Icicibank vs Bajaj Finance Q3 FY25

ICICI Bank reported a steady Q3 FY25 with PAT growing 14.8% YoY to ₹117.92 billion, driven by core operating profit growth of 13.1% YoY and strong fee income (+16.3% YoY). Domestic loan growth was 15.1% YoY, led by business banking (+31.9%) and corporate (+13.2%), while retail slowed to 10.5% due to cautious unsecured lending. NIM compressed to 4.25% (down 18bps YoY) from deposit cost pressure and KCC seasonality. Asset quality remained stable with net NPA at 0.42% and contingency provisions of ₹131 billion (1% of loans). Management guided for sustained credit costs around 50bps and continued investment in technology and branches. Risk: Unsecured retail slippages could rise if economic conditions weaken, though management expects stabilization.

Guidance read

Credit cost around 50bps: Management reiterated that reported credit cost of 37bps is below the sustainable level of ~50bps, with no expectation of a dramatic increase. Continued investment in technology and branches: The bank will keep investing in technology (10.5% of opex), people, and distribution, adding 129 branches in Q3. Focus on risk-calibrated profitable growth: Management aims to grow market share across key segments while maintaining strong balance sheet and prudent provisioning.

Risk read

Key risks include Unsecured retail slippages — Personal loan and credit card portfolios have seen increased delinquencies over the past six quarters; management has taken corrective actions but trend may persist.; NIM compression from deposit cost — Cost of deposits rose to 4.91% from 4.88% sequentially, and NIM declined 18bps YoY; further pressure could impact profitability.; Business banking credit risk — Analyst questioned what could go wrong in business banking; management cited granularity and collateral but acknowledged need for tight monitoring..

Promise ledger

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

Bajaj Finance reported a solid Q3 FY25 with PAT of ₹4,308 crore (+18% YoY) and AUM growth of 28% YoY to ₹3.98 lakh crore. New loan bookings hit a record 12 million and customer franchise reached 97.12 million, on track to cross 100 million by year-end. Credit costs stabilized at 2.16% of average AUM, with management guiding Q4 credit cost to 2.00-2.05% and FY26 below 2%. Operating efficiency improved as OpEx-to-NTI fell to 33.1% from 33.9% a year ago. However, asset quality remains under watch: Stage 2 and Stage 3 formations are still elevated, particularly in urban B2C and two-wheeler portfolios. The company is proactively pruning risky segments and expects credit normalization by Q4. The strategic partnership with Bharti Airtel and the FinAI transformation (BFL 3.0) are key medium-term growth drivers. Risk: A sharper-than-expected economic slowdown could delay credit cost recovery and pressure growth.

Guidance read

Q4 FY25 credit cost guidance of 2.00-2.05%: Management expects loan loss to average AUF to decline to 2.00-2.05% in Q4, from 2.16% in Q3, driven by portfolio pruning and improving collection efficiency. FY26 credit cost below 2%: If Q4 credit cost lands in the guided range, management expects FY26 credit cost to be sub-2%, barring significant macro deterioration. FY26 balance sheet growth of ~25%: Management targets consolidated balance sheet growth of around 25% in FY26, with profit growth of 22-23%. Rural B2C business to grow 20-23% in FY26: After returning to growth mode, the rural B2C segment is expected to grow 20-23% in the next fiscal year.

Risk read

Key risks include Urban B2C collection efficiency still weak — Despite lower default rates, collection efficiency in urban B2C remains below normal, and management expects this segment to take the longest to normalize.; Two-wheeler portfolio deterioration — The two-wheeler and three-wheeler portfolio is classified as 'amber' with Stage 2 rising from 3.83% to 5.53% YoY, though part of the degradation is due to portfolio degrowth.; Pricing pressure across lending segments — Management acknowledged that pricing pressure has intensified as credit growth slows, which could compress NIMs if not offset by operating leverage.; Economic slowdown risk — Management flagged that high-frequency data shows the economy slowing, which could worsen asset quality and delay credit cost recovery..

Promise ledger

Of 1 tracked promise, management 0 met, 0 close, 1 missed.