The bank’s net profit surged from Rs 200.69 crore in the year-ago quarter, while net interest income (NII) rose 6.8% YoY to Rs 5,112.57 crore, up from Rs 4,788 crore a year earlier. However, the net interest margin (NIM) declined 59 basis points year-on-year to 5.59%, down from 6.18% in Q2FY25 and 5.71% in the previous quarter.
Asset quality remained steady, with gross NPA ratio easing 6 basis points YoY to 1.86%, while net NPA increased slightly by 4 basis points to 0.52%.
Business momentum strong
IDFC First Bank’s total customer business expanded 21.6% YoY to Rs 5,35,673 crore as of September 30, 2025. Loans and advances grew 19.7% YoY to Rs 2,66,579 crore, while customer deposits climbed 23.4% to Rs 2,69,094 crore.
CASA deposits rose 26.8% YoY to Rs 1,38,583 crore, with the CASA ratio improving by 119 basis points to 50.07%. The cost of funds eased 23 basis points YoY to 6.23%, providing a cushion against margin pressure.
“The stress in the MFI business was an MFI industry issue and looks like it is behind us,” said V Vaidyanathan, MD and CEO of IDFC First Bank. “Other than MFI, the asset quality of the Bank has always been stable for over a decade through cycles and continues to be so with Gross NPA at 1.86% and Net NPA at 0.52% as of 30th September 2025,” he added.
Vaidyanathan noted that operating leverage is improving, highlighting that total business grew 22.7% YoY in FY25 and 21.6% YoY in H1FY26, compared with opex growth of 16.5% and 11.8% respectively. “We hope to sustain this trend,” he said, adding that the cost of funds is expected to drop further.
On Friday, shares of IDFC First Bank closed flat at Rs 71.91 on the BSE.
Motilal Oswal sees steady growth
Brokerage Motilal Oswal Financial Services (MOSL) maintained its ‘Neutral’ stance on IDFC First Bank with a target price of Rs 280, citing that asset quality stress appears to have peaked and earnings are likely to gather pace.
The brokerage said business growth remains robust, with net advances rising 20% YoY and deposits up 24% YoY, while CASA mix has improved to nearly 50%. It noted that the decline in NIM was limited to just 12 basis points quarter-on-quarter, and that the gross and net NPA ratios at 1.86% and 0.52%, respectively, reflect stability.
MOSL projects a 20% CAGR in loans and 63% CAGR in PAT over FY25–28, with FY27E ROA/ROE at 1.0% and 9.3%, respectively.
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