IDFC FIRST Bank Q1 profit more than doubles to Rs 1,075 crore on strong core growth

Mumbai: IDFC FIRST Bank appears to have turned the page on a challenging previous quarter, reporting a sharp jump in profit as stronger lending income, improving asset quality and prudent provisioning helped drive earnings higher.

IDFC FIRST Bank Limited reported a standalone net profit of Rs 1,074.96 crore for the quarter ended June 30, 2026, more than tripling from Rs 318.94 crore in the March quarter and rising 132 per cent from Rs 462.57 crore in the corresponding quarter last year.

The results, approved by the bank’s board following a meeting that lasted more than five hours, received an unmodified limited review report from joint statutory auditors Walker Chandiok & Co LLP and M. P. Chitale & Co..

Profit before tax surged to Rs 1,408.69 crore from Rs 189.30 crore in the previous quarter and Rs 580.25 crore a year earlier. Tax expenses for the quarter stood at Rs 333.73 crore compared with Rs 129.64 crore in the March quarter and Rs 117.68 crore in the year-ago period.

Total income rose to Rs 13,360.52 crore, up from Rs 12,182.81 crore in the preceding quarter and Rs 11,868.97 crore a year earlier.

Interest income continued to drive growth, increasing to Rs 11,051.09 crore from Rs 10,552.77 crore in the March quarter and Rs 9,642.14 crore in the corresponding quarter of FY26.

Within interest income, earnings from advances and bills stood at Rs 9,438.45 crore, while investment income contributed Rs 1,475.18 crore. Interest earned from balances with the Reserve Bank of India and inter-bank funds amounted to Rs 61.09 crore, while other interest income stood at Rs 76.37 crore.

Other income rose to Rs 2,309.43 crore, compared with Rs 1,630.04 crore in the previous quarter and Rs 2,226.83 crore in the year-ago period, supported by fees, treasury operations, foreign exchange income and other non-fund-based business.

The bank also maintained tight control over costs. Total expenditure, excluding provisions and contingencies, declined sequentially to Rs 10,807.95 crore from Rs 11,124.27 crore, although it remained higher than Rs 9,629.60 crore reported a year earlier.

Interest expenses increased to Rs 5,078.69 crore from Rs 4,875.58 crore in the March quarter and Rs 4,709.06 crore a year ago. Operating expenses stood at Rs 5,729.26 crore, including staff costs of Rs 1,696.19 crore and other operating expenses of Rs 4,033.07 crore.

As a result, operating profit before provisions and contingencies jumped to Rs 2,552.57 crore, compared with Rs 1,058.54 crore in the preceding quarter and Rs 2,239.37 crore a year earlier.

The lender made provisions and contingencies of Rs 1,143.88 crore during the quarter, higher than Rs 869.24 crore in the March quarter but substantially lower than Rs 1,659.12 crore reported a year ago.

A notable contributor to earnings was the receipt of Rs 514.82 crore from National Credit Guarantee Trustee Company Limited under the Credit Guarantee Fund for Micro Units scheme. The amount was recognised through provisions and contingencies.

At the same time, the bank created a voluntary contingency provision of Rs 515 crore to strengthen its balance sheet against potential macroeconomic and geopolitical risks despite reporting stable credit quality across its retail, rural and SME portfolios.

The bank also said an independent forensic review into the Chandigarh branch fraud disclosed during the March quarter has now concluded. The investigation confirmed that the unauthorised transactions resulted from employee collusion at the branch and that no additional financial impact beyond the Rs 645.59 crore already recognised in the previous quarter is expected.

Asset quality continued to improve during the quarter. Gross non-performing assets declined to Rs 4,509.79 crore, representing 1.51 per cent of gross advances, compared with 1.61 per cent in March and 1.97 per cent a year earlier.

Net non-performing assets fell to Rs 1,286.22 crore, or 0.44 per cent of net advances, improving from 0.48 per cent in the previous quarter and 0.55 per cent a year ago.

The bank’s balance sheet expanded steadily during the quarter. Total assets increased to Rs 4,20,809.80 crore from Rs 3,99,780.09 crore at the end of March and Rs 3,61,424 crore a year earlier.

Deposits rose to Rs 3,11,891.89 crore from Rs 2,94,474.55 crore in March and Rs 2,64,971.27 crore in June 2025. Advances increased to Rs 2,94,480.79 crore from Rs 2,80,390.60 crore in the previous quarter and Rs 2,43,678.87 crore a year earlier.

The investment portfolio also expanded to Rs 95,254.85 crore from Rs 85,966.25 crore at the end of FY26.

Paid-up equity capital increased to Rs 8,614.74 crore following the allotment of 1.30 crore equity shares under employee stock option schemes. Reserves and surplus rose to Rs 39,720.93 crore, taking the bank’s net worth to Rs 47,442.12 crore.

The capital adequacy ratio under Basel III stood at 15.05 per cent, compared with 15.60 per cent in March. Annualised return on assets improved sharply to 1.05 per cent from 0.33 per cent in the previous quarter and 0.53 per cent a year ago.

Basic earnings per share increased to Rs 1.25 from Rs 0.37 in the March quarter and Rs 0.63 a year earlier, while diluted earnings per share also rose to Rs 1.24 from Rs 0.37 and Rs 0.63 respectively.

The Government of India’s shareholding in the bank declined marginally to 7.74 per cent from 7.75 per cent in March and 9.09 per cent a year earlier. The debt-to-equity ratio stood at 0.33, while total debt to total assets was 9.83 per cent.

Retail banking remained the bank’s largest business segment, generating revenue of Rs 14,616.62 crore, including Rs 2,414.91 crore from digital banking and Rs 12,201.71 crore from other retail operations. The segment delivered a profit before tax of Rs 622.70 crore.

Treasury operations generated revenue of Rs 7,731.95 crore and a segment profit of Rs 415.10 crore, while wholesale banking contributed revenue of Rs 3,192.60 crore and profit of Rs 409.49 crore.

The bank also remained active in portfolio management. During the quarter, it transferred performing loan assets worth Rs 813.15 crore through assignments while acquiring performing loans worth Rs 2,113.72 crore. It reported no transfers or acquisitions of stressed loans and held no security receipts.

Outstanding co-lending exposure stood at Rs 173.12 crore across 6,045 accounts with two lending partners, primarily in vehicle loans. Project finance exposure totalled Rs 1,106.12 crore across 14 projects, with five new projects worth Rs 384.36 crore sanctioned during the quarter and two projects worth Rs 181.19 crore achieving commercial operations.

Commenting on the results, IDFC FIRST Bank Limited managing director and chief executive officer V. Vaidyanathan said the bank’s performance reflected strong underlying business growth supported by disciplined risk management and a continued focus on building a resilient franchise.

With improving profitability, stronger asset quality, healthy balance sheet expansion and additional prudential buffers in place, IDFC FIRST Bank enters the remainder of FY27 with renewed momentum despite an uncertain macroeconomic environment.