IDFC FIRST Bank’s Profit Jumps 196.5% to 1,045 Crore Rupees in Second Quarter
Key Facts
IDFC FIRST Bank on October 24 announced unaudited results for the quarter and half-year ended September 30, 2026, reporting net profit after tax of 1,045 crore rupees in the second quarter of fiscal 2027, up 196.5% year on year. The bank said profit exceeded 1,000 crore rupees for a second consecutive quarter, after also crossing that level in the first quarter. Net profit for the first half of the fiscal year was 2,120 crore rupees, while return on assets reached 0.99%. The results reflect growth in operating activity alongside lower provisions and improved asset-quality indicators. But the expansion of funding through FCNR(B) deposits means loan growth and margin figures need to be read with their impact in mind.
Net interest income, the difference between what the bank earns on loans and pays on deposits, rose 21% to 6,184 crore rupees, compared with 5,113 crore rupees in the same period a year earlier. Core operating profit, excluding trading gains, grew 38.5% to 2,527 crore rupees. The chief executive said operating expense growth was about 500 basis points below income growth for the second consecutive quarter, attributing this to cost control. He added that a 27% year-on-year decline in provisions, alongside higher operating profit, supported the increase in profitability. The bank had said profit after tax exceeded 1,000 crore rupees in both the first and second quarters, putting the quarter’s growth within a trend that has extended across half a fiscal year.
Total deposits stood at 3,48,583 crore rupees, up 25.9% year on year and 11.8% quarter on quarter. Loans and advances, including credit substitutes and loans backed by FCNR(B) deposits, meanwhile rose 30.1% annually to 3,46,913 crore rupees. The bank also presented a measure excluding loans secured by these deposits; on that basis, loan growth was 22.2%, on a gross basis before the effect of interbank loan purchase and sale transactions. The chief executive said growth in the core loan book and deposits was around 20–22%, and the bank considers growth of about 20% in both sustainable for the foreseeable future. This breakdown gives a clearer picture of core lending expansion compared with growth that includes FCNR(B) funding.
The bank raised 34,390 crore rupees through FCNR(B) deposits during the quarter, equivalent to about 3.6 billion dollars, with tenors mostly between 3 and 5 years. It said the all-in cost of these deposits, after accounting for priority-sector lending benefits, was about 1% lower than the cost of raising domestic term deposits. The bank said its average current and savings account ratio was 48.4%, compared with 50.1% in the corresponding period cited in its statement, attributing the decline mainly to the mobilization of FCNR(B) deposits during the quarter. The chief executive explained that the bank raised 2.5 billion dollars in loans through its international banking business unit to lend to non-resident Indian customers, enabling them to deposit funds in FCNR(B) accounts. According to management, these inflows provide long-term funding and structural liquidity while also affecting the deposit mix and loan growth.
The gross non-performing asset ratio was 1.32%, net non-performing assets were 0.40%, and the cost of credit fell to 1.01% of average assets. The bank described asset quality as stable, without providing year-on-year comparisons for these ratios in the cited statement. The chief executive said a 27% year-on-year decline in provisions helped drive profitability, alongside growth in operating profit. He added that the bank expects the cost of credit to remain under control in the third and fourth quarters, while monitoring the effects of weak rainfall and drought in some states. He said the situation was evolving and the bank was following developments closely. Management linked this to continued improvement in portfolio quality while keeping the impact of weather conditions among the factors it monitors.
On the margin, the chief executive said part of the decline reflected an accounting effect from the expansion of the asset base after loans were funded through the international banking business unit and FCNR(B) deposits were raised. He added that the excess liquidity from these deposits needed to be deployed, and management expects margins to recover to about 5.8% by the fourth quarter of fiscal 2027 as this liquidity is put to work. He said FCNR(B) inflows provide structural liquidity for three to five years. He also explained that higher interest rates could support profitability because the floating-rate loan book reprices faster than deposits, whose rates adjust with a lag. According to the chief executive, these benefits could largely offset the impact of a proposed change to insurance commission rules.
In the market, the bank’s shares fell about 4% in early trading on October 26, despite results that were in line with market expectations, according to press coverage. The stock fell 3.91% during the session to 69.52 rupees, compared with a previous close of 72.35 rupees. The move followed the profit-growth announcement, as management focused on deploying surplus liquidity as a factor affecting the margin trajectory. Investors will watch whether the deployment of FCNR(B) deposits leads to the expected margin recovery by the fourth quarter of fiscal 2027. The bank also said it was monitoring rainfall and drought developments when assessing the cost of credit for the third and fourth quarters.