IDFC First Bank Q2 FY26 Earnings Results: Profit Jumps 76% on Lower Provisions; NIM Narrows

IDFC First Bank reported a 75.6% year-on-year rise in net profit for Q2 FY26, reaching ₹352 crore, driven by a 16% drop in provisions to ₹1,452 crore, mainly in its microfinance portfolio. Net interest income (NII) grew 6.8% YoY to ₹5,113 crore, while the net interest margin (NIM) declined 59 basis points YoY to 5.59%, slightly down from 5.71% in Q1 FY26.

Other Income and Operating Performance

Fee and other income increased 13.2% YoY to ₹1,836 crore, although trading gains fell sharply 47.1% to ₹56 crore. Pre-provision operating profit (PPOP) dipped 4.2% to ₹1,880 crore, reflecting cautious expense management during the quarter.

Loan Growth and Asset Quality

Loans rose 19.7% YoY to ₹2.23 trillion, led by growth in mortgages, vehicle loans, and consumer loans. Meanwhile, the microfinance portfolio shrank 41.6% YoY, forming 2.7% of funded assets, down from 5.6% a year ago. The bank attributed the lower provisions to reduced stress in its microfinance segment, utilising ₹75 crore from the microfinance provision buffer while retaining ₹240 crore as a contingent provision.

Asset quality improved, with gross NPA declining 6 basis points YoY to 1.86%, while net NPA edged up slightly to 0.52%.

Deposits and Capital Position

Customer deposits grew 23.4% YoY to ₹2.18 trillion, with CASA deposits accounting for 50% of the total. Following the conversion of ₹7,500 crore raised through Compulsorily Convertible Preference Shares (CCPS) into equity, the bank’s capital adequacy ratio and Tier-1 ratio stand at 16.82% and 14.75%, respectively.

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Outlook

CEO V. Vaidyanathan highlighted that the stress in the microfinance business appears to be behind the bank, and the cost of funds is expected to decline in the coming quarters. Strong loan growth and improved asset quality position IDFC First Bank for continued stable performance.

IDFC Share Price Movement

As of 11:35 AM IST on October 20, 2025, IDFC First Bank share price (NSE: IDFCFIRSTB) was trading at ₹76.38, up ₹4.50 or 6.26% for the day. The stock opened at ₹72.75, reaching a high of ₹76.85 and a low of ₹72.61 during the session. IDFC First Bank has a market capitalisation of ₹62,240 crore and a P/E ratio of 43.60. Its 52-week high is ₹78.45, while the 52-week low is ₹52.46. The bank offers a dividend yield of 0.33%, with a quarterly dividend of ₹0.06 per share.

Conclusion

IDFC First Bank delivered robust Q2 results with a significant profit jump supported by lower provisions and healthy loan growth. Improved asset quality and strong capital position indicate sustainable growth ahead.

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