ICICI Bank U.K. had a profit after tax of USD 7.7 million in this quarter compared to USD 9.4 million in Q1 of last year. As per Ind AS, ICICI Home Finance had a profit after tax of INR 1.17 billion in the current quarter compared to INR 1.05 billion in Q1 of last year.

With this, we conclude our opening remarks, and we'll now be happy to take your questions.

[Operator]

[Operator Instructions] The first question is from the line of Mahrukh Adajania from Nuvama Institutional Equities.

[Mahrukh Adajania, analyst]

Congratulations. My first question is on deposit and loan growth. So incrementally, everyone is complaining about tight deposits, there are some rate hikes that have happened as well. So are you still comfortable with, say, maybe targeting a loan growth of mid- to high-teens? And would you be comfortable increasing your LDR, since it's already lower than peers or would deposits continue to grow in line with loans? That's my first question, and then I have 2 more.

[Anindya Banerjee, executive]

So Mahrukh, we don't target any particular level of loan growth, but we have grown our deposits quite comfortably during the quarter at average deposit growth of 17% on an average basis and 15%-plus on a period-end basis.

So we don't -- the deposit flows are quite healthy and -- in terms of supporting the loan growth. As you said, the deposit rates continue to be tight. The wholesale deposit rates have not really come down during the first quarter as they do -- usually do.

And of late, there has been 1 or 2 hikes in the retail deposit rate also, although in 1 case, it is at a longer tenure. So we'll have to see how the deposit market moves going ahead, but we are not -- we don't feel that as a constraint in terms of the available lending opportunities.

On the lending side also, I think there is price competition in the other way, and we are seeing a fair amount of competition, particularly on the corporate side. So we'll keep calibrating both. As far as the LDR is concerned, I think this low- to mid-80s is the level of domestic LDR that we have historically operated at, and I don't see any big change in that. It may vary 1 quarter here up or down, but broadly, it should be at that level.

As far as both deposit growth and loan growth are concerned, of course, over the next couple of quarters, we will also have to take into account the implications of the revised guidelines on LCR, the draft which has come, which will have some impact on both deposit markets and loan markets. So we'll have to see that as we go along as well.

[Mahrukh Adajania, analyst]

Okay. So my other 2 questions. One is, if you have any rough calculation on LCR? And can we assume that 90%-95% of deposits would fall under the digitally enabled tab? And the other question is just on retail recoveries, right? So obviously -- do you see them slow down because there's a lot of -- in your customer segments, because there's a lot of discussion on customer leverage in some segments or the other, so in your set of customers, do you see the retail recoveries flowing in as smoothly as you saw last year? How does it play out?

[Anindya Banerjee, executive]

On the first one, we -- I think it's a fairly easy calculation to do because the LCR disclosures are public. And at least, I think all the analyst reports that we've seen as of yesterday for the major banks talk about between a 10 and 14, 15 percentage point impact, and I think that's a fair estimate.

On the recoveries, I think we have been saying for some time that the pace of recoveries will vary and may not continue at the same pace because we were still collecting out of the pool of NPAs that got created in fiscal '21 and fiscal '22. So that pace will come off, but -- and therefore, the credit costs will also normalize upwards. But as I mentioned earlier, finally, if we look at it, the credit costs for the -- are still at or below around 50 basis points and the NPA ratios, provisioning coverage are all fine. So I think that's the way we would look at it.

[Operator]

Next question is from the line of Nitin Aggarwal from Motilal Oswal.

[Nitin Aggarwal, analyst]

Congrats on a good quarter. I have 2 questions. First is on the cards portfolio, like few other banks and NBFCs have reported acute stress in this segment and the system in general is seeing some rise in delinquencies, so how do you see the asset quality outlook here? And if you can just also provide some color on the credit cost currently versus the long period average? Some qualitative color around that will also be helpful. So that's 1 -- first question.

[Anindya Banerjee, executive]

Yes. As far as cards is concerned, it's less than 5% of our loan portfolio. And whatever happens in the credit cost there, it has flowed into the overall numbers. I would say that it is -- we see it as a growth business, and we are investing in growth in that business in terms of both products and distribution and our offerings, so that's a business we would like to grow.

On the credit cost, if you're asking about on the overall basis, I think we are -- as I said, currently, we seem to be operating at about 50 bps, so this I would expect it to further normalize gradually. But what the long period average will be in the kind of portfolio construct and the systemic construct that we have now is difficult to say at this point. But I would say that it will be better than historical levels, for sure.

[Nitin Aggarwal, analyst]

Okay. But Anindya, also, I mean, this credit cost outlook on the cards specifically, like how do you compare versus long period average?

[Anindya Banerjee, executive]

No, we don't really call that out. As I said, it's about 5% of our book, but it is a book we would be very keen to grow.

[Nitin Aggarwal, analyst]

Okay. Sure. And the other question is on the yield on advances, which has come down this quarter around 8 basis points. So how do you read that? Is it like that the yields have peaked out and will sustain around current levels? So how do you really read this?

[Anindya Banerjee, executive]

No, so part of it would just be the impact of the nonaccrual on the KCC portfolio because there, unlike that is -- it's a nonaccrual of interest accrued over a slightly longer period. That would be 1 component; and others, there will be some small movements here and there, nothing really specific to call out. On lending rates per se, as I said, I think we continue to see a reasonable amount of competition, particularly on the corporate side.

[Nitin Aggarwal, analyst]

Sure. And just 1 clarification on the treasury gain also, which is a higher number this quarter versus our updates that we have reported in the prior years. So some like details as to -- behind this game and how do we like see this moving?

[Anindya Banerjee, executive]

So we would have made gains from our normal proprietary trading businesses, which trade equities, fixed income and currency. We also had some gains on our security receipts portfolio, both realized gains because there were redemptions of the security receipts.

And then there would be -- the third component would largely be the mark-to-market on the fair value through P&L portfolio, which earlier, we would -- we had to only take the negative MTM impact. Now under the new guidelines on the AFS portfolio, with MTM impact either positive or negative flows to the AFS reserve. And on the fair value through P&L portfolio, whether positive or negative, it flows through to the P&L. And in this quarter, it would have been a positive impact. So those would be the 3 impacts. In the overall context, even at INR 6 billion, the treasury profit number is not -- is a pretty small component of the P&L.

[Operator]

[Operator Instructions] Next question is from the line of Manish Shukla from Axis Capital.

[Manish Shukla, analyst]

Just going back to the yield on loans question, Anindya. Q-o-Q, I appreciate that. But even if you look at Y-o-Y, the yields are 9.86 to 9.8. During this period, the share of retail, SME and business banking has gone up, which I believe is higher yielding business, MCLR rates would be higher, GNPA proportion is lower and yet the yield on advances have not gone up. What would explain that?

[Anindya Banerjee, executive]

No, I think the yield on advances really has been at a stable level over the last year. If you look at all the categories that you mentioned, there has been no really increase in market pricing, which would have taken the yields up. In fact, if we look at, for example, as you know, even on something like personal loans, the lending rates were at very low-teens kind of lending rates.

The mortgage market has been very competitive, as has been the corporate market. So there was no real case for yields to go up. Also, on the SME and business banking side, I think we, and I would guess other private sector banks or most banks, are operating at really the upper end of the quality spectrum. So it's not in itself a high-yield business in that sense. So in that context, I think the yields are quite okay in terms of the yield movement reported.

[Manish Shukla, analyst]

Okay, sure. Secondly, OpEx growth for the full year, how should we really think about it relative to either balance sheet growth or income growth and if you could talk about it separately in terms of employee and nonemployee expenses?

[Anindya Banerjee, executive]

We don't give guidance on expenses or different components of expenses. But as you would have seen, the OpEx growth has been coming down over the quarters and the adjusted growth for Q4 was also between 12% and 13%. This quarter, it is 10%-odd. So I would expect that, that should be a fair indicator. I don't think that there is anything that should take it up materially in our business-as-usual sense.

[Operator]

Next question is from the line of Abhishek Murarka from HSBC.

[Abhishek Murarka, analyst]

So 3 questions. One, in cards and PL, do you think any additional tightening is needed or the current growth rates, Q-o-Q growth rates allow you to filter out enough risk and this kind of Q-o-Q trend can continue?

[Anindya Banerjee, executive]

So I think -- I don't think we are looking at really any material tightening. I mean, there is minor tweaking and refinement that we keep doing. On PL, we had taken a number of actions last year, and we -- and I think the growth rate has come off. If you look at the year-on-year growth, it has come from 24% to -- from 40% to 24%. And I'm guessing by the time we end this year, it will be closer to a 20% kind of number or lower. So there, I don't think there is anything much to be done.

Cards is an ongoing refinement. But as I said, there, we want to grow the business. So to answer your question, I don't think anything major.

[Abhishek Murarka, analyst]

Okay. Perfect. Second question is on corporate loans. Now we've seen [indiscernible] banks growing corporate loans on a Q-o-Q basis this quarter. Is this because there is now some bit of asset quality stress in the retail side and that's why you're moving to this side or there are better rather opportunities in the space? How do we read this? And what's happening in that space, if you could give an update?

[Anindya Banerjee, executive]

So it has nothing to do with asset quality on the retail side. I think it really depends on what opportunities come at any point in time and what is the pricing available. So we -- if you look at -- we've spoken of in this quarter also, we saw growth in the NBFC portfolio and a growth in the real estate portfolio.

And some of this, of course, is at decent pricing and as well as well within our risk reward thresholds. In the previous quarters, for a couple of quarters, our NBFC portfolio had gone down because of some prepayments, et cetera. So that has not happened this quarter.

So I think if you look at it on a -- for the last several quarters, our corporate book has grown at around 10%. It could be 8% to 9% in 1 quarter, it could be 11% to 12% in another. And that is a pretty steady pace. No change in approach. Going forward, I think what we are currently seeing, again, is a fair amount of competitive intensity in that space. So we'll have to calibrate that.

[Abhishek Murarka, analyst]

Okay, perfect. And just quickly on LCR. So just as an approach now, do you need to maintain 20%, 25% additional LCR over 100 on an ongoing basis or once you're reserving higher and anyway, it is more stringent, you don't need to maintain that much surplus and that can be how you offset the impact of this new circular?

[Anindya Banerjee, executive]

I think we have to think all that through. And we have to, I guess, look at refining both the asset and liability side of the balance sheet. But we'll have to think that through. Not something we can respond as of now.

[Operator]

Next question is from the line of Piran Engineer from CLSA.

[Piran Engineer, analyst]

Congrats on the quarter. Just sort of getting back to some of the questions that were asked earlier on yields. Now I just -- I'd be interested in your thoughts as to borrower demand has been strong for the last 2 years, the raw material cost for banks is going up; yet, none of the banks, not just you, but none of your peers have been able to pass it on to the borrowers. Why do you think that's the case really? Or is it that because there is growth, you are sacrificing NIMs?

[Anindya Banerjee, executive]

No, it would not be correct to say that it has not been passed on at all. So I think if you look at, for example, products, even although it has been very competitive, but products like home loans, auto loans or a number of assets classes, the yields have gone up between certainly FY '22-'23, that is not going up any further now.

On the corporate side, I think in 2 markets, I would say, corporate and mortgages, there is episodes of competitive intensity because I think different banks may have different motivations at various points of time.

[Piran Engineer, analyst]

Okay. Is it also the case that within each product the customer selection is getting better. So just getting to like Manish's question that the product mix is changing, but then in each product, you're getting to better types of customers, so the effective yield does not change. Is that is what is happening?

[Anindya Banerjee, executive]

No, I would say that for the quality customers, the banks are quite competitive in terms of yield. And I think broadly, banks are focused on the prime -- I would say, more prime end of the spectrum.

[Operator]

Next question is from the line of Param Subramanian from Nomura.

[Parameswaran Subramanian, analyst]

Just 1 question from my side. Could you explain the quarter-on-quarter movement in networth because it's up INR 15,600 crores, whereas the profit for the quarter is INR 1,100 crores. So is there something that I'm missing?

[Anindya Banerjee, executive]

Yes. So the revised investment guidelines became applicable in the quarter. And as we have disclosed in our stock exchange release, we recognized an AFS reserve plus retained earnings of about INR 32 billion, net of deferred tax and that the AFS reserve would have increased a little bit further based on market movements between April and June. So that would be the main component. In addition, some amount of capital and reserves get added every quarter due to stock option exercises. So that's a smaller number.

[Operator]

Next question is from the line of Kaitav Shah from Anand Rathi Financial Service.

[Kaitav Shah, analyst]

Thank you. All my questions have been answered. Thank you.

[Anindya Banerjee, executive]

Thank you.

[Operator]

[Operator Instructions] Next question is from the line of Kunal Shah from Citigroup.

[Kunal Shah, analyst]

Sir, firstly, maybe if you can quantify an impact of the penal charges [Technical Difficulty].

[Operator]

Kunal, sorry to interrupt you, can you speak through the handset, please?

[Kunal Shah, analyst]

Yes, if you can just quantify the impact of penal charges circular which has come through, that would be helpful? And secondly, maybe with respect to recoveries, maybe if corporate recoveries are anticipated to be relatively lower, should we see the faster normalization we had seen in one of the peer banks that impacting the credit cost immediately in one single quarter, do we expect such kind of volatility or maybe for us, as you mentioned, it should be gradual inch up or maybe gradual normalization, which will come through in the quarters?

[Anindya Banerjee, executive]

So on the penal charges circular, we've not really put out any number, so that's not something I can share. On the recoveries part, I would just say that overall, our credit costs have been quite steady. Even in the last couple of quarters where for various reasons, the reported numbers were pretty low, we had kind of said the adjusted cost for the quarter would be around 50 bps, and that is where it is. There will always be some up and down in terms of additions, recoveries, et cetera, but that's okay. I mean -- but not something that we would want to specifically comment on.

[Kunal Shah, analyst]

Okay. And lastly, in terms of -- as you also indicated in terms of the retail, a couple of players have hiked by almost like 20-odd basis points. How would we take a call? Maybe are we looking to be equally competitive and increase the interest rates? And even in terms of the branch expansion, any changes compared to what you have earlier articulated in terms of the plan on an annual basis?

[Anindya Banerjee, executive]

On the rates, we'll take a view. These are dynamic markets. So as we go along, we will take a view and based on both sort of the -- our target -- our kind of desired level of mobilization as also the maturity bucket which works for us. On the branch, no change as such.

[Operator]

Ladies and gentlemen, we will take that as the last question. I'll now hand the conference over to the management for closing comments.

[Anindya Banerjee, executive]

Thank you all for taking time out on a Saturday, as always. And if any other clarifications are required, please reach out. Thank you.

[Operator]

Thank you very much. On behalf of ICICI Bank Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.