ICICI Bank Q2 Results Preview: PAT, NII may rise up to 21% YoY; margins, deposit growth in focus

ICICI Bank is expected to report strong year-on-year (YoY) growth in net interest income (NII) and profit after tax (PAT) in the September quarter, according to brokerage estimates. Investors are likely to focus on net interest margins (NIMs), loan and deposit growth, operating profitability and asset quality.

The private sector lender's earnings are expected to benefit from healthy balance sheet growth, even as margins face pressure from a higher proportion of leveraged loans and strong foreign currency non-resident (bank) deposit inflows.

Brokerage estimates point to NII growth of 15.8-18% YoY in Q2FY27, while PAT is projected to rise 15-21%. JM Financial expects PAT to grow 15% YoY, while Motilal Oswal Financial Services (MOFSL) and Dolat Capital project growth of 18.5% and 21%, respectively.


Operating profitability is also expected to remain strong, with pre-provision operating profit (PPOP) growth estimates ranging from 20% to 21%. However, the sequential trajectory of margins, provisioning requirements and management commentary on loan growth will be key monitorables.

NII growth likely to remain strong

Brokerages expect ICICI Bank's NII to grow 15.8-18% YoY in Q2FY27, supported by loan growth. Sequential growth estimates range from 2.3% to 5%.

JM Financial estimates NII at Rs 24,940.4 crore, up 15.8% YoY and 2.3% quarter-on-quarter (QoQ).

MOFSL projects NII at Rs 25,150 crore, an increase of 16.8% YoY. Based on its estimates of Rs 24,380 crore in Q1FY27 and Rs 25,150 crore in Q2FY27, sequential growth works out to approximately 3.2%.

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Dolat Capital expects NII to rise to Rs 25,490 crore, up 18% YoY and 5% QoQ, the highest estimate among the three brokerages.

Margins likely to remain under pressure

Net interest margins are expected to face sequential pressure in Q2FY27, even as loan and deposit growth remain healthy.

MOFSL expects NIMs to decline by 20 basis points QoQ, citing strong foreign currency non-resident (bank) deposit inflows and a higher proportion of leveraged loans. The brokerage's estimates suggest that strong growth in advances and deposits may not fully translate into margin expansion in the near term. The impact of funding costs and the changing loan mix will therefore be important in determining the bank's earnings trajectory.

Management commentary on deposit pricing, the cost of funds, lending yields and the outlook for NIMs will, brokerages said, be closely watched.

Loan and deposit growth in focus

Loan and deposit growth will remain key monitorables as ICICI Bank seeks to expand its balance sheet while managing funding costs.

MOFSL expects loan growth of 26.2% YoY and 9% QoQ in Q2FY27. Deposits are projected to rise 25.2% YoY and 10.1% sequentially, supported by strong foreign currency non-resident (bank) deposit inflows.

The brokerage estimates deposits at Rs 20,19,700 crore in the September quarter, compared with Rs 18,33,600 crore in the June quarter. Advances are projected at Rs 17,77,700 crore, against Rs 16,31,300 crore in Q1FY27.

The strong growth in deposits is expected to support the expansion in advances. However, the contribution of foreign currency deposit inflows and their implications for funding costs will be important in assessing the sustainability of this growth.

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Profit growth expected to remain healthy

Despite the expected pressure on margins, brokerage estimates point to healthy growth in operating profitability and net profit in Q2FY27.

JM Financial expects ICICI Bank to report PAT of Rs 14,217.8 crore, up 15% YoY. It estimates PPOP at Rs 20,756.9 crore, an increase of 20% YoY.

MOFSL projects PAT at Rs 14,650 crore, up 18.5% YoY, while operating profit is estimated at Rs 21,050 crore, representing growth of 21.7%.

Dolat Capital expects PAT to rise to Rs 14,910 crore, up 21% YoY and 1% QoQ. It estimates PPOP at Rs 20,980 crore, an increase of 21% YoY and 3% sequentially.

The estimates suggest that operating profitability is expected to grow faster than NII, supported by income growth and operating leverage. MOFSL expects operating expense growth to lag balance sheet growth, which could help contain cost pressures.

However, sequential earnings trends are expected to be more moderate. JM Financial projects PAT to decline 4% QoQ, while Dolat Capital expects a 1% increase. The divergence in estimates highlights the potential impact of margins, other income, operating expenses and provisions on the final earnings outcome.

Asset quality and provisions remain key monitorables

Asset quality is expected to remain an important area of focus, with investors likely to track credit costs, provisioning requirements and fresh slippages for signs of stress.

MOFSL expects provisions to rise marginally QoQ, partly due to higher standard asset provisioning on the leveraged portion of the loan book.

The brokerage estimates gross non-performing assets (GNPA) at 1.3% in Q2FY27, compared with 1.4% in Q1FY27. Net NPA is expected to remain at 0.3%, against 0.4% in the June quarter.

MOFSL projects the provision coverage ratio (PCR) at 75.7%, compared with 75.2% in Q1FY27.

The expected moderation in gross and net NPA ratios points to an improvement in reported asset quality. However, the movement in credit costs, slippages and standard asset provisions will be important in determining the impact of the loan book's risk profile on profitability.

Investors will also assess whether the bank can maintain asset quality as advances expand and its exposure to leveraged borrowers increases.

Management commentary, growth outlook in focus

Beyond the headline numbers, investors will look for clarity on loan growth, deposit mobilisation, NIMs, operating expenses and provisioning trends.

The sustainability of deposit inflows, the impact of leveraged lending on margins and provisions, and the bank's ability to maintain operating leverage will be key indicators of its earnings outlook.

MOFSL has retained its Buy rating on ICICI Bank with a target price of Rs 1,750, compared with its cited market price of Rs 1,318. This implies an upside of approximately 33%.

The brokerage has also raised its earnings per share (EPS) estimates for FY27 and FY28 by 2.5% and 3.4%, respectively, indicating improved earnings expectations despite near-term margin pressure.

Disclosure: This article has been written by Kumar Gaurav, who is not a Sebi-registered Research Analyst or an Investment Adviser. Gaurav and their ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective Sebi-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here