Share Price of IDFC First Bank Dips on Profit Decline Despite Growth in Advances and Deposits

Q3FY25 Performance Summary

Shares of IDFC First Bank fell by 5.4% on January 27 to ₹58.90 per share after the bank reported disappointing Q3FY25 results. Quarterly Net Profits dropped by 53% YoY to ₹339.4 crore, significantly missing market expectations of ₹551 crore.

Key Highlights of Q3FY25 Results:

• Net Profit Decline:

Standalone net profit declined to ₹339.4 crore, primarily due to higher operating expenses and elevated provisions. Sequentially, net profit grew by 69% from ₹201 crore in Q2FY25.

• Provisions and Credit Costs:

Total provisions (excluding tax) doubled to ₹1,338 crore, compared to ₹655 crore in Q3FY24.High credit costs and slippages in the microfinance (MF) portfolio impacted profitability.

• Net Interest Income (NII):

NII grew 14.4% YoY to ₹4,902 crore, up from ₹4,286.6 crore in Q3FY24.

Total income increased to ₹11,123 crore.

Microfinance Portfolio:

A proportion of the loan booking fall from 5.6% to 4.8% in Q3FY25 led to decline in Microfinance Portfolio.

Substantial Advances and Deposits Growth

Despite weak profitability, IDFC First Bank reported robust growth in advances and deposits:

• Net Advances: Witnessed a 20% year-on-year growth, driven by a robust 21.3% increase in retail, rural, and MSME loans.
• Customer Deposits: Expanded by nearly 30% YoY, with retail deposits accounting for a significant 80% of the total.
• CASA Deposits: Recorded a 32.3% YoY rise, maintaining an impressive CASA ratio of 47.7%, reflecting a solid and stable funding foundation

Summary

IDFC First Bank's Q3FY25 results reflected a challenging quarter, with profit declines and increased provisions overshadowing strong growth in advances and deposits.