Icicibank vs Bajaj Finance Q4 FY25

ICICI Bank reported a strong Q4 FY25 with PAT growing 18% YoY to INR 126.30 billion, driven by robust core operating profit growth of 13.7% YoY and stable asset quality. Net interest income rose 11% YoY to INR 211.93 billion, with NIM at 4.41% (full year 4.32%). Domestic loan growth was 13.9% YoY, led by business banking (+33.7% YoY), while retail growth moderated. Credit costs remained low at 0.27% of advances, with net NPA at 0.39%. Management highlighted a focus on risk-adjusted PPOP and customer 360-degree approach. Guidance points to continued healthy growth, though margin pressure from rate cuts is expected. Key risk: potential impact of global trade tensions on the economy and credit quality.

Guidance read

Margin pressure expected from rate cuts: Management expects some impact on NIMs as loan repricing is immediate while deposit repricing lags, but will manage through growth and other levers. Continued focus on risk-adjusted PPOP: The bank will prioritize risk-adjusted pre-provision operating profit over pure loan growth, making tactical pricing calls as needed. Unsecured retail NPL stabilization expected to continue: NPL formation on unsecured retail has broadly stabilized; management hopes for improvement in coming quarters.

Risk read

Key risks include Margin compression from rate cuts — A deeper-than-expected rate cut cycle could compress NIMs as loan yields reset faster than deposit costs.; Competitive pressure from PSU banks on pricing — Public sector banks are pricing loans below ICICI Bank, creating challenges for growth in segments like housing.; Global trade uncertainty impact on credit quality — Management noted that global trade-related issues could affect the economy and portfolio performance, though current comfort is high..

Promise ledger

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

Bajaj Finance reported a mixed Q4 FY25 with strong AUM growth of 26% to INR 416,061 crore and record loan bookings of 10.7 million, but PAT growth of 19% to INR 4,546 crore was aided by a one-time tax reversal of INR 348 crore. Credit costs remained elevated at 2.33% (1.97% adjusted for ECL model refresh), leading to a miss on earlier guidance. Management guided for FY26 AUM growth of 24-25%, credit cost of 185-195 bps, and stable NIMs, with optimism on profit growth. Key risks include delayed rate cuts impacting NIMs and elevated credit costs in unsecured portfolios. The company is focusing on credit quality and FinAI transformation to improve operating leverage.

Guidance read

AUM growth of 24-25% in FY26: Aided by new business lines launched in the last 2-3 years, with a focus on credit quality first. Credit cost corridor of 185-195 bps for FY26: Loan loss to average AUM expected to improve from FY25 levels as early vintage metrics improve. OPEX to NTI improvement of 40-50 bps in FY26: Driven by FinAI transformation and productivity initiatives, including fixed-term contract conversions. Deploy 100 FinAI applications in FY26: Across revenue, cost, customer engagement, underwriting, productivity, and controllership.

Risk read

Key risks include Elevated credit costs in unsecured portfolios — Credit cost guidance of 185-195 bps remains above pre-COVID levels, with urban personal loan portfolio still maturing.; NIM compression from fee moderation and delayed rate cuts — Management expects stable NIMs, but fee income growth is moderated to 13-15% and cost of fund benefits may be slower than anticipated.; Surplus capital weighing on ROE — Excess capital from BHFL listing and QIP is pressuring ROE; long-term ROE guidance reduced to 19-21% from 21-23%.; Two-wheeler/three-wheeler captive book wind-down risk — The winding-down captive portfolio (INR 10,000 crore) contributes disproportionately to credit costs; any delay in wind-down could impact asset quality..

Promise ledger

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