This article first appeared on GuruFocus .
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Customer Business:Crossed INR6 lakh crore, a YoY increase of 20%.
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Loan Book:Grew by 20.6% YoY to INR3.05 lakh crore.
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Retail, Agri, and MSME Book:INR2.4 lakh crore, grew by 18% YoY.
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Wholesale Book:INR64,000 crore, grew by 30% YoY.
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Credit Cards:Book grew by 19% YoY to INR9,600 crore; spend increased by 22% YoY.
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Wealth Management AUM:INR64,000 crore, grew by 24% YoY.
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Gross NPA:Improved by 10 basis points to 1.51%.
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Net NPA:Improved by 4 basis points to 0.44%.
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Customer Deposits:Grew by 16.6% YoY to just shy of INR3 lakh crore.
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CASA Ratio:Improved by 1% to 50.8%.
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Profit:INR1,075 crore, an improvement of 132% YoY.
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NII:Grew by 21.1% YoY.
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Net Interest Margin:Improved by 3 basis points to 5.96%.
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Fee Income:Increased by 22.9% YoY.
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OpEx:INR5,729 crore, grew by 16.4% YoY.
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Operating Profit:Increased by 36% YoY.
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Provisions:Reduced by 31.1% YoY to INR1,144 crore.
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Capital Adequacy Ratio:15.05% with CET1 ratio of 13.33%.
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Release Date: July 25, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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IDFC First Bank Ltd ( BOM:539437 ) reported a strong business momentum with customer business crossing INR6 lakh crore, showing a YoY increase of 20%.
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The loan book registered a robust growth of 20.6% YoY, driven by mortgage, vehicle, corporate, and consumer loans.
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Asset quality improved with gross NPA ratio decreasing by 10 basis points to 1.51% and net NPA improving by 4 basis points to 0.44%.
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The bank achieved a significant milestone by crossing INR1,000 crore in profit for the first time, marking a 132% YoY improvement.
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Net interest margin (NIM) improved to 5.96%, supported by a reduction in the cost of funds from 6% to 5.96%.
Negative Points
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The cost-to-income ratio remains high at 70.7%, although it has improved by 166 basis points sequentially.
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Despite improvements, the bank still faces challenges in reducing its cost-to-income ratio below 70% during the year.
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The bank continues to incur a negative drag from purchasing Priority Sector Lending (PSL) certificates, with a loss of INR250 crore last year.
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There is a potential impact on margins due to asset mix changes and normalization of the investment book.
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The bank has created a contingency provision of INR515 crore due to macroeconomic uncertainties, which could impact future profitability.
Q & A Highlights
Q: Can you provide an update on the bank's margin outlook given the current cost of funds and asset mix? A: Sudhanshu Jain, CFO, stated that while the bank had previously guided for a 5.75% margin, they now expect margins to be closer to 5.8% for the year. This adjustment considers the asset mix change and stabilization of the cost of funds around 6%.
Q: With credit costs performing better than expected in Q1, is there room to revise the credit cost guidance? A: Sudhanshu Jain noted that Q1 credit costs were surprisingly low at 153 basis points. Given this performance, the bank now anticipates credit costs to be between 150 to 160 basis points, down from the previous guidance of 170 to 180 basis points.
Q: How is the bank leveraging AI and technology investments, and what are the future plans in this area? A: V. Vaidyanathan, CEO, emphasized that the bank has built a strong technology architecture with modern stacks and cloud-native principles. The focus is on leveraging AI for customer intelligence and operational efficiency, which will support sustainable growth.
Q: What is the current status of the bank's institutional deposits following recent challenges? A: V. Vaidyanathan assured that institutional deposits are stable and growing. The bank's strategy remains focused on increasing retail deposits over institutional ones, and customer confidence has been strong despite past challenges.
Q: Can you elaborate on the bank's approach to managing PSL (Priority Sector Lending) requirements and associated costs? A: V. Vaidyanathan explained that the bank is still purchasing PSL to meet requirements, resulting in a negative drag of about INR250 crore last year. The bank aims to build more PSL organically over time to reduce reliance on purchases.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
