ICICI Bank has taken a more cautious approach to personal loans, slowing down growth due to concerns over asset quality and heightened risk. In the December quarter, while the bank reported overall stable financials, it faced an increase in retail and rural loan slippages, with ₹5,304 crore of the ₹6,085 crore in gross slippages coming from these segments. This includes ₹714 crore from its farmer credit card portfolio. Despite these challenges, ICICI Bank saw a recovery of ₹3,392 crore in loans, primarily from the retail sector, though it also wrote off ₹2,011 crore in bad loans.
The bank’s focus on maintaining a strong asset quality and reducing risk has led to a deliberate slowdown in personal loan growth. Its personal loan portfolio grew by 8.8% year-on-year, a significant drop from the mid-30% growth seen in the same quarter last year. According to executive director Sandeep Batra, this slowdown is a result of tighter underwriting standards and careful risk assessment, following warnings from the Reserve Bank of India regarding the unsecured loan market.
While overall loan growth remained healthy, up 15.1% year-on-year, the bank remains disciplined, particularly in the corporate lending sector, where competition is fierce. ICICI Bank’s net interest margin also showed a slight decline to 4.25% from the previous quarter, reflecting a cautious stance on pricing across loan segments. Despite these challenges, the bank’s profit after tax grew by 14.8% year-on-year, driven by an increase in other income, including gains from treasury activities.