Icicibank vs Bajaj Finance Q2 FY25

ICICI Bank reported a strong Q2 FY25 with PAT growing 14.5% YoY to INR 117.46 billion, driven by healthy loan growth and controlled operating expenses. Core operating profit rose 12.1% YoY to INR 160.43 billion. Domestic loan growth was 15.7% YoY, with retail loans up 14.2% and business banking surging 13% YoY. Net interest margin (NIM) moderated to 4.27% from 4.36% QoQ due to higher deposit costs and day-count impact, but management expects NIM stability in H2. Asset quality remained robust with net NPA at 0.42% and contingency provisions of INR 131 billion (1% of loans). Credit costs stayed low at ~0.38% of advances. Management guided for stable margins and moderate OpEx growth. Key risk: potential further normalization of credit costs in unsecured retail portfolios.

Guidance read

NIM expected to be broadly stable in H2 FY25: Management expects net interest margin to remain stable in the second half of the fiscal year, with potential improvement when rate cuts begin. Operating expense growth to be around 8-10% in near term: OpEx growth moderated to 6.6% YoY in Q2; H1 growth was ~8.5%, and H2 may be slightly higher due to festive spends, but broadly in that range. Personal loan growth to trend down further: Personal loan growth has slowed from 40% YoY to 17% and is expected to decline further over the next couple of quarters due to tighter underwriting.

Risk read

Key risks include Unsecured retail credit cost normalization — Delinquencies in personal loans and credit cards have risen over the past year; further increase could push overall credit costs above the current 40-50 bps range.; NIM compression from deposit repricing — Cost of deposits rose 4 bps QoQ to 4.88%, and further marginal increases are expected, which could pressure NIM if loan yields do not keep pace.; Competitive intensity in business banking lending — Business banking is a competitive segment with pressure on yields; growth may come at lower margins, though management focuses on overall customer profitability..

Promise ledger

Of 3 tracked promises, management 0 met, 0 close, 3 missed.

Bajaj Finance reported a mixed Q2 FY25 with AUM growth of 29% YoY and PAT up 13% to INR 4,014 crore, but elevated credit costs dampened profitability. Loan losses remained high at 2.16% of average assets, driven by higher flow rates across retail and SME portfolios, though Stage 2/3 additions moderated sequentially. Management guided FY25 credit costs to ~2.05%, above the earlier 1.75-1.85% range, but expects improvement to 2% by Q4. NIMs have stabilized, and cost of funds appears to have peaked. The company added 4 million new customers and expects to cross 100 million total customers by year-end. Festive season demand is tracking well with 21% volume growth. Key risk: credit normalization may take longer if macroeconomic conditions deteriorate or if unsecured lending stress persists.

Guidance read

FY25 credit cost guidance revised to ~2.05%: Net loan loss to average assets expected at 2.00-2.05% for FY25, up from earlier 1.75-1.85%. AUM growth of 27-28% for FY25: Full-year AUM growth guided at 27-28%, with new businesses contributing 2-3%. New customer addition of 15-16 million in FY25: Management expects to add 15-16 million new customers in FY25, marginally higher than last year's 14 million. Non-Bajaj Auto two-wheeler AUM to replace Bajaj Auto AUM by FY27: Non-Bajaj Auto two-wheeler financing will scale to 720,000 accounts in FY26, fully replacing Bajaj Auto AUM by end-FY26/FY27.

Risk read

Key risks include Elevated credit costs may persist — Credit costs remain above long-term averages; management is cautiously optimistic but normalization may take longer if macro conditions worsen.; Unsecured lending stress from multiple loans — Clients with 3+ live unsecured loans show higher default propensity; supply-side slowdown may not fully mitigate risk.; Loss of Bajaj Auto captive financing business — Bajaj Auto's captive financing unit is taking over two-wheeler/three-wheeler financing, impacting AUM and profitability in the near term.; Regulatory and compliance risks — Management declined to comment on regulatory matters; ongoing investments in compliance may not fully mitigate future actions..

Promise ledger

Of 2 tracked promises, management 0 met, 0 close, 2 missed.