IDFC First Bank Q3 Results: Profit Down 53% Despite NII Growth

IDFC First Bank Q3 Results: Net Profit Declines by 53%, NII Up 14.4%

IDFC First Bank has reported a 52.6% decrease in its standalone net profit for the December quarter, with earnings at ₹339.4 crore compared to ₹715.7 crore in the same period last year. Despite this drop in net profit, the bank's Net Interest Income (NII) saw a positive trend, increasing by 14.4% to ₹4,902 crore in Q3FY25, up from ₹4,286.6 crore in the previous year.

The bank's net interest margin (NIM) for Q3-FY25 was 6.04%, a slight decrease from 6.18% in Q2-FY25. This decline in NIM is largely attributed to a downturn in the micro-finance business and an increase in the proportion of the Wholesale Banking business.

Key Financial Highlights

• Net Profit: ₹339.4 crore, a 52.6% decrease YoY.
• Net Interest Income (NII): ₹4,902 crore, a 14.4% increase YoY.
• Net Interest Margin (NIM): 6.04%, down from 6.18% in Q2-FY25.
• Operating Income: ₹6,682 crore, a 15% increase YoY.

Operating income grew 15% from ₹5,803 crore in Q3 FY24 to ₹6,682 crore in Q3 FY25. For the first nine months of FY25 (9MFY25), the growth in operating income was 19.4% on a year-on-year basis.

Operating expenses also saw an increase, growing by 16% YoY from ₹4,241 crore in Q3 FY24 to ₹4,923 crore in Q3 FY25. For 9M-FY25, operating expenses grew by 18.2% YoY.

Core operating profit (excluding trading gains) grew by 15% YoY from ₹1,515 crore in Q3 FY24 to ₹1,736 crore for Q3 FY25, impacted by the micro-finance business.

Management Commentary

V Vaidyanathan, Managing Director and CEO of IDFC FIRST Bank, commented that the bank continues to experience strong growth in both loans and deposits. Customer deposits are growing at 29% YoY, reaching ₹2,27,316 crores, with the CASA ratio remaining at 48%. Loans and advances have also grown steadily by 22% YoY, reaching ₹2,31,074 crores.

The bank is closely monitoring its micro-finance loan book due to industry-wide challenges. The asset quality of the overall loan book remains stable, with Gross NPA at 1.94% and Net NPA at 0.52%. Excluding the micro-finance loan book, the GNPA and NNPA are even lower at 1.81% and 0.49%, respectively.

Management believes that the credit issues in the microfinance segment are temporary and are expected to be resolved within a few quarters. They emphasized that this business was built to meet priority sector lending norms, particularly for weaker sections and small and marginal farmers.

All other business segments, including deposits, loans, credit cards, wealth management, cash management, corporate banking, Fastag, and gold loans, are performing well. The bank anticipates that the cost-to-income ratio will decrease over the next few years due to operating leverage as the bank continues to scale up.

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