India · Delayed Price · Currency is INR IDFC First Bank Earnings Call Transcripts
Fiscal Year 2026
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Loans and advances grew 20% YoY, with strong asset quality and stable NIM at 5.75%. Despite a one-off fraud impacting Q4 profit, normalized PAT surged 145% YoY. Deposit growth is expected to rebound, with credit cost guided at 170-180 bps and ROE approaching 1% next year.
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A fraud at a single branch involving employee collusion and external parties led to an estimated INR 590 crore impact, but the issue is isolated and the bank remains well-capitalized. Enhanced controls, a forensic audit, and recovery efforts are underway, with no material impact expected on overall business or client relationships.
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Strong deposit and loan growth, improved margins, and robust asset quality drove a 48% YoY profit increase. Cost of funds and credit costs are trending down, with further margin and ROA improvement expected as scale builds and MFI issues subside.
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Customer deposits and loans grew over 20% YoY, with asset quality and profitability improving sequentially. Management expects NIM to rise above 5.8% by Q4 and credit costs to trend lower, while maintaining a cautious approach to deposit rate cuts and capital allocation.
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Balance sheet and deposits grew robustly year-over-year, while NIMs moderated due to repo pass-through and microfinance contraction. Asset quality remains stable, with credit costs guided at 2.0–2.05% and margins expected to recover by Q4 as deposit repricing benefits flow through.
Fiscal Year 2025
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Balance sheet and deposits grew robustly, with strong retail and CASA momentum. Microfinance stress led to higher provisions and lower PAT, but collection efficiency rebounded and credit costs are expected to decline. Capital raise and cost controls position the bank for improved ROE and growth.
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Balance sheet and deposits grew strongly YoY, but MFI segment stress led to higher credit costs and impacted profitability. Management expects MFI credit costs to peak in Q4, with operating leverage and cost-to-income ratio set to improve, supporting a long-term ROA target above 2%.
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Q2 FY25 saw strong deposit and loan growth, but profitability was hit by elevated provisions from the MFI segment and a legacy toll road account. Asset quality outside MFI remains stable, and management expects credit costs to normalize, with long-term growth and profitability targets unchanged.
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Deposits grew 38% year-over-year to INR 200,000 crore, with strong retail and CASA momentum. Asset quality remains stable except for the JLG microfinance segment, which saw higher credit costs due to floods. Cost-to-income ratio improved to 70.45%, with further reductions and profitability gains expected as high-cost borrowings run off.