IDFC First Bank Q3 Profit Soars 48% to Rs 503 Crore in FY26

Introduction to Q3 Performance

IDFC First Bank announced a robust financial performance for the third quarter of fiscal year 2026, reporting a 48% year-on-year increase in net profit, which reached Rs 503 crore. This significant growth was primarily fueled by strong expansion in both loans and customer deposits, coupled with a notable improvement in the bank's asset quality and stable core margins. The results reflect the successful execution of the bank's retail-focused strategy and its growing customer base, which now stands at 35 million.

Detailed Financial Metrics

The bank's Net Interest Income (NII) for the quarter grew by 12% year-on-year, rising to Rs 5,492.4 crore from Rs 4,902 crore in the same period last year. The Net Interest Margin (NIM) remained healthy at 5.76%, indicating stable profitability from its core lending operations, although it saw a slight moderation from 6% in the corresponding quarter of the previous year. A key factor supporting profitability was the reduction in provisions for bad loans, which declined by 3.7% quarter-on-quarter to Rs 1,398 crore, signaling better control over credit risk.

Balance Sheet Expansion

IDFC First Bank's balance sheet showed significant expansion during the quarter. Total customer business, a measure of the bank's overall scale, grew to Rs 5.62 lakh crore. Loans and advances saw a substantial 20.9% year-on-year growth, reaching Rs 2.79 lakh crore. This growth was broad-based, with nearly 89% of the expansion driven by key segments like mortgage loans, vehicle loans, and consumer finance. On the liabilities side, customer deposits increased by an impressive 24.4% year-on-year to Rs 2.83 lakh crore, providing a stable funding base for the bank's lending activities.

Strengthening the Liability Franchise

A standout achievement for the quarter was the strengthening of the bank's low-cost deposit base. Current Account and Savings Account (CASA) deposits surged by nearly 33% year-on-year to reach Rs 1.50 lakh crore. This pushed the CASA ratio up to a strong 51.64%, a significant improvement that helped lower the bank's overall cost of funds to 6.11% for the quarter. A higher CASA ratio is crucial as it provides a cheaper and more stable source of funding compared to term deposits.

Asset Quality Shows Improvement

The bank continued to make strides in improving its asset quality. The Gross Non-Performing Asset (GNPA) ratio declined to 1.69% as of December 31, 2025, a 25 basis point improvement from the 1.94% recorded a year ago. In absolute terms, gross NPAs fell to Rs 4,614 crore from Rs 4,841 crore in the previous quarter. The Net Non-Performing Asset (NNPA) ratio remained stable at a low 0.53%, indicating that the bank holds adequate provisions against its bad loans.

Growth in Key Business Verticals

Beyond core banking, IDFC First Bank saw strong traction in its other business segments. The wealth management business demonstrated impressive growth, with assets under management increasing by 31% year-on-year to Rs 58,957 crore. The bank's credit card franchise also continued its expansion, with the total number of cards in force rising to 4.3 million by the end of the quarter. This diversification of revenue streams contributes to the bank's overall financial stability.

Management Outlook

V Vaidyanathan, the Managing Director and CEO of IDFC First Bank, expressed confidence in the bank's trajectory. 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 improved asset quality and noted that the cost of funds is expected to decline further following recent revisions in savings account interest rates. This, he added, will provide a tailwind for expanding the bank's lending franchise profitably.

Conclusion

IDFC First Bank's third-quarter results for FY26 underscore a period of strong, well-rounded growth. The significant jump in profitability, driven by healthy loan and deposit growth and disciplined asset quality management, positions the bank well for the future. With a robust CASA base and positive management outlook, the bank appears set to continue its expansion while maintaining a focus on sustainable, high-quality growth.