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, on Saturday reported a net profit of ₹11,318 crore for the three months to December, down 4% year-on-year (y-o-y) as an RBI-mandated provision weighed on the bottomline.

As a result, the bank failed to meet analyst estimates. According to 13 analysts polled by Bloomberg, ICICI Bank was expected to report a 6% year-on-year rise in net profit to ₹12,493 crore.

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

According to Sandeep Batra, an executive director of the bank, the impacted loan book is between ₹20,000-25,000 crore. This would mean that this portfolio where RBI has asked the bank to set aside more money is anywhere from 24-30% of its rural loanbook as on 31 December.

“The RBI, as you are aware, does an annual inspection as part of the cycle. We have been doing this portfolio since 2012, and RBI has made an assessment that theterms of the facilities were not fully in compliance with the regulatory requirement for PSL,” Batra told reporters over a conference call on Saturday.

Under RBI’s priority sector lending norms, banks have to set aside 40% of their total credit to sectors like agriculture, small businesses, education, and renewable energy, among others.

Batra reiterated that there is no change of asset classification or conditions applicable to the borrowers or in repayment behavior of the borrower of these loans. “So we are very comfortable with the quality of the book that we have done. We will work towards repayment and renewal of these loans to make them in conformity with the PSL guidelines, and our endeavor would 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 around since 2012.

CEO Bakhshi’s term extended for two years

Meanwhile, the bank’s board has decided to extend the term of current chief executive Sandeep Bakhshi by another two years, after his existing tenure ends in October. This, of course, is subject to approvals from RBI and the shareholders, among others. Bank boards typically seek three-year terms for chief executives and ICICI Bank’s decision to restrict it to two years, raised a flurry of questions.

Batra said that the board, “in its wisdom, in consultation with the managing director, decided to give a two-year term”. He said that since the reappoint is only due in October — nine months away — it is akin to three years. “We have informed the market well in advance,” said Batra.

Mint reported in October 2025 that 65-year-old Bakhshi's tenure was up for renewal in about a year, and the market was looking for clarity on whether the man who pulled the lender out of a slump would get another term. Under RBI India regulations, private bank chiefs can be at the helm for up to 15 years or till they turn 70.

Analysts see a silver lining in the reappointment. Analysts at Bernstein said in a note on Saturday that the re-appointment for a further two-year term, extending through October 2028, removed a key overhang on the stock and emerged as the most significant positive from the quarter. “However, a 2-year extension vs. the usual 3-year means that the relief is not permanent,” said Bernstein.

The bank reported total provisions of ₹2,556 crore in the three months through December, more than double of what it reported in the same period last year. While its domestic loan book grew 11.5% year-on-year to ₹14.7 trillion, deposits at the end of the quarter rose 9.2% y-o-y to ₹16.6 trillion as on 31 December.

ICICI Bank witnessed an improvement in asset quality, with gross non-performing assets (NPA) at 1.53% of total loans as on 31 December, compared to 1.58% on 30 September and 1.96% on 31 December 2024.