IDFC First Bank Q1 profit drops 32% to Rs 462.6 crore, asset quality weakens

Microfinance portfolio reduced by 36.9% YoY and its proportion to overall loan book reduced from 6.3% as of June 30, 2024 to 3.3% in June 30, 2025

Private sector IDFC First Bank on Saturday reported a 32% slump in net profit to Rs 462.6  crore during the first quarter of the current financial year, impacted by slippages in the micro-finance book.

The Mumbai-based lender had earned a net profit of Rs 681 crore in the same quarter of the previous fiscal year.

The private lender posted a net profit of Rs 462.6 crore for the June quarter, marking a 32.07% drop compared to Rs 681 crore in the same period last year. Its net interest income (NII) increased by 5% year-on-year, rising to Rs 4,933 crore from Rs 4,695 crore.

Asset quality showed signs of stress during the quarter. Gross non-performing assets (GNPA) rose to 1.97% from 1.87% in the previous quarter, with total gross NPAs increasing to Rs 4,867.5 crore from Rs 4,433.5 crore. Net NPA inched up to 0.55% from 0.53% sequentially, rising to Rs 1,346 crore from Rs1,230 crore.

The bank’s net interest margin (NIM) on assets under management (AUM) slipped by 24 basis points quarter-on-quarter, down from 5.95% to 5.71%, which the bank attributed to the repo rate impact.

On the market front, shares of IDFC First Bank ended the previous trading session 3.1% lower at Rs 70.63 apiece. Despite the recent dip, the stock has gained 10% year-to-date.

V Vaidyanathan, Managing Director and CEO, IDFC FIRST Bank, said, “We are pleased to share that our core franchise continues to grow well. In banking, Capital is the foundation and Deposits are the raw material for our business. With the impending equity raise, our capital adequacy will be at 17.6% (if computed at June 30, 2025). With customer deposits growing at 25.5%, our funding is strong. Our incremental Credit Deposit Ratio for the last 1 year is only 75.8%. On Asset Quality, all our businesses, other than microfinance continue to perform well, GNPA and NNPA are at 1.97% and 0.55%, respectively."

Our margins reduced because we passed on the benefit of repo rate to eligible borrowers and asset mix change, but term deposits broadly would take a year to reprice downwards. So, by H2 FY26 margins is likely to be better. Also, by H2 FY26, MFI issue should largely be behind us. Our customer franchise is strong. So all-in-all we are well positioned well for the future.