ICICI Bank's quarterly performance on paper was superb. However, on Monday, October 19, its share price performed the opposite.
It closed the trading at ₹1,382, representing a decrease of 1.06% from its previous close of ₹1,396.80. It started trading at ₹1,408.90 and made a highest of ₹1,412 before falling to ₹1,378.05 as its lowest.
This happened on the first trading day following ICICI Bank's release of its third-quarter financial results that surpassed profit expectations.
ICICI Bank saw a net profit growth of 20.1% YoY to ₹14,843.03 crore for the September quarter. Last year, the figure stood at ₹12,358.89 crore. The company disclosed its results on October 17, Saturday.
The net profit also exceeded expectations. The estimate was ₹14,280 crore, as per Whalesbook. Total income witnessed an increase of 15.86% to ₹57,157 crore.
Core operating profit grew by 21.8% to ₹20,805 crore.
The reason why investors are cautious is the net interest margin—the difference between the return on advances made and interest expense on deposits. The net interest margin has declined to 4.18% in Q2 from 4.36% in Q1 and 4.3% in the same period last year.
As explained by Upstox, margins are under pressure despite an increase in interest income. The decline is about 12 basis points during the year and 18 points during the quarter.
Margins have always been a key figure in major lending institutions. It implies that an increase in advance is not yielding the required profit per unit loan.
Gross NPA additions were ₹4,833 crore, up from ₹5,034 crore. Net additions, excluding provisions and write-downs, came in at ₹1,213 crore, down from ₹1,386 crore.
During the quarter, the bank made provision for gross NPA of ₹1,592 crore. Net NPA was at 0.30%.
The capital buffer maintained by the bank is healthy. The total capital adequacy ratio and CET-1 were 16.68% and 16.01%, respectively, as of September 30, 2026, compared to the minimum of 11.70% and 8.20%.
The analysts were largely ignoring the dip. According to Macquarie, Q2 earnings were above expectations thanks to robust advances and low credit costs.
The net interest income was up 18% compared to last year's, and advances jumped by 30%, out of which 12% was from the last quarter. On a non-treasury basis, profits jumped 23%.
Macquarie maintained its Outperform recommendation with a one-year target price of ₹1,730. BusinessToday reported that three brokerage houses remained positive on the company.
For ICICI Bank, it has been a good stock pick story. In five years, its stock has returned by 92%, and in three years, it has returned over 46%. The market capitalization of ICICI Bank stands around ₹10.03 lakh crore.
Ahead of the results, there was little activity in its share price. On Friday, the stock ended trading 0.55% higher at ₹1,397. The fall on Monday wiped out the gains.
It should be noted here that the sector performance is important too. The results from HDFC Bank indicated a 4.7% increase in net profit to ₹19,510 crore for the quarter.
It is useful to remember to maintain some proportion in the matter. The decrease in value of over 1% can hardly be called serious given the volatility of the bank shares during the year amid interest rate cuts and funding costs.
The previous cases were much worse. Back in January 2016, the stock price decreased by more than 7% due to unexpectedly low profits caused by bad debt provision. This event cannot even be compared to Monday's one.
Nevertheless, it proves once again that the expectations from this stock are very high. Even if the company shows good profit growth, if one financial indicator is decreasing, its price will not necessarily go up.
