IDFC First Bank Q3 Results: Profit Soars 48% to ₹503 Crore

Introduction

Private sector lender IDFC First Bank announced a robust financial performance for the third quarter of the fiscal year 2026, reporting a 48% year-on-year (YoY) increase in net profit. The bank's net profit for the quarter ending December 31, 2025, stood at ₹503 crore, a significant rise from the ₹339 crore recorded in the same period of the previous fiscal year. This growth was primarily supported by a healthy expansion in core income and a consistent improvement in the bank's asset quality.

Detailed Financial Performance

The bank's Net Interest Income (NII), the difference between interest earned and interest expended, grew by 12% YoY. NII for Q3 FY26 reached ₹5,492.4 crore, compared to ₹4,902 crore in the corresponding quarter a year ago. This steady growth in core income highlights the bank's expanding lending operations. However, the Net Interest Margin (NIM) experienced a slight compression, dropping to 5.76% from 6.00% in the same period of the previous financial year. This indicates a tighter spread between the cost of funds and lending rates.

Asset Quality Analysis

IDFC First Bank demonstrated a notable improvement in its asset quality. The Gross Non-Performing Assets (GNPA) ratio improved to 1.69% of gross advances, down from 1.86% in the previous quarter and 1.94% a year ago. In absolute terms, gross NPAs declined to ₹4,614 crore from ₹4,841 crore in the preceding quarter. This reduction in bad loans points to better recovery and underwriting standards. On the other hand, the Net Non-Performing Assets (NNPA) ratio saw a marginal increase, rising to 0.53% from 0.52% on a sequential basis. The absolute Net NPA figure rose slightly to ₹1,427 crore from ₹1,345.4 crore quarter-on-quarter. The bank's provisions for the quarter declined by 3.7% sequentially to ₹1,398 crore, signaling confidence in the overall quality of its loan portfolio.

Key Financial Highlights for Q3 FY26

Business Growth and Segment Performance

The bank's loan growth was broad-based, with nearly 89% of the YoY expansion in loans and advances driven by key segments. These include mortgage loans, vehicle loans, consumer loans, business banking, and wholesale loans. This diversification reflects a balanced approach to growing its asset book. The credit card business continued its expansion, with the number of cards in force reaching 4.3 million during the quarter. Furthermore, the wealth management division showed strong momentum, with its Assets Under Management (AUM) growing by 31% YoY to ₹58,957 crore.

Management Commentary

V Vaidyanathan, the Managing Director and CEO of IDFC First Bank, commented on the strong performance. He stated, "We are seeing a strong business momentum across all our main lines of businesses, including lending, deposits, wealth management, transaction banking, etc." He highlighted the improvement in asset quality, with GNPA at 1.69% and Net NPA at 0.53%. Vaidyanathan also expressed optimism about the cost of funds, expecting it to decline further following a recent revision in savings account interest rates. This reduction is anticipated to support the expansion of the bank's lending franchise in the coming quarters.

Market Reaction and Outlook

Following the announcement of the results, the shares of IDFC First Bank ended the previous session flat at ₹83.5 per share. Over the past year, the stock has delivered a return of 32% to its investors. The bank's solid Q3 performance, characterized by strong profit growth and stable asset quality, positions it well for future growth. Investors will likely monitor the trajectory of its Net Interest Margin and the management's ability to capitalize on the expected reduction in the cost of funds to drive further profitability.

Conclusion

IDFC First Bank's third-quarter results for FY26 underscore a period of robust growth and operational stability. The 48% surge in net profit, coupled with a stronger balance sheet and improving asset quality metrics, reflects the successful execution of its strategic priorities. With continued momentum across its core business segments and a positive outlook from the management, the bank appears well-positioned to sustain its growth trajectory.