IDFC First Bank Ltd

IDFC First Bank Limited reported strong financial performance for Q2 FY27, with loan growth of 30.1% YoY and 13.6% QoQ, driven by mortgage, vehicle, and consumer loans. The bank mobilized INR34,390 crores (USD3.6 billion) under the RBI's FCNR scheme, contributing 10% of total deposits. FCNR-backed loans amounted to INR25,000 crores, or 7% of the loan book. Asset quality improved, with gross NPA at 1.32% (down 19 bps YoY) and net NPA at 0.40%. Deposits grew 25.9% YoY, with customer deposits up 26.9% YoY. Profit after tax reached INR1,045 crores, a 196.5% YoY increase. Core profitability, excluding one-time gains, stood at INR1,036 crores. Net interest margin (NIM) was 5.58%, down from 5.90% due to FCNR deposits, excess liquidity, and asset mix changes. However, management noted that FCNR's impact on ROA is minimal (2 bps) and expects NIM to recover to 5.8% by Q4. Operating efficiency improved, with cost-to-income ratio at 70.2% (down 57 bps QoQ). The bank emphasized its digital capabilities, CASA ratio of 47.6%, and strategic benefits from FCNR, including structural liquidity and lower funding costs. Management also addressed concerns about the IRDAI consultation paper, noting potential fee income impacts but expecting offsets from repo rate hikes and FCNR benefits. Asset quality metrics, including credit card spends and SMA ratios, remained stable. The bank highlighted its corporate banking growth, with 20% of loans now in corporate segments, and a focus on high-rated clients. Management reiterated confidence in maintaining profitability and managing risks, including El Niño-related uncertainties.

The document emphasizes strong financial performance, improved asset quality, and strategic benefits from FCNR, with management expressing confidence in future performance.