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Informist, Friday, Oct. 17, 2025

 

NEW DELHI – IDFC FIRST Bank Ltd.'s profit after tax is likely to surge nearly 90% on year in the September quarter on a low base but is expected to shrink sequentially as credit costs remain high. The bank's loan growth is expected to be the fastest among peers, which is seen boosting the top line.

The bottom line is seen at INR 3.80 billion in the reporting quarter, according to the average estimates from five brokerages, down 18% on quarter. Emkay Global Financial Services Ltd. has the highest net profit estimate of INR 5.20 billion, while YES Securities (India) Ltd. has the lowest at INR 1.94 billion. Last year, a sharp rise in provisions had pulled down the bank's profits in the September quarter. IDFC FIRST Bank is scheduled to declare its Jul-Sept earnings on Saturday.

 

IDFC FIRST Bank is a Mumbai-headquartered, mid-sized private bank and has one of the highest share of retail loans amongst peers. It raised INR 75 billion of capital from two marquee investors in the September quarter, which it said will spur lending growth to an annual pace of 20%. Over the past year, the bank's provisions have shot up due to systemic stress in the microfinance sector. The bank has halved the portfolio over the past five quarters to 3.3% of its total book as of Jun. 30. This has led to plateauing provisions but a fall in net interest margin, as the bank has moved away from high-yield loans.

 

The microfinance stress is likely to stay on the books in the September quarter, with a likely increase in bad loans on its card business as well, brokerages said. Still, the share of the slippages to its operating expenses is likely to fall and boost profitability. Excluding microfinance and one legacy infrastructure toll account, the credit cost for the overall loan book was around 2.0% in the June quarter, down from 1.8% in 2024-25 (Apr-Mar). Credit cost is annualised ratio of bad loans to total assets. The bank had reported provisions of INR 16.59 billion in the June quarter.

 

"Slippages would be higher on sequential basis due to seasonality," YES Securities said in its pre-earnings note. "Provisions will be marginally higher on a sequential basis." The brokerage has the lowest estimate on net profit, despite having the highest net interest income projection. 

 

The bank's net interest income is seen at INR 50.79 billion, up 6.1% on year and 3.0% on quarter, according to the average of estimate of the five brokerages. Loan growth is expected to be 19% on year, taking the total assets to around INR 2.6 trillion, according to estimates from three brokerages.

 

However, the bank's net interest margin is likely to shrink in line with the rest of the industry due to the impact of the interest rate cuts, which are likely to be fully passed on in the September quarter. The Reserve Bank of India's Monetary Policy Committee has cut the benchmark repo rate by 100 bps so far since February. As a result of this, brokerages see a 12-13 bps reduction in IDFC FIRST Bank's net interest margin sequentially from 5.71% in the June quarter. 

 

Nuvama Wealth Management Ltd. sees the bank posting a relatively poor performance compared with peers, RBL Bank and IndusInd Bank. IDFC FIRST Bank's trading gains may also fall to INR 1.0 billion in Jul-Sept from INR 5.0 billion a quarter ago and INR 1.1 billion a year ago, the brokerage said. 

 

IDFC FIRST Bank's commentary on its asset quality in subsequent quarters will be keenly watched, as will be its plan to make use of the capital raised. "Banks such as...IDFCB...may be more exposed in the near term to risks in the low-ticket SBL (small business loan) segment," Emkay said in its pre-earnings note. The brokerage was flagging the risk to micro, small and medium enterprises from the US' 50% tariff on India's imports.

 

At 1134 IST, shares of the bank were 1.0% higher at INR 72.50 on the National Stock Exchange. Its shares are up 2.5% since the June quarter earnings, in line with the rise in the NIFTY Bank index. Brokerages have a mixed view on the bank's stock, with seven recommending a 'buy' with an average target price of INR 86 per share. Four brokerages have a 'hold' rating at an average target price of INR 72, while two recommend selling the stock with an average target price of INR 57 a share.

 

The following are the Jul-Sept earnings estimates for IDFC FIRST Bank from five brokerages in descending order of the estimate of net profit in INR million:

 

Brokerage	Net interest income (in INR million)	Net profit (in INR million)
Emkay Global Financial Services Ltd.	50,847	5,202
Anand Rathi Share and Stock Brokers Ltd.	50,846	4,809
ICICI Securities Ltd.	50,693	3,855
Nuvama Wealth Management Ltd.	50,100	3,200
YES Securities (India) Ltd.	51,458	1,937
Average	50,788.80	3,800.60

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Tanima Banerjee

 

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