ICICI Bank Q1 FY26 Preview: Moderate Growth Seen as Margins Face Pressure

Lower repo-linked loan yields, rising operating costs, and higher provisions likely to weigh on June quarter performance

ICICI Bank, India’s second-largest private sector lender, is expected to report moderate growth in net interest income (NII) and profit after tax (PAT) for the June 2025 quarter (Q1 FY26) amid pressure from lower repo rates and margin contraction. The bank is scheduled to release its quarterly results on July 19, 2025. Analysts expect ICICI Bank’s NII to rise by around 8% year-on-year to ₹21,091 crore, while PAT may grow by 9.5% to ₹12,112 crore, compared to ₹11,059 crore in Q1 FY25.

• NII Estimate: ₹21,091 crore, up 8% YoY

• PAT Estimate: ₹12,112 crore, up 9.5% YoY

• Q1 FY26 Results Date: July 19, 2025

• Analyst Range: Narrow, risk of sharp stock movement

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Margins Likely to Decline Amid Repo Rate Transmission

According to Kotak Institutional Equities, ICICI Bank’s net interest margin (NIM) is likely to shrink by 31 basis points YoY, falling to 4% in Q1 FY26, compared to 4.4% a year ago. This contraction stems from the fact that 53% of the bank’s loan book is linked to the repo rate, which has fallen in recent months following the RBI’s accommodative monetary policy stance.

• NIM Estimate: 4% vs 4.4% YoY

• Reason: High repo-linked loan exposure

• Repo Rate Impact: Shrinking lending yields

Operating Expenses to Rise on Tech and Digital Investments

Operating expenses for ICICI Bank are expected to increase by 8.4% YoY to ₹11,419 crore in Q1 FY26. Ashika Institutional Equity noted that the cost uptick is largely driven by continued investments in technology, digital infrastructure, and process upgrades aimed at strengthening operational resilience. The bank’s aggressive push towards digital transformation remains a key area of capital allocation.

• Opex Estimate: ₹11,419 crore, up 8.4% YoY

• Cost Drivers: Tech, digital upgrades, operational efficiency

• Strategic Focus: Long-term resilience and scalability

Provisions Expected to Increase Due to Base Effect

Loan loss provisions are projected to rise sequentially due to a one-time benefit in the previous quarter, which included gains from the sale of ₹2,786 crore worth of non-performing assets (NPAs), with ₹314 crore received in cash. This quarter may see a normalization of provisioning levels. However, analysts do not foresee any significant deterioration in asset quality, with stress metrics likely to remain stable.

• Provision Trend: Sequential rise

• Reason: Base effect from Q4 NPA recoveries

• Asset Quality View: Stable with no major surprises

Investor Focus: NIM Guidance, Retail Loan Trends, Asset Quality

Market participants will closely watch the management commentary on NIM trajectory, as it will reflect the bank’s profitability outlook under a softening interest rate regime. Other key areas of interest include unsecured retail credit trends, overall loan growth, and updates on bad loan ratios and slippages. ICICI Bank stock has gained 7% during April–June 2025, outperforming the Nifty 50’s 5% return in the same period.

• Investor Watchpoints:

  • NIM outlook

  • Retail credit momentum

  • Asset quality metrics

• Stock Performance Q1FY26: +7% vs Nifty 50’s +5%

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• ICICI Bank Stock Price