Why Did IDFC First Bank's Profit Drop by 29% YoY to Rs 453 Crore in Q1?
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Synopsis
In a recent exchange filing, IDFC First Bank announced a significant drop in net profit for Q1 FY26. Despite a year-on-year decline of 29%, the bank showcased a remarkable quarter-on-quarter growth. Dive into the details of their financial performance and growth strategies in this comprehensive report.
Key Takeaways
- IDFC First Bank's net profit fell by 29% year-on-year.
- However, there was a quarter-on-quarter growth of 53%.
- Customer deposits grew 25.5% year-on-year.
- Loans and advances increased by 21% year-on-year.
- Gross NPA ratio is 1.97%.
Mumbai, July 26 (NationPress) IDFC First Bank reported a net profit of Rs 453.47 crore for the first quarter of the ongoing financial year (Q1 FY26), reflecting a 29% decline compared to the same period last year, as disclosed in an exchange filing on Saturday.
The lender had previously recorded a consolidated net profit of Rs 642.64 crore in Q1 FY25.
Nonetheless, the bank experienced an impressive 53% increase in net profit when compared to the previous quarter, rising from Rs 295.60 crore in Q4 FY25.
Additionally, the bank's Net Interest Income (NII) grew by 5.1% year-on-year, from Rs 4,695 crore in Q1 FY25 to Rs 4,933 crore in Q1 FY26, according to the filing.
For the quarter in question, the bank's total income reached Rs 11,869 crore, an increase from Rs 11,308.42 crore in Q4 FY25 and Rs 10,362.70 crore in the same quarter of the previous year.
Retail Banking emerged as the primary contributor to the bank's revenue during the April-June quarter, generating Rs 12,760.49 crore, followed by Treasury with Rs 7,374.51 crore, and Wholesale Banking at Rs 2,651.54 crore.
The filing reported a 25.5% increase in customer deposits year-on-year, rising from Rs 2.04 lakh crore in Q1 FY25 to Rs 2.56 lakh crore in Q1 FY26.
Loans and advances saw a 21% year-on-year growth, reaching Rs 2.53 lakh crore, up from Rs 2.09 lakh crore in the same quarter last year. This growth was bolstered by Mortgage, Vehicle, Business Banking, MSME, and Wholesale loans, according to the bank.
As of the last month, the bank's gross non-performing asset (GNPA) ratio was 1.97%, compared to 1.87% in the prior quarter, while the net NPA ratio stood at 0.55%, up from 0.53% in Q4 FY25.
“We are thrilled to announce that our core franchise continues to expand. In the banking sector, capital serves as the foundation, while deposits are crucial to our operations. With the anticipated equity raise, our capital adequacy ratio will reach 17.6% (if calculated as of June 30, 2025),” stated V Vaidyanathan, Managing Director and CEO of IDFC FIRST Bank.
With customer deposits rising by 25.5%, our funding remains robust. Our incremental Credit Deposit Ratio over the past year is merely 75.8%, he concluded.
Point of View
I acknowledge the challenges faced by IDFC First Bank amidst fluctuating profit margins. However, the bank’s ability to maintain a strong customer deposit base and its focus on retail banking highlight its resilience. Moving forward, it will be crucial for the bank to navigate these financial shifts effectively.
NationPress
26/07/2025
Frequently Asked Questions
What led to the decline in IDFC First Bank's profit?
The decline in profit can be attributed to various economic factors and competitive pressures in the banking sector.
How much did customer deposits grow year-on-year?
Customer deposits increased by 25.5% year-on-year, from Rs 2.04 lakh crore in Q1 FY25 to Rs 2.56 lakh crore in Q1 FY26.
What was the bank's net interest income for Q1 FY26?
The bank's net interest income for Q1 FY26 was Rs 4,933 crore, reflecting a 5.1% growth compared to the previous year.
What are the key contributors to the bank's revenue?
Retail Banking, Treasury, and Wholesale Banking were the main contributors to the bank's revenue.
What is the gross NPA ratio for IDFC First Bank?
As of the last quarter, the gross non-performing asset (GNPA) ratio stood at 1.97%.
