IDFC First Bank Q2 falls short of estimates; net profit dives 73%, NII rises 21% to ₹4,788 crore
In the corresponding quarter of the previous fiscal, IDFC First Bank posted a net profit of ₹751.3 crore, the bank said in a regulatory filing. The CNBC-TV18 poll had predicted a profit of ₹644.6 crore for the quarter under review.
Net interest income (NII), which is the difference between the interest income a bank earns from its lending activities and the interest it pays to depositors, rises 21.2%, coming at ₹4,788 crore against ₹3,950.2 crore in the corresponding quarter of FY24.
The CNBC-TV18 poll had predicted a net interest income of ₹4,897.6 crore for the quarter under review.
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IDFC First Bank reported a marginal reduction of 4 basis points in its Net Interest Margin on Assets Under Management (AUM), bringing it to 6.18% for Q2 FY25. The bank achieved a steady 21% year-on-year growth in operating income while operating expenses increased at a reduced pace of 18% year-on-year.
Core operating profit, excluding trading gains, rose by 28% year-on-year, and overall operating profit, including trading gains, increased by 30% year-on-year. Customer deposits surged by 32.4% year-on-year to ₹2,18,026 crore, driven by a 37% growth in retail deposits, which reached ₹1,75,300 crore, and a 37.5% increase in CASA deposits, totalling ₹1,09,292 crore.
The CASA ratio stands high at 48.9%, with the cost of funds remaining stable at 6.46%. When excluding legacy borrowings, the cost of funds was 6.37% in Q2 FY25, while the cost of deposits was stable at 6.38%. The total loan book grew by 21.5% year-on-year, reaching ₹2,22,613 crore, with retail loans increasing by 25.1% and the corporate loan (non-infrastructure) book growing by 20.0%.
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The gross NPA marginally increased by 2 basis points quarter-on-quarter to 1.92%, while the net NPA improved by 11 basis points to 0.48%. The provision coverage ratio rose by 589 basis points quarter-on-quarter to 75.27%. Collection efficiency for the urban retail book remained stable at 99.5%, while the microfinance book’s collection efficiency deteriorated by 40 basis points to 98.6%.
Provisions for Q2 FY25 amounted to ₹1,732 crore, primarily due to a prudent provisioning buffer of ₹568 crore for the microfinance business and an additional provision of ₹253 crore related to a legacy infrastructure toll road account. The bank’s capital adequacy ratio was strong at 16.36%, with a CET-I ratio of 13.84%.
The results came after the close of the market hours. On October 25, shares of IDFC First Bank Ltd ended at ₹65.53, down by ₹2.52, or 3.70% on the BSE.
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