IDFC First Bank shares in focus after Q1 profit drops 32% YoY to Rs 463 crore
IDFC First Bank
will be in focus on Monday after the lender reported a 32% year-on-year (YoY) decline in net profit to Rs 463 crore for the first quarter of FY26. However, net interest income (NII) rose 5.1% YoY to Rs 4,933 crore, up from Rs 4,695 crore in the same period last year.
Sequentially, profit after tax (PAT) jumped 52.1%, indicating a recovery from the previous quarter.
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The bank's Net Interest Margin (NIM) on assets under management (AUM) dropped 24 basis points quarter-on-quarter to 5.71% in Q1 FY26, from 5.95% in Q4 FY25. The decline was mainly due to the repo rate cut, changes in the asset mix—including a sharp fall in the microfinance segment—and lower investment yields.
Operating profit (excluding trading gains) fell 6.2% YoY to Rs 1,744 crore but rose 7.8% sequentially.
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IDFC First Bank reported strong deposit growth for the quarter ended June 30, 2025. Customer deposits rose 25.5% YoY to Rs 2,56,799 crore, compared with Rs 2,04,572 crore a year earlier.
Asset quality remained broadly stable despite pressure in the microfinance segment. Gross NPA stood at 1.97% as of June 30, 2025, up from 1.87% in the previous quarter, while Net NPA was at 0.55% versus 0.53% in Q4 FY25. The gross NPA for the Retail, Rural, and MSME portfolio increased slightly to 1.82% from 1.70% sequentially.
Loans and advances grew 21% YoY to Rs 2,53,233 crore, up from Rs 2,09,361 crore a year ago.
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IDFC First Bank shares target price
Following the results, Motilal Oswal maintained a 'Neutral' rating on the stock with a target price of Rs 80. It noted that earnings in Q1 were largely driven by other income, and expects NII growth to accelerate in the second half of FY26.
The brokerage expects NIM to stabilise at around 5.8% by Q4 FY26. It also projects the cost-to-income ratio to improve from 69.6% in FY26 to 66.4% in FY27. The FY26 earnings estimate has been raised by 11%, with projected RoA and RoE at 1.2% and 14.4%, respectively, for FY27.
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