IDFC FIRST Bank Q4 FY25: Profit Falls 58%, Deposits Surge 25% YoY
Key Highlights:
IDFC FIRST Bank Q4 FY25 Results: Strong Deposit Growth, Microfinance Drag on Profit
IDFC FIRST Bank has announced its audited financial results for Q4 and full year FY25, showcasing robust deposit growth, stable asset quality, and a significant dip in net profit caused by industry-wide stress in the microfinance segment.
The bank’s customer-centric and ethical banking model continues to drive growth in deposits and advances, though profitability has taken a hit due to higher provisioning in the microfinance portfolio.
Q4 FY25 Financial Performance at a Glance
- Net Profit: ₹304 crore in Q4 FY25 vs ₹724 crore in Q4 FY24 – a 58% YoY decline
- Net Interest Income (NII): ₹4,907 crore, up 9.8% YoY
- Fee and Other Income: ₹1,702 crore, up 5.7% YoY
- Operating Income: ₹6,609 crore, up 8.7% YoY
- Operating Expenses: ₹4,991 crore, up 12.2% YoY
- Net Interest Margin (NIM): 5.95% in Q4 FY25 (down 9 bps QoQ)
Deposits & Borrowings Witness Healthy Growth
IDFC FIRST Bank posted impressive YoY growth in all deposit segments:
- Total Customer Deposits: ₹2,42,543 crore, up 25.2% YoY
- Retail Deposits: ₹1,91,268 crore, up 26.4% YoY
- CASA Deposits: ₹1,18,237 crore, up 24.8% YoY
- CASA Ratio: A healthy 46.9%, showcasing customer trust and low-cost deposit base
Retail deposits now make up 79% of the total deposit base, reinforcing the bank’s strong retail focus.
Loans and Advances: Consistent Growth, MFI Stress Persists
- Total Advances: ₹2,41,926 crore, up 20.4% YoY
- Retail, Rural & MSME Book: ₹1,97,568 crore, up 18.6% YoY
- Microfinance Portfolio: Down 28.3% YoY, now just 4% of total loan book
- Legacy Infra Book: Reduced to ₹2,348 crore (less than 1% of total assets)
Asset Quality: Stable Ex-MFI, Cautious on Microfinance
Despite microfinance challenges, the bank maintained resilient overall asset quality:
- Gross NPA: Improved to 1.87% from 1.94% in Q3
- Net NPA: Marginal uptick to 0.53%
- PCR (Provision Coverage Ratio): 72.3%
- Retail, Rural & MSME (ex-MFI):
- Gross NPA: 1.40%
- Net NPA: 0.56%
Provisions & Credit Cost
- Total Provisions FY25: ₹5,515 crore (2.46% of loan book)
- Credit Cost (Ex-MFI): 1.76% for FY25, improved QoQ
- Microfinance Buffers: ₹315 crore not utilized
- Insurance: 66% of MFI portfolio covered under CGFMU
Other Key Metrics
- Credit Cards: Crossed 3.5 million mark
- Wealth Management AUM: Grew 27% YoY to ₹42,665 crore
- FASTag: Retains leadership with 17.8 million live tags
Capital Infusion & Dividend
In a major development, the bank’s board approved:
- Capital Raise: ~₹7,500 crore via Compulsorily Convertible Preference Shares (CCPS)
- Backed by Warburg Pincus and ADIA (Abu Dhabi Investment Authority)
- Post-Investment CRAR: Estimated at 18.20%
- Tier-I Ratio: 15.89%
- Proposed Dividend: ₹0.25 per share (subject to approval)
CEO’s Statement: Focus on Strength & Future Growth
V Vaidyanathan, Managing Director & CEO, said:
“Despite profitability challenges from the microfinance sector, our deposit franchise remains robust with 25% growth. The upcoming capital raise will fortify our balance sheet and fuel our next growth phase. We stay committed to responsible, ethical, and digital-first banking.”
What This Means for You
For investors and retail customers, IDFC FIRST Bank’s strong deposit performance and minimal exposure to risky infrastructure loans reflect sound banking fundamentals. However, caution is warranted due to the continued stress in the microfinance business, which significantly dragged down profitability.
How to Take Action
- Long-term investors may view the capital raise as a positive signal of future scalability.
- Credit market observers should watch the bank’s evolving strategy to exit microfinance while doubling down on core retail and SME segments.
- Analysts and Funds can evaluate the strength of IDFC FIRST’s digital-first approach, especially as its app tops global mobile banking ratings.
IDFC FIRST Bank Remains Resilient Amid Profit Dip
While Q4 FY25 marked a tough quarter for IDFC FIRST Bank in terms of profit, its fundamentals remain strong. A solid deposit base, proactive provisioning, and capital infusion commitments are signs of prudent leadership and long-term stability in the face of microfinance volatility.
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