IDFC First Bank’s fiscal second-quarter net profit jumped threefold to Rs 1,045 crore from Rs 352 crore a year ago, driven by a strong loan growth and other key operating metrics while the lender mobilised $3.6 billion (Rs 34,390 crore) in FCNR(B) deposits under the Reserve Bank of India’s special swap scheme.

“It’s a landmark, considering that the core net profit has crossed Rs 1,000 crore without any adjustments. In the previous quarter when we posted net profit of Rs 1,075 crore, we had said that a portion of that is treasury income - the core was like Rs 897 crore. The quarter before that, the core was like Rs 746 crore – and the two quarters before were like Rs 430 crore and Rs 300 crore, respectively. You can see the trajectory is fairly established by now,” IDFC First Bank managing director and CEO V Vaidyanathan told analysts at the post-earnings call.

During the fiscal second quarter, loans, including credit substitutes and FCNR(B)-backed lending, increased 30.1% year-on-year to Rs 3.47 lakh crore. Excluding loans secured by foreign currency non-resident (Bank), or FCNR(B), deposits, loan growth was 22.2%.  

The private lender’s net interest income (NII) increased 21% to Rs 6,184 crore from Rs 5,113 crore a year ago.

NIM moderates due to FCNR deposits

Net interest margin (NIM) declined to 5.58% as compared to 5.90% in the previous quarter, largely due to a 16-basis-point impact from loans given to garner FCNR(B) deposits. 

“The moderation in NIM during the quarter was primarily due to the strong mobilisation in FCNR deposits. We had an impact of about 16 basis points on this FCNR-backed lending. Secondly, we parked such liquidity in low-yielding treasury instruments and nostro balances in the interim, which had an impact on NIM of 7 bps. The change in asset mix, in which we grew wholesale banking and business banking at a faster pace, had an impact of 5 bps. Then there is the 4-basis-point impact because of the day count convention as the quarter had 92 days instead of 91,” IDFC First Bank chief financial officer Sudhanshu Jain told analysts.

NPA improves

The bank’s asset quality improved, with gross non-performing assets (NPAs) declining to 1.32% of gross advances at the end of the September quarter versus 1.51% in the previous three months and 1.86% a year ago.

Net NPA eased to 0.40% from 0.44% a quarter ago and 0.52% a year ago.

Credit cost, as a percentage of average assets, reduced to 1.01% in Q2 FY27.

Provisions for the September quarter stood at Rs 1,137 crore, almost flat against Rs 1,144 crore in the preceding quarter and down 21.7% from Rs 1,451.8 crore in the year-ago quarter.

Strong loan growth at 30%

The bank’s advances stood at Rs 3.47 lakh crore as on 30 September 2026, driven by mortgage, vehicle, consumer, MSME (micro, small and medium enterprises) and wholesale loans.

Excluding FCNR-backed loans, total assets stood at Rs 3.29 lakh crore and reflected a YoY growth of 22.2%.

The retail book grew 35.4% YoY to Rs 2.12 lakh crore at the end of the September quarter, with mortgage loans (including home loans and loan against property) rising 8.7% to Rs 64,211 crore and consumer loans jumping 25.3% to Rs 60,324 crore. Vehicle loans grew 17.3% YoY to Rs 35,464 crore while gold loans grew the fastest on a low base at 119.3% to Rs 5,850 crore. 

The bank’s credit cards-in-force crossed 5 million and the portfolio grew 14.3% to Rs 9,875 crore, while education loans increased by 6.1% to Rs 3,783 crore.

The FCNR-backed lending was Rs 24,885 crore during the September quarter.

The bank’s business finance lending book stood at Rs 1.10 lakh crore, up 26.8% from the year-ago period. Within this, wholesale loans grew 33.5% YoY to Rs 70,312 crore, while term loans to small businesses shrank 1.8% to Rs 14,295 crore. Working capital lending grew 31.5% to Rs 14,381 crore.

During the quarter, microfinance loans contracted 6.6% YoY to Rs 6,825 crore. Rural finance stood at Rs 25,248 crore.

Retail comprised 61% of IDFC First Bank’s loan mix as on 30 September 2026, followed by wholesale financing at 20%, MSME (Rs 39,739 crore) at 11% and rural at 7%.

Deposit growth and FCNR mobilisation

Total deposits rose 25.9% YoY to Rs 3.49 lakh crore, consisting of Rs 3.41 lakh crore from customer deposits and Rs 7,168 crore from certificate of deposits (CDs). 

The CASA (current account savings account) deposits declined to 47.6% as on 30 September 2026, from 50.8% in the previous quarter and 50.1% a year ago. The slight decline from 50.1% was primarily due to the large mobilisation of FCNR(B) deposits during the quarter, the bank said.

Excluding the FCNR(B) deposits, the CASA ratio stood at 52.8%.

The bank mobilised Rs 34,390 crore of FCNR(B) deposits during the quarter, despite having no branch, subsidiary or representative office outside India. “This demonstrates the bank's digital capabilities and the trust it enjoys among customers,” the lender said.

FCNR(B) deposits are largely of 3-to-5-year tenor and provide strong structural liquidity for the coming years. The fully loaded cost of FCNR(B), including priority sector lending (PSL) benefits, is approximately 1% lower than the cost of raising domestic fixed deposits, the bank said.