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IDFC FIRST Bank's Q4 FY25 results reveal a mixed performance. While customer deposits and loans and advances exhibited robust growth, the bank's net profit experienced a significant decline compared to the previous year. The 58 percent drop in net profit, from Rs 724 crore in Q4 FY24 to Rs 304 crore in Q4 FY25, underscores the impact of elevated provisions linked to stress within the microfinance portfolio. This decline is further reflected in the full financial year FY25 results, where net profit decreased by 48.4 percent year-on-year to Rs 1,525 crore. Despite these challenges, the bank demonstrated resilience in several key areas, including deposit growth, asset quality, and net interest income. Customer deposits grew by a substantial 25.2 percent year-on-year, reaching Rs 2,42,543 crore, with retail deposits contributing significantly to this growth, increasing by 26.4 percent to Rs 1,91,268 crore. The bank's CASA (Current Account Savings Account) deposits also registered healthy growth of 24.8 percent year-on-year, reaching Rs 1,18,237 crore, maintaining a strong CASA ratio of 46.9 percent, slightly lower than the 47.2 percent recorded a year ago. The expansion of loans and advances, growing by 20.4 percent year-on-year to Rs 2,41,926 crore, highlights the bank's ability to extend credit and support economic activity. While retail, rural, and MSME loans increased by 18.6 percent to Rs 1,97,568 crore, the microfinance portfolio contracted by 28.3 percent, reflecting the challenges within this segment. This contraction likely contributed to the increased provisions impacting the bank's overall profitability.
Net Interest Income (NII), a crucial indicator of a bank's financial health, grew by 9.8 percent year-on-year to Rs 4,907 crore for Q4 FY25. The full year NII increased by 17.3 percent year-on-year. Net Interest Margin (NIM) on AUM (Assets Under Management) stood at 5.95 percent for Q4 FY25, experiencing a slight decrease of 9 basis points sequentially. This decrease was primarily attributed to the contraction within the microfinance business, further highlighting the impact of this sector on the bank's performance. The full-year NIM was at 6.09 percent. Fee and Other Income, representing revenue generated from various banking services, increased by 5.7 percent year-on-year to Rs 1,702 crore in Q4 FY25. The full year Fee and Other Income growth stood at 15.2 percent. Core Operating Income, reflecting the bank's underlying profitability, rose by 8.7 percent to Rs 6,609 crore in Q4. However, this growth was partially offset by an increase in Operating Expenses, which rose by 12.2 percent to Rs 4,991 crore. As a result, Core Operating Profit stood at Rs 1,618 crore during the quarter. For the full year, Core Operating Profit grew by 17.2 percent to Rs 7,069 crore, demonstrating the bank's ability to generate profits from its core operations despite the challenges faced in specific sectors.
Despite sectoral pressures, IDFC FIRST Bank managed to maintain stable asset quality metrics. Gross Non-Performing Assets (GNPA) improved marginally by 7 basis points sequentially to 1.87 percent, while Net NPA increased slightly by 1 basis point to 0.53 percent. Excluding the microfinance portfolio, Gross NPA for the Retail, Rural and MSME book improved to 1.40 percent, indicating that the bank's other lending segments were performing relatively well. The bank's Provision Coverage Ratio (PCR) remained healthy at 72.3 percent, providing a buffer against potential loan losses. Total provisions for FY25 amounted to Rs 5,515 crore, representing 2.46 percent of the loan book. Excluding microfinance and one toll account, the adjusted credit cost for the year was 1.76 percent, improving 9 basis points quarter-on-quarter to 1.73 percent in Q4. Gross slippages stood at Rs 2,175 crore for Q4 FY25, marginally down from Rs 2,192 crore in Q3. Looking ahead, IDFC FIRST Bank's board has approved raising approximately Rs 7,500 crore by issuing Compulsorily Convertible Preference Shares (CCPS) to affiliates of Warburg Pincus and Abu Dhabi Investment Authority (ADIA), pending shareholder and regulatory approvals. This capital infusion is likely to strengthen the bank's capital base and support its future growth plans. The bank has also proposed a dividend of Rs 0.25 per share, indicating a commitment to rewarding its shareholders.
Source: IDFC FIRST Bank reports Q4 FY25 net profit of Rs 304 crore, 58% decline from FY24