ICICI Bank Q3 profit drops 4% YoY as RBI seeks more provisions; CEO Sandeep Bakhshi’s term extended for 2 years

ICICI Bank, India’s second largest private sector lender, reported net profit on Saturday ₹11,318 crore in the three months to December, down 4% year-on-year as the RBI-mandated provision put pressure on profitability.

As a result, the bank failed to meet analyst forecasts. ICICI Bank was expected to report a 6% increase in annual net profit, according to 13 analysts surveyed by Bloomberg. ₹12,493 crore.

The bank said that after the RBI FY25 supervisory review, the regulator directed it to make additional provisions. ₹1,283 crore in agriculture priority sector loan portfolio.

According to Sandeep Batra, managing director of the bank, the affected loan book ₹20,000-25,000 crore. This means that this portfolio, for which the RBI has asked the bank to allocate more money, was between 24-30% of the rural loan book as on December 31.

“As you know, the RBI conducts annual inspection as part of the cycle. We have been doing this portfolio since 2012 and the RBI has made an assessment that the conditions of the facilities do not fully comply with the regulatory requirements for PSL,” Batra told reporters in a conference call on Saturday.

As per the RBI’s priority sector lending norms, banks are required to allocate 40% of their total loans to sectors such as agriculture, small businesses, education and renewable energy, among others.

Batra reiterated that there is no change in the asset classification or conditions applicable to borrowers or the repayment behavior of the borrower of these loans. “So we are very pleased with the quality of the book we have done. We will work to repay and renew these loans to bring them in line with the PSL guidelines and our effort will be to minimize the PSL and provisioning impact,” he said.

Batra did not elaborate on what specifically changed in the portfolio in FY25 for the regulator to mandate additional provisions, given that these loans have been in existence since 2012.

CEO Bakhshi’s term extended by two years

Meanwhile, the bank’s board of directors has decided to extend the tenure of current managing director Sandeep Bakhshi for another two years after his current tenure ends in October. This is of course subject to approvals from the RBI and shareholders, among others. Bank boards generally require three-year tenure for senior executives and ICICI Bank’s decision to limit the tenure to two years has raised many questions.

Batra said the board “in its wisdom, in consultation with the managing director, decided to grant a two-year tenure”. He said this period was close to three years because the reappointment was only made in October (nine months later). “We informed the market well in advance,” Batra said.

Mint reported in October 2025 that 65-year-old Bakhshi’s term will be renewed in about a year, and the market is awaiting clarity on whether the man who pulled the lender out of crisis will get another term. Under RBI India regulations, private bank chiefs can stay at the helm of the bank for up to 15 years or until they reach the age of 70.

Analysts see a positive development in the reappointment. The reappointment for a two-year term that will be extended through October 2028 removes a significant overhang on the stock and emerges as the most significant positive development for the quarter, analysts at Bernstein said in a note published Saturday. “However, a 2-year extension versus the usual 3-year extension means the relief is not permanent,” Bernstein said.

The bank reported its total provisions ₹2,556 crore in the three months to December, more than double the figure reported in the same period last year. While the domestic loan portfolio grew by 11.5% on an annual basis, ₹14.7 trillion, at the end of the quarter, deposits increased by 9.2% on an annual basis ₹16.6 trillion as of December 31.

ICICI Bank recorded an improvement in asset quality with gross non-performing assets (NPA) accounting for 1.53% of total loans as on December 31, up from 1.58% on September 30 and 1.96% on December 31, 2024.