IDFC First Bank (IDFCFIRSTB) Q2 24/25 earnings summary

Executive summary

• Q2 FY25 results showed strong growth in customer deposits (up 32.4% YoY to ₹2,18,026 crore) and retail deposits (up 37% YoY), with a CASA ratio at 48.9%, but profitability was impacted by elevated provisions for MFI and a legacy toll road account.

• Loan book grew 21.5% YoY to ₹2,22,613 crore; retail loans up 25.1% YoY; corporate (non-infra) loans up 20% YoY.

• Core operating profit increased 28% YoY, but net profit was subdued at ₹201 crore due to higher provisions; adjusted PAT at ₹626 crore excluding one-off provisions.

• Asset quality remained stable: Gross NPA at 1.92%, Net NPA at 0.48%, provision coverage at 75.27%.

• The amalgamation scheme involving IDFC Limited and IDFC FIRST Bank became effective October 1, 2024, with share capital adjustments completed.

Financial highlights

• Customer deposits reached ₹2,18,026 crore, up 32.4% YoY; CASA deposits at ₹1,09,000 crore.

• Funded assets grew to ₹2,22,613 crore, up 21.5% YoY; retail book grew 25.1%.

• Net Interest Income rose 21% YoY to ₹4,788 crore; Net Interest Margin stable at 6.18%.

• Fee income increased 18% YoY; trading gains at ₹105 crore; operating expenses rose 18% YoY; cost-to-income ratio at 69.9%.

• Standalone net profit for Q2 FY25 was ₹68,065 lakhs, up from ₹20,069 lakhs in Q2 FY24; capital adequacy ratio at 16.01% as of September 30, 2024.

Outlook and guidance

• Management expects credit cost for FY25 to be around 225 basis points, including MFI and toll account impacts.

• Credit cost for FY26 and beyond expected to normalize to ~1.85% as legacy issues subside.

• Deposit and loan growth guidance remains strong, with 25%+ growth targeted for coming years.

• Targeting cost-to-income ratio improvement to ~65% by FY27, with further scale expected to drive profitability.

• Long-term ROA target is 1.4%-2% by FY29, subject to regulatory and market changes.