IDFC First Bank Q2 Results: Net profit plummets 73% to ₹200.7 crore, NII up 21% YoY; Asset quality improves

IDFC First Bank Q2 Results: IDFC First Bank announced its July-September quarter results for fiscal 2024-25 (Q2FY25) on Saturday, October 26, reporting a decline of 73.3 per cent in net profit to ₹200.7 crore, compared to ₹751.3 crore in the corresponding period last year. The private sector bank was formed by merging the banking arm of project financer Infrastructure Development Finance Company (IDFC) and Capital First.

The bank said its net profit was impacted by prudent provisions of ₹568 crore, including Rs. 315 crore in the microfinance institution or MFI business (due to stress in the MFI industry) and ₹253 crore in one Maharashtra-based toll account (recent waiver of toll fees at Mumbai entry points).

Also Read: IDFC First Bank Q1 Results: Net profit drops 11% to ₹680.7 crore, NII up 25% YoY; Asset quality stable

IDFC First Bank Q2 Results: Key Metrics

IDFC First Bank's net interest income (NII)—the difference between interest earned and paid—rose 21 per cent to ₹4,788 crore compared to ₹3,950 crore in the year-ago period. The bank's core operating profit (excluding trading gain) grew by 28 per cent year-on-year (YOY) from Rs. 1,456 crore in Q2 FY24 to Rs. 1,857 crore in the year-ago period.

Including trading gains, core operating profit increased by 30 per cent year over year. Asset quality improved, as gross non-performing assets (NPA) were 1.92 per cent as of September 30, 2024, against 2.11 per cent as of September 30, 2023. The net NPA or bad loans was 0.48 per cent as of September 30, 2024, against 0.68 per cent as of September 30, 2023.

Also Read: LIC raises stake in IDFC First Bank to 2.68% at ₹80.63/share via private placement offer

Provisions for Q2 FY25 stood at ₹1,732 crore, primarily because of a prudent provisioning buffer of ₹568 crore created for MFI business ( ₹315 crore). Operating income grew 21 per cent from Rs. 5,380 crore in Q2 FY24 to Rs. 6,515 crore in Q2 FY25. Operating expenses grew by 18 per cent YoY from Rs. 3,870 crore in Q2 FY24 to Rs. 4,553 crore in Q2 FY25.

Customer deposits increased by 32.4 per cent YoY from Rs. 1,64,726 crore as of September 30, 2023, to ₹2,18,026 crore as of September 30, 2024. Retail deposits grew by 37.4 per cent YoY to Rs. 1,75,300 crore from Rs. 1,27,595 crore in the year-ago period. CASA deposits grew by 37.5 per cent from Rs. 79,468 crore as of September 30, 2023 to Rs. 1,09,292 crore.

Overall, the bank's wealth management AUM crossed Rs. 20,000 crore during Q2 FY25. Loans and Advances (including credit substitutes) increased by 21.5 per cent YoY to Rs. 2,22,613 crore from Rs. 1,83,236 crore as of September 30, 2023. The retail book of the bank grew by 25 per cent YoY, while the corporate (non-infrastructure) loans grew by 20.0 per cent YoY during the quarter.

Also Read: IDFC First Bank shares dip ahead of Q2 results 2024. Should you buy on Monday?

V Vaidyanathan, Managing Director and CEO, IDFC FIRST Bank, said, “Our core drivers are strong. Our brand, technology, and high service levels are enabling strong growth in deposits. The ability to grow deposits is a key strategic strength of the Bank. Our CASA ratio sustained at 48.9 per cent. We saw an impact on microfinance business as is seen in the rest of the industry."

“We have created an additional provisioning buffer of Rs. 315 crore for the microfinance segment as a prudent measure. We made an additional provision of Rs. 253 cr for one toll road related to Mumbai’s entry point, which was affected by the state government waiving the toll on LMV. The bank will recognize this back as profits depending on toll collections and the government’s compensation to the client,” said Vaidyanathan.

"Our core operating performance is strong, and we are confident we can revive our profitability going forward," added the CEO. On Friday, shares of IDFC First Bank settled 3.70 per cent lower at ₹65.53 apiece on the BSE.

The bank's board approved Sudhir Kapadia's appointment as an Additional Director in the category of Independent Director to hold office for his first term of four consecutive years commencing from October 26, 2024, to October 25, 2028 (both days inclusive), subject to the approval of the bank's shareholders.