Mumbai witnessed a significant financial development as ICICI Bank reported a 4% year-on-year drop in net profit for the December 2025 quarter. The bank's profit settled at Rs 11,318 crore. This decline stemmed directly from a Reserve Bank of India directive that forced a reclassification of the bank's agricultural loan portfolio.
RBI Inspection Triggers Major Provision
During a routine inspection, the RBI identified a specific issue. The central bank found that loans worth Rs 25,000 crore, which ICICI had included in its Rs 83,000 crore agriculture book, did not meet the strict criteria for priority sector agricultural loans. This finding came from the bank's own executive director, Sandeep Batra, who announced the quarterly results.
Because these loans were not compliant, the RBI required ICICI Bank to set aside additional money as a provision. The bank had to make a provision of Rs 1,283 crore specifically for this quarter. This single provision had a major impact on the bottom line.
Sandeep Batra clarified an important point. He stated that the loans in question were standard assets, meaning they were performing well. The provisioning was purely a statutory requirement following the reclassification, not a sign of deteriorating loan quality.
Profit Picture Without the Provision
The provision's effect was substantial. The bank's management indicated that without this one-time Rs 1,283 crore provision, the net profit for the quarter would have actually grown by 4%. Instead, the reported figures show a 4% decline. This reclassification caused total provisions and contingencies to skyrocket. They surged by 108% compared to the same period last year and jumped 180% from the previous quarter, reaching Rs 2,556 crore.
Strong Business Growth Continues
Despite the profit dip, ICICI Bank's core business showed robust health. The bank's balance sheet continued to expand at a steady pace.
- Advances grew 12% year-on-year to reach Rs 155 lakh crore, reflecting sustained demand for credit.
- Deposits increased 9% year-on-year, standing at Rs 17 lakh crore.
- The credit-deposit ratio remained high at approximately 88%.
On the income front, total income rose by 2% year-on-year to Rs 49,334 crore. A key highlight was net interest income, which grew a stronger 8% to Rs 21,932 crore. This growth was supported by a 4% decline in interest expended, signaling improved management of the bank's cost of funds. Other income also rose 4% compared to the previous year, reaching Rs 7,368 crore.
Costs Rise and Asset Quality Improves
Operating expenses presented a challenge, climbing 13% year-on-year to Rs 11,944 crore. This increase was driven mainly by higher employee and other operational costs. The rise in expenses outpaced income growth, putting some pressure on the bank's operational efficiency.
However, asset quality metrics showed clear improvement. The bank's gross non-performing assets (NPAs) ratio declined to 1.53%. This is better than the 1.5% in the preceding quarter and a significant improvement from 1.96% a year earlier. Net NPAs also improved, falling to 0.37%. These numbers indicate that the underlying loan book remains resilient and healthy.
Leadership Stability with Bakhshi's Reappointment
In a separate but notable development, the bank's board made a decision about its top leadership. The board reappointed Sandeep Bakhshi as Managing Director and CEO for a further two years. His new term will start in October 2026.
This reappointment comes well before Bakhshi reaches the RBI's upper age limit for bank CEOs, which is 70 years. He will turn 70 in May 2030, giving him a full term under the new appointment before hitting the regulatory age ceiling.
