ICICI Bank Ltd (IBN) 2025 Q1 法說會逐字稿

Ladies and gentlemen, good day, and welcome to ICICI Bank's Q1 FY25 earnings call. (Operator Instructions) Please note that this conference is being recorded. I now hand the conference over to Mr. Sandeep Bakshi, Managing Director and CEO of ICICI Bank. Thank you, and over to you, sir.

Thank you. Good evening to all of you and welcome to the ICICI Bank earnings call to discuss the results for Q1 of financial year 2025. Joining us today on this call are Sandeep Batra, Rakesh, Ajay, Anindya, and Abhinek.

The Indian economy continues to remain resilient as reflected by high frequency indicators showing growth momentum, such as expansion in manufacturing and services PMI, higher tax collections, real estate buoyancy, and pickup in rural demand, supported by the consistent actions and initiatives of the policymakers.

At ICICI Bank, our strategic focus continues to be on growing profit before tax excluding treasury through the 360-degree customer centric approach and by serving opportunities across ecosystems and micro markets.

We continue to operate within our strategic framework to strengthen our franchise. Maintaining high standards of governance, deepening coverage, and enhancing delivery capabilities are focus areas for our risk calibrated profitable growth.

The profit before tax excluding treasury grew by 11.8% year on year to INR140.80 billion in this quarter. The core operating profit increased by 11.0% year on year to INR154.12 billion in this quarter. The profit after tax grew by 14.6% year on year to INR110.59 billion in this quarter. Total deposits grew by 15.1% year on year and 0.9% sequentially at June 30, 2024. Term deposits increased by 19.9% year on year and 3.1% sequentially at June 30, 2024.

During the quarter, average deposits grew by 17.8% year on year and 3.3% sequentially and average current and savings account deposits grew by 9.7% year-on-year and 5.1% sequentially. The bank's average liquidity coverage ratio for the quarter was about 123%.

The domestic loan portfolio grew by 15.9% year on year and 3.3% sequentially at June 30, 2024. The retail loan portfolio grew by 17.1% year on year and 2.4% sequentially. Including non-fund based outstanding, the retail portfolio was 46.3% of the total portfolio. The business banking portfolio grew by 35.6% year on year and 8.9% sequentially.

The SME portfolio grew by 23.5% year on year and 4% sequentially. The rural portfolio grew by 16.9% year on year and 3.4% sequentially. The domestic corporate portfolio grew by 10.3% year on year and 3.1% sequentially. The overall loan portfolio including the international branches portfolio grew by 15.7% year on year and 3.3% sequentially at June 30, 2024.

The net NPA ratio was 0.43% at June 30, 2024, compared to 0.42% at March 31, 2024, and 0.48% at June 30, 2023. During the quarter, there were net additions of INR26.24 billion to gross NPAs, excluding write-offs and sale, reflecting mainly the seasonal higher additions in the kisan credit card portfolio and lower recoveries and upgrades compared to previous quarter.

The total provisions during the quarter were INR13.32 billion or 8.6% of core operating profit and 0.43% of average advances. The provisioning coverage ratio on NPAs was 79.7% at June 30, 2024. In addition, the bank continues to hold contingency provisions of INR131 billion or about 1.1% of total loans at June 30, 2024.

The capital position of the bank continued to be strong with a CET-1 ratio of 15.92% and total capital adequacy ratio of 16.63% at June 30, 2024, including profits for Q1 of 2025. Looking ahead, we see many opportunities to drive risk calibrated profitable growth.

We believe our focus on customer 360 degree, extensive franchise, and collaborations within the organization, backed by our focus on enhancing delivery systems and simplifying processes will enable us to deliver holistic solutions to customers in a seamless manner and grow market share across key segments. We will continue to make investments in technology, people, distribution and building our brand.

We are laying strong emphasis on strengthening our four operational resilience for seamless delivery of services to customers. We remain focused on maintaining a strong balance sheet with prudent provisioning and healthy levels of capital. The principles of return of capital, fair to customer, fair to bank, and one bank, one team will continue to guide our operations. We remain focused on delivering consistent and predictable returns to our shareholders. I now hand the call over to Anindya.

Thank you, Sandeep. I will talk about loan growth, credit quality, P&L details, growth in digital offerings, portfolio trends, and performance of subsidiaries. Sandeep covered the loan growth across various segments. Coming to the growth across retail products, the mortgage portfolio grew by 14.2% year on year and 2.5% sequentially.

Auto loans grew by 14.8% year on year and 1.7% sequentially. The commercial vehicles and equipment portfolio grew by 13.9% year on year and 2.2% sequentially. Personal loans grew by 24.9% year on year and 1.5% sequentially. The credit card portfolio grew by 31.3% year on year and 4.2% sequentially.

The personal loans and credit card portfolio were 9.7% and 4.4% of the overall loan book respectively at June 30, 2024. The overseas loan portfolio, in US dollar terms, grew by 5.4% year on year at June 30, 2024. The overseas loan portfolio was about 2.8% of the overall loan book at June 30, 2024.

The non-India linked corporate portfolio declined by 9% or about USD24.8 million on a year-on-year basis. Of the overseas corporate portfolio, about 92% comprises Indian corporates, 6% overseas corporates with Indian linkage, 1% comprises companies owned by NRIs or PIOs and the balance 1% non-India corporates.

Moving on to credit quality. The gross NPA additions were INR59.16 billion in the current quarter compared to INR51.39 billion in the previous quarter. There were gross NPA additions of about INR7.21 billion from the kisan credit card portfolio in the current quarter.

We typically see higher NPA additions from the kisan credit card portfolio in the first and third quarter of a fiscal year. Recoveries and upgrades from gross NPAs, excluding write-offs and sale, were INR32.92 billion in the current quarter compared to INR39.18 billion in the previous quarter.

The net additions to gross NPAs were thus INR26.24 billion in the current quarter compared to INR12.21 billion in the previous quarter. The gross NPA additions from the retail, rural, and business banking portfolio were INR57.32 billion in the current quarter compared to INR49.28 billion in the previous quarter.

The additions for the quarter include the KCC NPA as mentioned earlier. Recoveries and upgrades from the retail, rural and business banking portfolio were INR29.33 billion compared to INR32.17 billion in the previous quarter. The net additions to gross NPAs in the retail, rural, and business banking portfolios were INR27.99 billion compared to INR17.11 billion in the previous quarter.

The gross NPA additions from the corporate and SME portfolio were INR1.84 billion compared to INR2.11 billion in the previous quarter. Recoveries and upgrades from the corporate and SME portfolio were INR3.59 billion compared to INR7.01 billion in the previous quarter.

There were net deletions of gross NPAs of INR1.75 billion in the corporate and SME portfolio compared to INR4.90 billion in the previous quarter. The gross NPAs written-off during the quarter were INR17.53 billion. There was sale of gross NPAs of INR1.14 billion in the current quarter compared to INR3.27 billion in the previous quarter. The sale of NPAs includes about INR1.02 billion in cash.

The non-fund based outstanding to borrowers classified as non-performing was INR35.43 billion as of June 30, 2024, compared to INR36.71 billion as of March 31, 2024. The bank holds provisions amounting to INR19.64 billion against this non-fund based outstanding. The total fund based outstanding to all standard borrowers under resolution as per various guidelines declined to INR27.35 billion or about 0.2% of the total loan portfolio at June 30, 2024, from INR30.59 billion at March 31, 2024.

Of the total fund based outstanding under resolution at June 30, 2024, INR23.25 billion was from the retail, rural, and business banking portfolio and INR4.10 billion was from the corporate and SME portfolio. The bank holds provisions of INR8.63 billion against these borrowers, which is higher than the requirement as per RBI guidelines.

Moving on to the P&L details. Net interest income increased by 7.3% year on year to INR195.53 billion in this quarter. The net interest margin was 4.36% in this quarter compared to 4.40% in the previous quarter and 4.78% in Q1 of last year.

The impact of interest on income tax refund on net interest margin was nil in the current and previous quarter and was 3 basis points in Q1 of last year. The domestic NIM was 4.44% in this quarter compared to 4.49% in the previous quarter and 4.88% in Q1 of last year. The cost of deposits was 4.84% in this quarter compared to 4.82% in the previous quarter.

Of the total domestic loans, interest rates on 50% of the loans are linked to the repo rate, 2% to other external benchmarks, and 17% to MCLR and other older benchmarks. The balance 31% of loans have fixed interest rates.

Non-interest income, excluding treasury, grew by 23.3% year on year to INR63.89 billion in Q1 of 2025. Fee income increased by 13.4% year on year to INR54.90 billion in this quarter. Fees from retail, rural, business banking, and SME customers constituted about 78% of the total fees in this quarter.

Dividend income from subsidiaries was INR8.94 billion in this quarter compared to INR2.91 billion in Q1 of last year. The year-on-year increase in dividend income was primarily due to dividend from ICICI Securities, ICICI Lombard General Insurance, and ICICI Prudential Life Insurance in Q1 of this year compared to Q1 of last year.

On costs, the Bank's operating expenses increased by 10.6% year on year in this quarter compared to 19% in FY2024. In Q4 of last year, the year-on-year increase was 12.9% adjusted for one-off in the previous year's base, as we had stated on the earnings call.

Employee expenses increased by 12.5% year on year in this quarter, reflecting mainly the impact of annual increments and promotions that takes place during the first quarter of every fiscal year. Non-employee expenses increased by 9.2% year on year in this quarter primarily due to retail business related and technology expenses.

The technology expenses were about 9.3% of our operating expenses in this quarter. Our branch count has increased by 64 in the first quarter. We had 6,587 branches as of June 30, 2024. The total provisions during the quarter were INR13.32 billion, a year-on-year increase of 3.1% over the provisions of INR12.92 billion in Q1 of 2024.

This includes the impact of release of AIF related provisions of INR3.89 billion during the quarter, pursuant to clarity on the regulatory requirements. The provisions during the quarter were 8.6% of core operating profit and 0.43% of average advances compared to 9.3% of core operating profit and 0.49% of average advances in Q1 of 2024.

Adjusting for the AIF provision release and the seasonality of KCC provisioning which comes in only in Q1 and Q3, the credit cost to advances would be about 50 basis points, which is the adjusted credit cost level we had spoken of in the earnings calls for the previous two quarters as well.

The provisioning coverage on NPAs was 79.7% as of June 30, 2024. In addition, we hold INR8.63 billion of provisions on borrowers under resolution. Further, the bank continues to hold contingency provision of INR131 billion as of June 30, 2024.

At the end of June, the total provisions, other than specific provisions on fund-based outstanding to borrowers classified as non-performing, were INR234.03 billion or 1.9% of loans. The profit before tax excluding treasury grew by 11.8% year on year to INR140.80 billion in Q1 of this year.

Treasury gains increased to INR6.13 billion in Q1 from INR2.52 billion in Q1 of the previous year, primarily reflecting realized and mark-to-market gains in equities and security receipts. As you are aware from the first quarter of this year, the revised investment guidelines have become applicable under which the mark-to-market gain on investments classified as fair value through P&L flows through the P&L, which was not getting recognized prior to the introduction of these guidelines, and hence, the future course of treasury gains will depend on these market movements.

The tax expense was INR36.34 billion in this quarter compared to INR31.99 billion in the corresponding quarter last year. The profit after tax grew by 14.6% year on year to INR110.59 billion in this quarter. Sandeep earlier talked about the capital adequacy position with a CET-1 ratio, including profits for Q1 of 2025, of 15.92%, Tier 1 ratio of 15.92% and total capital adequacy ratio of 16.63% at June 30, 2024.

These ratios include the impact of increase in risk-weighted assets for operational risk, which is computed in first quarter of every fiscal year and also the impact of implementing revised investment guidelines that became applicable during the first quarter.

Growth in our digital offering, we continue to enhance the use of technology in our operations to provide simplified solutions to customers. The bank has launched an industry-first initiative SmartLock that empowers customers to instantly lock or unlock the key banking services such as UPI, Debit Cards, and Credit Cards, with just one click on iMobile Pay.

About 71% of trade transactions were done digitally in Q1 of 2025. The volume of transactions done through Trade Online platform grew by 21.5% year on year in Q1 of 2025. We have provided details on our retail, business banking, and SME portfolio in slides 25 to 32 of the investor presentation.

The loan and non-fund based outstanding to performing corporate and SME borrowers rated BB and below was INR52.86 billion at June 30, 2024, compared to INR55.28 billion at March 31, 2024. This portfolio was about 0.43% of our advances at June 30, 2024.

Other than two accounts, the maximum single borrower outstanding in the BB and below portfolio was less than INR5 billion at June 30, 2024. At June 30, 2024, we held provisions of INR8.49 billion on the BB and below portfolio compared to INR9.03 billion at March 31, 2024. This includes provisions held against borrowers under resolution included in this portfolio. `

The total outstanding to NBFCs and HFCs was INR854.12 billion at June 30, 2024, compared to INR770.68 billion at March 31, 2024. The total outstanding loans to NBFCs and HFCs were about 7% of our advances at June 30, 2024.

During the current quarter, the increase in the NBFC portfolio was primarily due to lending opportunities to higher rated borrowers as well as opportunities via the bond market. The builder portfolio including construction finance, lease rental discounting, term loans, and working capital was INR521.30 billion at June 30, 2024, compared to INR482.92 billion at March 31, 2024.

The builder portfolio was about 4.3% of our total loan portfolio. Our portfolio largely comprises well-established builders and this is also reflected in the sequential increase in the portfolio. About 2.2% of the builder portfolio at June 30, 2024, was either rated BB and below internally or was classified as non-performing, compared to 2.7% at March 31, 2024.

Moving on to the consolidated results. The consolidated profit after tax grew by 10% year on year to INR116.96 billion in this quarter. The details of the financial performance of subsidiaries and key associates are covered in slides 40 to 42 and 62 to 67 in the investor presentation.

The annualized premium equivalent of ICICI Life increased to INR19.63 billion in Q1 of 2025 from INR14.61 billion in Q1 of 2024. The value of new business increased to INR4.72 billion in Q1 2025 from INR4.38 billion in Q1 of 2024.

The value of new business margin was 24% in Q1 of 2025 compared to 24.6% in fiscal 2024. The profit after tax for ICICI Life increased by 8.7% year on year to INR2.25 billion in Q1 of 2025 compared to INR2.07 billion in Q1 of 2024.

The gross direct premium Income of ICICI General was INR76.88 billion in Q1 of 2025 compared to INR63.87 billion in Q1 of 2024. The combined ratio stood at 102.3% in Q1 of 2025 compared to 103.8% in Q1 of 2024. The profit after tax was INR5.8 billion in Q1 of 2025 compared to INR3.9 billion in Q1 of 2024.

The profit after tax of ICICI AMC, as per Ind AS was INR6.33 billion in this quarter compared to INR4.74 billion in Q1 of last year. 13 The profit after tax of ICICI Securities, as per Ind AS on a consolidated basis, was INR5.27 billion in this quarter compared to INR2.71 billion in Q1 of last year.

ICICI Bank Canada had a profit of CAD20.3 million in this quarter compared to CAD16.4 million in Q1 last year. ICICI Bank UK had a profit after tax of USD7.7 million in this quarter compared to USD9.4 million in Q1 of last year. As per Ind AS, ICICI Home Finance had a profit after tax of INR1.17 billion in the current quarter compared to INR1.05 billion in Q1 of last year. With this, we conclude our opening remarks and we will now be happy to take your questions.

(Operator Instructions) Mahrukh Adajania, Nuvama Institutional Equities.

Yeah, hi, congratulations. My first question is on deposit and loan growth, so incrementally everyone's complaining about time deposits. There are some rate hikes that have happened as well. So are you still comfortable with same maybe targeting loan growth of mid to high teens? And would you be comfortable increasing your LDR since it's already lower than peers or would deposits continue to grow in line with loans? That's my first question and then I have two more.

So Mahrukh, we don't target any particular level of loan growth. But we have grown our deposits quite comfortably during the quarter at an average deposit growth of 17% on an average basis and you know, 15%-plus on a period end basis.

The deposit flows are quite heavy in terms of supporting the loan growth. As you said, you know, the deposit rates continue to be tight. The wholesale deposit rates have not really come down during the first quarter as they usually do. And of late, there has been one or two hikes in the retail deposit rate also, although in one case it is at a longer tenor. So we'll have to see how the deposit market moves going ahead.

But we don't feel that as a constraint in terms of, you know, the available lending opportunities. On the lending side also, I think there is, you know, price competition the other way, and we are seeing, you know, a fair amount of competition, particularly on the corporate side. So we'll keep calibrating both.

As far as the LDR is concerned, I think you know this low to mid-80s is the level of domestic LDR that we have historically operated at and I don't see any big change in that. You know, it may vary one quarter up or down, but broadly it should be at that level.

As far as the both deposit growth and loan growth are concerned, of course, over the next couple of quarters, we will also have to take into account, you know, the implications of the revised guidelines on LCR, the draft, which has come, which will have some impact on both deposit markets and loan markets. So we'll have to see that as we go along as well.

Okay. So my other two questions. One is if you have any rough calculation on LCR, and can we assume that 90%, 95% of deposits would fall under the digitally enabled tab. And the other question is just on retail recoveries, right. So obviously, do you see them slow down? Because there's a lot of -- in your customer segments because there's a lot of discussion on customer leverage in some segments or the other. So in your set of customers, do you see the retail recoveries flowing in as smoothly as you saw last year. How does it play out?

So on the first one, I think it's a fairly easy calculation to do because the LCR disclosures, as you know, public and at least I think all the analyst reports that we've seen as of yesterday for the major banks talk about a between a 10 percentage point and 14 percentage point, 15 percentage point impact and I think that's a fair estimate.

On the recoveries, I think we have been saying for some time that the pace of recoveries will vary and may not continue at the same pace because we were still collecting out of the pool of NPAs that got created in fiscal '21, fiscal 22, so that pace will come up. And therefore, the credit cost will also normalize upwards.

But as I mentioned earlier, finally, if we look at it, you know, the credit costs are still at or below around 50 basis points. And then NPA ratios, provisioning coverage are all fine. So I think that's the way we would look at it.

Okay, thanks a lot. Thanks.

Nitin Aggarwal, Motilal Oswal.

Thank you so much. And congrats on a good quarter. I have two questions. First is on the cards portfolio. Like a there are a few other banks and NBFCs have reported acute stress in this segment. And the system in general is seeing some rise in delinquencies.

So how do you see the asset quality outlook here? And if you can just also provide some color on the credit cost currently versus the long period average, some qualitative color around that will also be helpful. So that's my first question.

As far as cards is concerned, you know, it's less than 5% of our loan portfolio. And whatever happens in the credit cost there has flowed into the overall numbers. I would say that we see it as a growth business and we are investing in growth in that business in terms of both products and distribution and our offerings. So that's a business we would like to grow.

On the credit cost, if you're asking about on the overall basis, I think we are as I said currently, we seem to be operating at about 50 bps. This I would expect it to further normalize gradually. But what the long period average will be, you know, in the kind of portfolio construct and the systemic construct that we have now is difficult to say at this point. But I would say that, you know, it will be better than historical levels for sure.

Okay. And Anindya, also I meant this is credit cost outlook on the cards specifically, like how do you compare versus long period average?

So we don't really call that out. As I said, it's about 5% of our book, but it is a book we would be very keen to grow.

Okay, sure. And the other question is on the yield on advances, which has come down this quarter around 8 basis points. So how do you read that? Like, is it like that the yield has eased out and will sustain around current levels? Or how do you really read this?

So part of it will just be the impact of the non-accrual on the KCC portfolio because there, you know, unlikely that is non-accrual of interest accrued over a slightly longer period. That could be one component and others, there will be some small movements here and there, nothing really specific to call out. On gross lending rates per se, as I said, I think we continue to see a reasonable amount of competition, particularly on the corporate side.

Sure. And there's this one clarification on the treasury gain also, which is a higher number this quarter, what's the updates that we have reported in the prior years? So some like details as to behind this game and how do we like see this moving?

So we would have made gains from our normal proprietary trading businesses, which trade, you know, equities, fixed income, and currency. We also had some gains on our security receipts portfolio, both realized gain because there were redemptions, you know, of the security receipts, and then there would be the third component would largely be the mark-to-market on the fair value through P&L portfolio, which is, you know, earlier, we had to only take the negative MTM impact, now under the new guidelines on the AFS portfolio, the MTM impact either positive or negative close to the AFS reserve and on the fair value through P&L portfolio, whether positive or negative it flows through to the P&L.

And in this quarter it would have been, you know, a positive impact. So those would be the three impacts. In the overall context, even at INR6 billion, the treasury profit number is a pretty small component of the P&L.

Right. Got it. Thanks, Anindya, so much, and wish you all the best.

(Operator Instructions) Manish Shukla, Axis Capital.

Yeah, good evening and thank you for the opportunity. Just going back to the yield on loans question. On the QoQ, I appreciate that. But even if you look at YoY, the yields are 9.86 to 9.8. During this period, the share of retail, SME, and business banking has gone up, which I believe is higher yielding business. MCLR rates would be higher, the NPA proportion is lower, and yet the yield on advances have not gone up, what would explain that?

So I think the yield on advances really has, you know, been at a stable level over the last year. If you look at all the categories that you mentioned, there has been no real increase in market pricing, which would have taken the yields up.

In fact, if we look at, for example, as you know, even on something like personal loans, the lending rates were at very low-teens kind of lending rate. If you know, the mortgage market has been very competitive as has been the corporate market. So there was no real case for yields to go up.

Also on the SME and business banking side, I think we and I would guess other private sector banks are, most banks are operating at really the upper end of the quality spectrum. So it's not in itself a high yield business in that sense. So in that context, I think, you know, the yields are quite okay in terms of the yield movement reported.

Okay, sure. Secondly, OpEx growth for the full year, how should we really think about it relative to the balance sheet growth or income growth? And if you could talk about it separately in terms of employee and non-employee expenses.

We don't give guidance on expenses or different components of expenses. But as you would have seen, the OpEx growth has been coming down over the quarters. And the adjusted growth for Q4 was also between 12% and 13%. This quarter, it is 10%-odd. So I would expect that, that should be a fair indicator. I don't think that there is anything that should take it up materially in our business as we will say.

Sure. Thank you. Those were my questions.

Abhishek Murarka, HSBC.

Yeah, hi, good evening, everyone. Thanks for taking my question. So three questions, one in cards and PL, do you think any additional tightening is needed or the current growth rates, Q2 growth rates allow you to filter out enough to withstand this kind of QoQ trend can continue?

So I don't think we are looking at really any material tightening. I mean there is minor tweaking and refinement that we keep doing. On PL, we had taken a number of actions last year. And I think, you know, the growth rate has come off.

If you look at the year-on-year growth, that has come from 40% to 24%. And I'm guessing by the time we end this year, it will be closer to a 20% kind of number or lower. So there I don't think there is anything much to be done. Cards is an ongoing refinement. But as I said there, as you know, we want to grow the business. So to answer your question, I don't think anything major.

Okay, perfect. Second question is on corporate loans. We see now few banks growing corporate loans on a QoQ basis this quarter, is it because there is now some bit of asset quality strike in the retail side and therefore, you know, moving to this side or there are better rather opportunities in the space? How do we read this and what's happening in that space if you could give an update?

So it has nothing to do with asset quality on the retail side. You know, I think it really depends on what opportunities come at any point in time and what is the pricing available? So if you look at, we've spoken of in this quarter also, we saw a growth in the NBFC portfolio and growth in the real estate portfolio. And some of this, of course, is at, as you know, decent pricing and as well as well within our risk-reward thresholds.

In the previous couple of quarters, our NBFC portfolio has gone down because of some prepayments, et cetera. So that has not happened this quarter. So I think if you look at it for the last several quarters, our corporate book has grown at around 10%. You know, it could be 8% to 9% in one quarter, it could be 11% to 12% in another.

And that is, you know, a pretty steady pace, no change in approach. Going forward, I think what we are currently seeing, again is a fair amount of competitive intensity in that space. So we'll have to calibrate to that.

Okay, perfect. And just quickly on LCR. So just as an approach, now do you need to maintain 20%, 25% additional LCR over the [100%] on an ongoing basis or once you are reserving higher and anyway, it is more stringent, so you don't need to maintain that much surplus. And that can be how you offset the impact of this new circular?

I think we have to think of that through and, you know, we have to I guess look at refining, you know, both the asset and liability side of the balance sheet. But we'll have to think that, not something we can respond as of now.

Okay, got it. Thank you so much and all the best for the quarter.

Piran Engineer, CLSA.

Yeah, hi, team. Congrats on the quarter. Just sort of getting back to some of the questions that were asked earlier on yields, Now I'd be interested in your thoughts as to borrower demand has been strong for the last two years, the raw material cost for banks is going up yet. None of the banks, not just you, but none of your peers have been able to pass it on to the borrowers. Why do you think that's the case really? Or is it that even if there's growth you are sacrificing NIMs?

It would not be correct to say that it has not been passed on at all. So I think if you look at, for example, a product even though it has been very competitive, but products like home loans, auto loans, or a number of asset classes, yields have gone up between certainly FY22, '23. That is not going up any further now. On the corporate side, I think in two markets, I would say corporate and mortgages, there is episodes of competitive intensity because I think different banks may have different motivations at various points of time.

Okay. Is it also the case that within each product, the customer selection is getting better? So just getting to like Manish's question on the product mix changing, but then in each product, you're getting to better types of customers, so the effective yield has not changed. Is that is what is happening?

So I would say that for the quality customer, the banks are quite competitive in terms of terms of yield. And I think broadly, banks are focused on, I would say, more prime end of the spectrum.

Got it. Okay. That was it from my end. Thank you and wish you all the best.

Param Subramanian, Nomura.

Yeah, hi, thanks for taking my question. Just one question from my side. Could you explain the quarter-on-quarter movement in net worth because it's up INR15,600 crore, whereas the profit for the quarter was INR11,000 crore. So is there something that I'm missing here?

Yeah. So you know the revised investment guidelines became applicable in the quarter. And as we have disclosed in our stock exchange release, we recognized an AFS reserve plus retained earnings of about INR32 billion net of deferred tax. And the AFS reserve would have increased a little bit further based on market movements between April and June. So that would be the main component.

In addition, some amount of capital and reserves get added every quarter due to stock option exercises, but that's a smaller number Okay.

Fair enough. Okay. Thanks, Anindya. Yeah, got it. Thank you.

Kaitav Shah, Anand Rathi Financial Services.

Thank you. All my questions have been answered. Thank you.

(Operator Instructions) Kunal Shah, Citigroup.

Yeah, hi. Sir, firstly maybe if you can quantify the impact of the --

Kunal, sorry to interrupt you. Can you speak through the handset, please?

Yes. So if you can just quantify the impact of penal charges circular, which has come through, that would be helpful. And secondly, maybe with respect to recoveries, maybe if corporate recoveries are anticipated to be relatively lower, should we see the faster normalization we have seen in one of the peer banks that impacting the credit cost immediately in one single quarter, do we expect that kind of volatility or maybe for us as you mentioned, it should be gradual or maybe gradual normalization, which will come through in the quarters?

So on the penal charges circular, we have not really put out any number. So that's not something I can share. On the recoveries part, I would just say that overall, you know, our credit costs have been quite steady. Even in the last couple of quarters where, you know for various reasons, the reported numbers were pretty low, we had kind of said that the adjusted cost for the quarter would be around 50 bps and that is where it is. There will always be some up and down in terms of additions, recoveries, et cetera. But that's okay, but not something that we would want to specifically comment on.

Okay. And lastly, in terms of as you also indicated, in terms of the retail couple of players have high -- about almost like 20 basis points-odd, how would we take a call maybe -- are we looking to be clearly competitive and increase the interest rates and even in terms of the now brand expansion and changes compared to what you have earlier articulated in terms of the plan on an annual basis?

On the rates, we'll take a view -- these are dynamic markets, so as we go along, we will take a view based on, you know, both our target -- our kind of desired level of mobilization as also the maturity bucket, which works for us. On the branch, no change as such.

Okay. Thank you. Thank you and all the best, sir.

Thank you very much. Ladies and gentlemen, we'll take that as the last question. I'll now hand the conference over to the management for closing comments.

Thank you all for taking time out on a Saturday as always. And if any other clarifications are required, please reach out. Thank you.

Thank you very much. And on behalf of ICICI Bank Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.