IDFC First Bank Q2 FY26 Earnings Highlight Robust Performance and Improved Asset Quality

IDFC First Bank has reported a strong financial performance for the second quarter of the fiscal year 2025-2026, delivering a significant 75.4% year-on-year surge in net profit to ₹352 crore, up from ₹201 crore in the corresponding period last year. This substantial growth was primarily driven by higher core income, reduced provisioning, and robust customer deposit growth. Net Interest Income (NII) saw a steady rise, growing by 6.8% year-on-year to ₹5,112.7 crore. The Net Interest Margin (NIM) was recorded at 5.59%, although it narrowed from 6.18% a year ago. Notably, the cost of funds showed a positive trend, declining by 23 basis points year-on-year to 6.23%. Core operating profit was stable at ₹1,825 crore. A key factor supporting profitability was the reduction in loan-loss provisions, which fell 12.5% sequentially to ₹1,452 crore from ₹1,659 crore in Q1 FY26. This decline was largely attributed to an easing of stress in the microfinance portfolio, allowing the bank to utilise ₹75 crore from its microfinance provision buffer. Asset quality showed consistent improvement, with the Gross Non-Performing Asset (GNPA) ratio improving to 1.86% from 1.97% in the previous quarter. The Net Non-Performing Asset (NNPA) ratio also declined to 0.52% from 0.55%. Managing Director and CEO V. Vaidyanathan affirmed the bank's stable asset quality, noting that the stress in the microfinance segment is largely behind them. He anticipates that continued improvement in operating leverage and a falling cost of funds will further enhance profitability. The bank, serving 35 million customers through over 1,000 branches, is well-positioned for sustained future growth based on these operational efficiencies and improving balance sheet metrics.