IDFC FIRST Bank Q2FY26 Bottomline Climbs 76% YoY to ₹352 Crore; Stock Increases Over 5%

Mumbai, October 20, 2025 – IDFC FIRST Bank Limited (NSE: IDFCFIRSTB) stock rose more than 5% in Monday trading following the bank’s announcement of a good 76% year-over-year growth in net profit at ₹352 crore for Q2FY26. The improvement was supported by strong growth in retail and MSME segments, improved asset quality, and healthy growth in deposits from customers. The stock opened firmly and went to an intra-day high of ₹76.18, just shy of its 52-week high at ₹78.45.

Strong Business and Loan Growth

The bank’s customer business was ₹5,35,673 crore in Q2FY26, a year-on-year growth of 21.6% and a sequential increase of 5%. Loans and advances grew to ₹2,66,579 crore with a year-on-year growth of 19.7% and 5.3% quarter-on-quarter growth. Customer deposits grew 23.4% year-on-year to ₹2,69,094 crore with the CASA ratio of 50.07% – a sequential rise of 208 basis points and 119 basis points on a year-on-year basis.

The bank saw strong traction in vehicle finance, consumer loans, business banking, and MSME lending, which together contributed 94% of the loan growth. The microfinance book declined 41.6% year-on-year and now represents just 2.7% of funded assets.

Profitability and Margins

Net Interest Margin (NIM) was 5.59%, a decrease from the 6.18% in Q2FY25, due to higher funding costs. Core operating profit stood at ₹1,825 crore, lower by 1.7% from the previous year but higher by 4.6% sequentially. Net profit of the bank for Q2FY26 was ₹352 crore, higher than ₹201 crore of the corresponding quarter a year ago, a 75.6% increase year-on-year although sequentially lower by 23.8% against ₹463 crore in Q1FY26.

Provisions reduced 12.5% quarter-on-quarter to ₹1,452 crore, aided by a reduction in provisioning for microfinance. Asset quality remained strong with Gross NPA improving at 1.86% compared to 1.92% last year and Net NPA at 0.52%.

Operational and Capital Efficiency

Bank’s total business in the first half of FY26 increased 21.6% yoy, and operating expenses increased at a slowing pace of 11.8%, showing operating efficiency. The Capital Adequacy Ratio of 14.34% was sequentially lower due to balance sheet growth. However, the bank further added that on conversion of ₹7,500 crore Compulsorily Convertible Preference Shares (CCPS) into shares, its Tier-I ratio would rise to 14.75% and overall capital adequacy to 16.82%, thereby maintaining a healthy buffer of capital.

Growth Across Business Segments

IDFC FIRST Bank share price kept seeing robust performance in its retail and MSME portfolios, with the wealth management business recording a 28% year-on-year increase in Assets Under Management (AUM) to ₹54,693 crore. Its credit card base also crossed 4 million during the quarter, showing continued traction in retail banking.

Management Commentary

V. Vaidyanathan, Managing Director & CEO, IDFC FIRST Bank, was hopeful of the bank’s financial health improving. He stated, “The stress in the MFI business seems behind us. The asset quality other than MFI has remained steady over more than a decade over cycles, with Gross NPA at 1.86% and Net NPA at 0.52% as of September 2025. We expect cost of funds to come down from here on as operating leverage improves.”

He further added that IDFC FIRST Bank’s consistent business growth, combined with careful management of expenses, has positioned the bank well for the next few quarters.

Market Reaction

As of 2:54 PM IST on October 20, the stock is trading at ₹76.63, up ₹4.75 or 6.61% for the day compared with a previous close of ₹71.88. The share experienced heavy buying interest following the release of results and touched an intraday high of ₹76.18.

About IDFC FIRST Bank

Established in 2015 by the consolidation of IDFC Bank and Capital First, IDFC FIRST Bank is among the fastest-growing private sector banks in India. Headquartered at its corporate office in Mumbai, the bank serves more than 35 million customers across retail, MSME, corporate, and digital banking businesses. It is best known for its customer-centric, digitally driven, and ethical approach to financial growth and inclusion.

REF: https://nsearchives.nseindia.com/corporate/IDFCFIRSTB_18102025170636_BM-Press_Release_Q2FY26.pdf

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