IDFC First Bank Q2 results: Standalone net profit falls 73% YoY to Rs 201 crore due to provisions, NII rises 21%

IDFC First Bank reported a 73% decline in its September quarter standalone profit at Rs 201 crore as against Rs 751 crore in the year-ago period. However, net interest income (NII) rose 21% to Rs 4,788 crore in Q2FY25 as against Rs 3,950 crore in the year-ago period.

Earnings were impacted by what the company described as “prudent provisions” of Rs 568 crore, including Rs 315 crore in MFI business (stressed MFI industry) and Rs 253 crore in a domiciled toll account in Maharashtra.

Deposits and loans

IDFC First Bank’s customer deposits increased by 32.4% YoY from Rs 1,64,726 crore as on September 30, 2023 to Rs 2,18,026 crore as on September 30, 2024. Retail deposits increased by 37.4% YoY % from Rs 1,27,595 crore as on September 30, 2023 to Rs 1,75,300 crore as on September 30, 2024.

CASA deposits increased 37.5% YoY from Rs 79,468 crore as on September 30, 2023 to Rs 1,09,292 crore as on September 30, 2024. CASA ratio stood at 48.9% as on September 30, 2024. Retail deposits accounted for 80.4% of total customer deposits as of September 30, 2024 from 6.46% in Q2-FY25, representing a marginal improvement over the last quarter. Without taking the expensive old loans into account, the financing costs in the second quarter of the 2025 financial year amounted to 6.37%.Loans and advances

Loans and advances including loan substitutes grew 21.5% YoY from Rs 1,83,236 crore as on September 30, 2023 to Rs 2,22,613 crore as on September 30, 2024. The bank’s retail book grew by 25 YoY % Corporate loans (excluding infrastructure) increased 20% year-on-year in the quarter.

The bank’s existing infrastructure portfolio decreased by 21% year-on-year to Rs 2,654 crore as on September 30, 2024, representing 1.2% of the bank’s total financed assets.
The share of the microfinance portfolio in the total loan portfolio fell from 6.3% in June 2024 to 5.6% in September 2024.

Quality of assets

Gross NPA stood at 1.92% as on September 30, 2024 as against 2.11% as on September 30, 2023. Net NPA stood at 0.48% as on September 30, 2024 as against 0.68% as on September 30 2023.

The bank’s PCR increased to 75.27% as of September 30, 2024 from 68.18% as of September 30, 2023 and 69.38% as of June 30, 2024.

Fees and other income grew 18% year-on-year from Rs 1,376 crore in Q2FY24 to Rs 1,622 crore in Q2FY25. Operating profit rose 21% from Rs 5,380 crore in Q2FY25 24 to Rs 6,515 crore in Q2FY25. Operating expenses rose 18% year-on-year from Rs 3,870 crore in Q2FY24 to Rs 4,553 crore in Q2FY25.

Capital position

• The bank successfully collected Rs. 3,200 crore fresh equity capital from reputed domestic institutional investors in July 2024.
• The bank also successfully completed merger with IDFC Ltd in October 2024, increasing its net assets by Rs 618 crore in capital while reducing the number of outstanding shares by 16.64 crore shares.
• Including Q2-FY25 earnings and after the impact of the merger mentioned above, the overall CRAR would have been 16.60% as of September 30, 2024 with a CET-1 ratio of 14.08%.

Commenting on the results, V Vaidyanathan, MD and CEO, said the company’s core drivers remained strong while its brand, technology and high service levels enabled strong deposit growth. “The ability to grow deposits is an important strategic strength of the bank. Deposits grew significantly at 32% compared to the previous year. Our overall loan growth is stable at 21.5% year-on-year. We have seen impacts on the microfinance business, as is the case with the rest of the industry. Since then.” “As of January 2024, MFI disbursements are insured at CGFMU and are expected to reach 75% by the end of March 2025,” Vaidyanathan said.

“As a prudent measure, we have an additional provision buffer of 315 billion for the microfinance segment. “The bank will recognize this as profit subject to toll collection and compensation from the government to the customer,” he further said.

“Our core operating performance is strong, we are confident of reviving our profitability in the future,” said the Managing Director and CEO.