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 improved profitability despite a one-off fraud impact. Deposit growth is expected to normalize, NIMs to remain stable, and credit costs to decline, supporting an ROE approaching 1% by year-end.
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A significant fraud at a single branch led to a financial impact of INR 590 crore, isolated to Haryana government-linked accounts. The bank has suspended implicated employees, initiated a forensic audit, and is enhancing controls, while maintaining strong capital and stakeholder confidence.
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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. Margins are expected to rise in H2, credit costs to decline, and the microfinance book to stabilize and resume growth. Management remains focused on digital capabilities and prudent capital management.
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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 impacted by elevated provisions for MFI and a toll road account. Asset quality outside MFI remains stable, and management expects credit costs to normalize as legacy issues subside.
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Deposits grew 38% year-over-year to INR 200,000 crore, with retailization at 80% and CASA ratio at 46.6%. Asset quality remains stable except for the JLG portfolio, which saw elevated credit costs due to floods. Cost-to-income ratio improved to 70.45%, with further reductions and profitability gains expected as provisions normalize.