A Study on Ethical Financial Practices and Their Impact on Profitability at ICICI Bank

Abstract

Ethical financial practices encompass transparency, regulatory compliance, responsible lending, fair pricing, and robust corporate governance— pillars that collectively determine a financial institution’s long-term profitability and stakeholder trust. This study examines the relationship between ethical financial practices and profitability at ICICI Bank Limited, India’s secondlargest private sector bank, over the period FY 2019–20 to FY 2023–24. Using secondary financial data from ICICI Bank Annual Reports, RBI publications, and BSE disclosures, supplemented by primary survey data from 30 banking professionals across ICICI Bank’s Hyderabad branches, the study employs ratio analysis, trend analysis, and regression modelling to quantify the profitability impact of ethical practice dimensions. Findings indicate that compliance expenditure, ESG score improvement, NPA reduction through responsible credit practices, and transparency in fee disclosures are positively and significantly associated with return on assets (ROA) and net interest margin (NIM) improvements. The study identifies governance lapses and mis-selling risks as primary ethical vulnerabilities and provides structured recommendations for strengthening the ethical-profitability nexus.