ICICI Securities's research report on IDFC FIRST Bank
IDFC First Bank (IDFCFB) reported broadly in-line set of numbers with Q1FY26 PAT of INR 4.6bn and RoA rising to ~50bps. Higher-than-expected slippages and credit costs were offset by strong treasury gains. Unlike peers, IDFCFB has, so far, strategically chosen to not cut its savings rate materially and is relying more on TD cuts (gradual impact) to offset yield pressure. The strategy aids in very strong CASA growth (~30% YoY; otherwise muted at systemic level), increases franchise value and adds optionality in the medium term. On the flip side, the impact on NIM (down 24bps) is bit steeper, and the recovery, too, could be gradual. Opex growth was well contained; bank remains confident of containing this growth at 11–12% YoY for FY26. Slippages rose QoQ, led by seasonality, elevated MFI and one wholesale exposure. PCR was stable QoQ.
Outlook
Maintain BUY with an unchanged TP of INR 80, valuing the stock at ~1.3x FY27E ABV. Key risk is higher-than-expected slippages impacting return ratios.
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