IDFC First Bank Q2FY26 net profit rises 76% to Rs 352 crore as provisions moderate

MUMBAI: IDFC FIRST Bank reported a 76% rise in profit after tax (PAT) to Rs. 352 crore for Q2 FY26, driven by lower provisions and growth in its retail and commercial businesses. The bank’s CASA ratio crossed 50% for the first time, reflecting improved funding stability.The PAT jump was supported by a 16.2% YoY decline in total provisions to Rs. 1,452 crore, including a sequential fall of 12.5% from Rs. 1,659 crore in Q1. The bank used Rs. 75 crore of its microfinance provision buffer during the quarter, maintaining Rs. 240 crore as contingent provisions. Net interest income rose 6.8% to Rs. 5,113 crore, while fee and other income increased 13.2% to Rs. 1,836 crore. Pre-provisioning operating profit fell 4.2% to Rs. 1,880 crore.IDFC FIRST Bank achieved a CASA ratio of 50.1% as of Sept 30, up 119 bps from a year ago, with total customer deposits growing 23.4% and CASA deposits up 26.8% YoY. Cost of funds fell 23 bps to 6.23%. Gross loans and advances grew 19.7% to Rs. 2,66,579 crore, with 94% of incremental growth in safer segments such as mortgage, vehicle, consumer, business banking, MSME, and wholesale loans. Private wealth management assets under management rose 28% to Rs. 54,693 crore, and the bank issued 4 million credit cards during the quarter.Net interest margin contracted 59 bps to 5.59% due to repo rate cuts and a decline in the microfinance book. The MFI portfolio fell 41.6% YoY and now accounts for 2.7% of funded assets, down from 5.6% in Q2 FY25. MD and CEO V Vaidyanathan said, “The stress in the MFI business was an industry issue and looks like it is behind us.Other than MFI, the asset quality of IDFC has always been stable for over a decade through cycles and continues to be so, with gross NPA at 1.86% and net NPA at 0.52% as of Sept 30, 2025. On cost of funds, we expect it to drop from here on. The bank is witnessing improving operating leverage.”Gross NPA ratio improved 6 bps to 1.86%, while net NPA rose 4 bps to 0.52%. The bank’s capital position will strengthen after converting a Rs. 7,500 crore CCPS (Compulsorily Convertible Preference Shares) infusion into equity, with CRAR and Tier-I ratios projected at 16.82% and 14.75%, respectively.