IDFC First Bank’s net profit for the quarter ended December rose 50% year-on-year (YoY) to Rs 503 crore, driven by robust loan and deposit growth.
Net interest income increased 12% YoY to Rs 5,492 crore during the October–December quarter, while the net interest margin (NIM) expanded to 5.76% from 5.59% in the previous quarter. During the analyst call, the bank raised its NIM guidance to 5.85% from 5.80% earlier, supported by a reduction in savings account interest rates.
Margin Expansion
Other income rose 19% YoY to Rs 2,125 crore. Operating expenditure increased 13.4% YoY, while tax expenses surged 62.4% YoY to Rs 133 crore. On the business front, loans and advances grew 21% YoY to Rs 2.79 lakh crore as of December 31, while customer deposits increased 24% YoY to Rs 2.82 lakh crore. The bank’s credit-deposit ratio stood at 93.9% at the end of December.
The bank stated that 89% of the YoY growth in loans and advances was driven by mortgage loans, vehicle loans, consumer loans, business banking, and wholesale loans. Microfinance loan disbursements during the October–December quarter stood at Rs 1,174 crore, compared with Rs 953 crore in the same quarter last year and Rs 956 crore in the July–September quarter.
Within deposits, current account and savings account (CASA) deposits grew 32.96% YoY to Rs 1.50 lakh crore, lifting the CASA ratio by 157 basis points (bps) sequentially to 51.64%.
Asset Quality Resilience
Provisions and contingencies increased nearly 5% YoY to Rs 1,398 crore, although they declined by about 4% sequentially. In its investor presentation, the bank noted that the special mention account pool in microfinance declined 78% since March 2025, indicating easing stress in the segment. During the quarter, the lender utilised Rs 75 crore of contingency provisions and continues to hold Rs 165 crore as contingency provisions for the microfinance portfolio.
“Our asset quality has improved with GNPA at 1.69% and Net NPA at 0.53% as of December 31. On cost of funds, we expect it to further drop from here because of recent revision in savings rates, which will enable us to expand our lending franchise,” V Vaidyanathan, managing director and CEO, said.
During the reporting quarter, the cost of funds declined by 12 bps sequentially to 6.11%. Credit cost also fell by 19 bps to 2.05% from 2.24% in the July–September quarter. As of December 31, the capital adequacy ratio rose 188 bps quarter-on-quarter to 16.22%.