IDFC First Bank Reports a Net Profit of ₹339 Crore for Q3 FY25, Core Operating Profit Up 15% Year-on-Year

**Financial Results**

Mumbai, January 2025: IDFC First Bank announced its unaudited financial results for the quarter ended December 31, 2024, and for the nine months of FY25.

**Deposits and Loans:**
- Customer deposits grew by 28.8% year-on-year, rising from ₹1,76,481 crore on December 31, 2023, to ₹2,27,316 crore on December 31, 2024.
- Retail deposits increased by 29.6%, from ₹1,39,431 crore on December 31, 2023, to ₹1,80,752 crore on December 31, 2024.
- CASA (Current Account Savings Account) deposits grew by 32.3%, from ₹85,492 crore on December 31, 2023, to ₹1,13,078 crore on December 31, 2024.
- The CASA ratio remained stable at 47.7% as of December 31, 2024.
- Retail deposits account for approximately 80% of total customer deposits (as of December 31, 2024).
- The bank’s cost of funds for Q3 FY25 was 6.49%. Excluding higher-cost legacy borrowings, the cost of funds was 6.43%, remaining stable compared to 6.38% in Q2 FY25.

**Other Businesses:**
- The number of credit cards issued by the bank surpassed 3.2 million in the last quarter.
- Wealth Management AUM (Assets Under Management), including deposit balances, grew by 53% year-on-year, reaching ₹42,778 crore.
- FASTag: The bank remains the largest issuer in the country with 22 million FASTags issued.
- Tax Collections: The bank has been appointed to collect direct taxes for the Central Board of Direct Taxes (CBDT) and GST for the Central Board of Indirect Taxes and Customs (CBIC). The bank has completed the technical integration and commenced tax collections.

**Loans and Advances:**
- Loans and advances (including credit options) grew by 22.0% year-on-year, from ₹1,89,475 crore on December 31, 2023, to ₹2,31,074 crore on December 31, 2024.
- The retail loan book grew by 21.3%, while non-infrastructure corporate loans grew by 28.9% year-on-year as of December 31, 2024.
- The bank's old infrastructure book declined by 15% year-on-year to ₹2,546 crore, which constitutes 1.1% of the bank's total financial assets.
- The contribution of the microfinance portfolio to the total loan book decreased from 5.6% in September 2024 to 4.8% in December 2024.

**Asset Quality:**
- Given the increasing default rate in the microfinance business, the bank is closely monitoring this sector. However, asset quality indicators (such as gross NPA, net NPA, SMA, and provisions) in the non-microfinance business, which makes up about 95% of the total loan book, remain stable.

**NPA Details:**
- Gross NPA stood at 1.94% as of December 31, 2024, compared to 2.04% on December 31, 2023.
- Net NPA stood at 0.52% as of December 31, 2024, compared to 0.68% on December 31, 2023.
- Excluding the microfinance business, gross NPA stood at 1.81% as of December 31, 2024, compared to 1.88% on September 30, 2024.
- The gross NPA for retail, rural, and MSME finance was 1.63% as of December 31, 2024, compared to 1.45% on December 31, 2023.
- The net NPA for retail, rural, and MSME finance was 0.59% as of December 31, 2024, compared to 0.51% on December 31, 2023.
- The bank’s provision coverage ratio (PCR) stood at 73.6% as of December 31, 2024, compared to 66.9% on December 31, 2023.
- Gross slippages for Q3 FY25 stood at ₹2,192 crore, compared to ₹2,031 crore in Q2 FY25, marking an increase of ₹162 crore. Most of this increase came from the microfinance business (₹143 crore). Gross slippages in retail, MSME, agriculture, and corporate loans (excluding microfinance) remained stable. These sectors constitute approximately 95% of the bank's total loan book.

**SMA Positions:**
- The SMA-1+2 position in the retail, rural, and MSME finance portfolio (excluding microfinance) decreased to 0.82% as of December 31, 2024, from 0.85% QoQ.
- SMA-1+2 remained stable across all major products, including mortgages, vehicle loans, personal loans, and credit cards, compared to Q2 FY25.
- The SMA-1+2 in the microfinance business increased from 2.54% as of September 30, 2024, to 4.56% as of December 31, 2024.

**Provisions:**
- Provisions for Q3 FY25 amounted to ₹1,338 crore, driven by higher slippages in the microfinance book. Excluding microfinance, provisions for the non-microfinance book remained stable.
- The bank did not utilize any microfinance provisioning buffer in Q3 FY25, maintaining a cautious approach.
- The annualized provision on total financial assets (including microfinance) for Q3 FY25 was 2.31%.
- Excluding the microfinance portfolio, the quarterly annualized credit cost for the loan book in Q3 FY25 remained stable at 1.8%.
- Incremental disbursements in the microfinance sector are insured by the CGFMU, with insurance coverage on the total portfolio increasing from 0% to 58% over the past year.

**Profitability:**
- Net Interest Income (NII) for Q3 FY25 rose by 14% year-on-year, from ₹4,287 crore in Q3 FY24 to ₹4,902 crore in Q3 FY25. NII for the first nine months of FY25 grew by 20.1% on a year-on-year basis.
- The bank’s Net Interest Margin (NIM) for Q3 FY25 was 6.04%, compared to 6.18% in Q2 FY25. The decline in NIM was primarily due to a decrease in the microfinance business and an increase in the wholesale banking business share.
- Fee and other income rose by 20% year-on-year, from ₹1,469 crore in Q3 FY24 to ₹1,757 crore in Q3 FY25. For the first nine months of FY25, fee and other income grew by 18.9% year-on-year.
- Operating income increased by 15%, from ₹5,803 crore in Q3 FY24 to ₹6,682 crore in Q3 FY25. Operating income for the first nine months of FY25 grew by 19.4% year-on-year.
- Operating expenses increased by 16% year-on-year, from ₹4,241 crore in Q3 FY24 to ₹4,923 crore in Q3 FY25. Operating expenses for the first nine months of FY25 grew by 18.2% year-on-year.
- Core operating profit (excluding trading gains) rose by 14.6%, from ₹1,515 crore in Q3 FY24 to ₹1,736 crore in Q3 FY25.
- Including trading gains, operating profit grew by 13% year-on-year. Core operating profit for the first nine months of FY25 (excluding trading gains) grew by 23.9% on a year-on-year basis.
- Net profit decreased by 53% year-on-year, from ₹716 crore in Q3 FY24 to ₹339 crore in Q3 FY25. However, it showed a 69% quarter-on-quarter increase from ₹201 crore in Q2 FY25. For the first nine months of FY25, net profit decreased by 45.3% year-on-year. The decline was primarily due to slower income growth from microfinance loan disbursements, higher provisioning for microfinance, and the normalization of credit costs in the non-microfinance business.

**Capital Position:**
- The bank successfully completed its merger with IDFC Limited in October 2024, adding ₹618 crore in capital to its net worth, while the number of outstanding shares reduced to 16.64 crore.
- Considering the profits for the first nine months of FY25 and the impact of the merger, the Total Capital Adequacy Ratio (CAR) as of December 31, 2024, stood at 16.11%, and the CET-1 ratio was 13.68%.

**Commentary by Managing Director & CEO**
Mr. V. Vaidyanathan, Managing Director and CEO of IDFC First Bank, said:

"Our bank continues to grow well in both loans and deposits. Our customer deposits have increased by 29% year-on-year, reaching ₹2,27,316 crore, while our CASA ratio remains stable at 48%. Loans and advances grew by 22% year-on-year, reaching ₹2,31,074 crore."

"Given the industry situation, we are closely monitoring the microfinance loan book. The asset quality of the bank’s total loan book remains stable, with a gross NPA of 1.94% and a net NPA of 0.52%. Excluding the microfinance loan book, the bank’s gross NPA and net NPA are even lower at 1.81% and 0.49%, respectively."

"The credit challenges in the microfinance sector are being seen as a transitional issue, which we expect to resolve in the coming quarters. We established this business because it is vital from a priority sector lending (PSL) perspective, especially for the vulnerable sections and small and marginal farmers."

"All other businesses, including deposits, loans, credit cards, wealth management, cash management, corporate banking, FASTag, and gold loans, are performing better as part of our universal banking model. Over the next few years, we expect a reduction in the cost-to-income ratio as we scale our operations. As mentioned earlier, the bank is gradually increasing its size."