| ICICI Bank Limited | ||||||||
| Rating reaffirmed at 'CRISIL AAA/Stable , CRISIL AA+/Stable' | ||||||||
| Rating Action | ||||||||
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| & Pertains to the erstwhile debt instruments of ICICI Ltd rated by CRISIL Ratings; these instruments were transferred to ICICI Bank following the merger of ICICI Ltd with ICICI Bank | ||||||||
| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||||
| 1 crore = 10 million | ||||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL AAA/CRISIL AA+*/Stable’ ratings to debt instruments of ICICI Bank Ltd (ICICI Bank).
The ratings continue to reflect the bank’s healthy capitalisation, strong market position and comfortable resource profile. Against these strengths, asset quality is a monitorable. However, robust capital position backed by demonstrated ability to raise capital, and steady pre-provisioning profits, cushion the credit risk profile against potential asset quality risks.
*CRISIL AA+ for Tier-I bonds |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of ICICI Bank and its subsidiaries because of majority shareholding, business and financial linkages and shared brand.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: Healthy capitalisation Networth was sizeable at Rs 2.6 lakh crore while Tier I capital adequacy ratio (CAR) was 15.96% and overall CAR was 16.66% (under Basel III), as on September 30, 2024. This makes ICICI Bank one of the well-capitalised banks in India. In fiscal 2021, the bank raised equity capital of Rs 15,000 crore under QIP (qualified institutional placement) to further strengthen its capital position. Consequently, networth coverage for net NPAs (non-performing assets) was strong at 46 times as on September 30, 2024 (43 and 30 respectively as on September 30, 2023 and September 30, 2022).
Moreover, the bank has adequate flexibility to raise resources through sale of stake in subsidiaries (more than Rs 16,000 crore raised in the past few fiscals). Backed by healthy cash accrual and demonstrated ability to raise capital, the bank is likely to maintain strong capitalisation to support overall credit risk profile and adequately cover for asset-side risks while pursuing credit growth over the medium term. Even after the implementation of regulations by the Reserve Bank of India (RBI) on revised risk weights on unsecured consumer loans, including credit card receivables and loans to NBFCs beyond a specific threshold, the bank’s capitalisation ratios have remained comfortable.
Strong market position ICICI Bank remains among the largest private sector banks in India with consolidated asset base of Rs 25.1 lakh crore as on September 30, 2024 (standalone asset base of Rs 19.7 lakh crore). With advances and deposits of Rs 12.9 lakh crore and Rs 14.9 lakh crore, respectively, as on September 30, 2024, on standalone basis, it is also one of the three banks that has been classified as domestic systemically important banks (D-SIBs) by RBI, highlighting its significance to the overall financial system.
Across various businesses within ICICI group, size, scale and positioning have been key strengths. As a leading full-service universal banking group with pan-India footprint, the group has strong presence in life and general insurance, asset management, private equity and retail broking. Wide geographical spread is reflected in its network of 6,613 branches as on September 30, 2024.
The bank’s established market position shall continue to benefit from its strategy of expanding penetration and coverage in the domestic lending space, particularly in retail lending, while maintaining strong liability franchise.
Comfortable resource profile In the scheme of growth, the bank’s resource franchise has also remained comfortable - supported by high proportion of low-cost current account and savings account (CASA) deposits. On September 30, 2024, the bank reported a total deposit base of Rs 14.9 lakh crore, which marks a half yearly growth of 6% (year-to-date) over March 2024. As a proportion of total deposits, CASA remained healthy at 40.6% as on September 30, 2024, as against an average CASA ratio of 42.2% as on March 31, 2024. Adjacently, the cost of deposits was 4.9% for Q2 2025 vis-à-vis 4.8% for Q1 2025 and 4.6% for full fiscal 2024. Furthermore, retail deposits form a significant part of the total deposits and provide stability to the resource profile.
Wide branch network and strong focus on digital banking shall help maintain higher-than-industry-average CASA levels and competitive funding cost over the medium term.
Weakness: Asset quality is a monitorable While asset quality has witnessed gradual improvement over the past few quarters, it remains moderate in comparison to other credit parameters of the bank. Overall gross NPAs (as a percentage of gross advances) declined to 2.1% as on September 30, 2024 from 2.2% six months ago and even higher at 2.8% on March 31, 2023. This traction was demonstrated across most asset segments. Contrary to the past - where high delinquencies in the corporate loan portfolio constrained the overall asset quality, slippages within this portfolio have subsided now. With regards to the retail and SME (small and medium enterprises) segments, while delinquencies have inched up from previous low levels, the overall slippages to NPA have remained range bound.
Nonetheless, gross NPAs (as a percentage of gross advances) in the retail (including rural) segments, remained stable at 1.6% as on September 30, 2024, as on March 31, 2024, and the same on September 30, 2023. Provision coverage ratio (excluding technical write-offs) stood at a comfortable 79% as on September 30, 2024 (83% as on September 30, 2023) resulting in net non-performing assets (NNPA) of 0.4% on the same date.
The bank has demonstrated resilience in the past while tiding over asset quality pressures across cycles by putting in place an institutionalised risk assessment framework involving enhanced control and monitoring mechanisms. Apart from this, various schemes launched by the Government of India and the RBI, such as the emergency credit line guarantee scheme that has benefitted the micro, small and medium enterprises, have also aided asset quality. The one-time restructuring scheme has also benefited the reported NPA metrics. The bank’s restructured advances were low at around 0.1% of total advances as on September 30, 2024.
Moreover, the bank’s strategy of increasing the proportion of retail (including rural loans) assets, which stood at ~60% of overall net advances as on September 30, 2024 (~57% as on March 31, 2018), is expected to granularize the loan book and support asset quality. CRISIL Ratings will continue to monitor the traction in asset quality, which though stable, has further scope of improvement in context of the other credit parameters of the bank. |
Liquidity : Superior Liquidity continues to be supported by a strong retail deposit base that forms a significant part of the total deposits. As on September 30, 2024, liquidity coverage ratio was 121% (on consolidated basis). Liquidity also benefits from access to systemic sources of funds such as the liquidity adjustment facility from the RBI, access to the call money market and the refinance limits from National Housing Bank and National Bank for Agriculture and Rural Development.
ESG profile CRISIL Ratings believes the environment, social and governance (ESG) profile of ICICI Bank supports its already strong credit risk profile.
The ESG profile for financial sector entities typically factors in governance as a key differentiator. The sector has a reasonable social impact because of its substantial employee and customer base and can play a key role in promoting financial inclusion. While the sector does not have a direct adverse environmental impact, lending decisions may have a bearing on the environment.
ICICI Bank has an ongoing focus on strengthening the various aspects of its ESG profile.
Key ESG highlights of ICICI Bank: ESG Profile
CRISIL Ratings believes the environment, social and governance (ESG) profile of ICICI Bank supports its already strong credit risk profile.
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Outlook Stable ICICI Bank will maintain its strong market position, healthy capitalisation and comfortable resource profile over the medium term. |
Rating sensitivity factors Downward factors • Significant deterioration in asset quality impacting earnings on sustained basis • Decline in CARs (including capital conservation buffer [CCB]) with CET I (common equity tier I) remaining below 11% on sustained basis |
About the Company Promoted by the erstwhile ICICI Ltd, ICICI Bank was incorporated in 1994. In 2002, ICICI Ltd was merged with ICICI Bank. In August 2010, ICICI Bank acquired Bank of Rajasthan, enhancing its presence in northern and western India.
The bank had a consolidated asset base of Rs 25.1 lakh crore as on September 30, 2024, with advances of Rs 13.6 lakh crore. On standalone basis, asset base and advances were Rs 19.7 lakh crore and Rs 12.9 lakh crore, respectively, on the same date. The advances mix consisted of 53% retail loans, 18% business banking, 21% domestic corporate and 3% overseas advances.
Standalone profit after tax (PAT) was Rs 40,888 crore in fiscal 2024 against Rs 31,896 crore in the previous fiscal. At the consolidated level (with subsidiaries and other associate entities), reported PAT was Rs 44,256 crore against Rs 34,037 crore.
For the first half ended September 30, 2024, ICICI Bank reported standalone PAT of Rs 22805 crore against Rs 19,909 crore in the corresponding period previous fiscal. At the consolidated level (with subsidiaries and other associate entities), the bank reported PAT of Rs 24644 crore against Rs 21,532 crore for the same periods. |
Key Financial Indicators Standalone
^as a % of gross advances
Key Financial Indicators : Consolidated
^as a % of gross advances |
Any other information: Not applicable ICICI Bank, on standalone basis, reported annualised return on assets of 2.4% (annualized) for the half ended September 30, 2024, against 2.4% in the corresponding period of previous fiscal. Profitability, after remaining impacted in fiscal 2021 due to additional pandemic-related provisioning requirement (Rs 4,750 crore), has improved thereafter with controlled credit cost resulting in net profits increasing to Rs 40,888 crore in fiscal 2024 from Rs 31,898 crore previous year. Provision coverage ratio (excluding technical write-offs) stood at 79% as on September 30, 2024 (83% as on September 30, 2023).
The factors that could trigger a default event for non-equity tier I capital instruments (under Basel III) resulting in non-payment of coupon are: i) the bank exercising coupon discretion; ii) inadequacy of eligible reserves to honour coupon payment if the bank reports losses or low profits; or iii) the bank breaching the minimum regulatory CET I (including CCB) ratio. Moreover, given the additional risk attributes, the rating transition for non-equity tier I capital instruments (under Basel III) can potentially be higher and faster than that for tier II instruments.
Key features of ICICI Bank's Rs 4,500 crore tier I bond issue (under Basel III)
Annexure: Note on tier-I instruments (under Basel III) The distinguishing features of non-equity tier I capital instruments (under Basel III) are the existence of coupon discretion at all times, high capital thresholds for likely coupon non-payment and principal write-down (on breach of a pre-specified trigger). These features increase the risk attributes of non-equity tier I instruments over those of tier II instruments under Basel III and capital instruments under Basel II. To factor in these risks, CRISIL Ratings notches down the ratings on these instruments from the bank's corporate credit rating. The rating on ICICI Bank's tier I bonds (under Basel III) has, therefore, been lowered by one notch from its corporate credit rating to 'CRISIL AA+/Stable’, in line with the CRISIL Ratings criteria (refer to the CRISIL Ratings rating criteria for Basel III compliant instruments of banks). |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
# Yet to be issued |
Annexure – List of entities consolidated
[1] In Q4-2024, the Bank purchased equity shares of ICICI Lombard General Insurance Company Limited through secondary market transactions. Consequently, the company is now a subsidiary of the Bank |
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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