IDFC First Bank Q2 results: Standalone PAT shoots up by 75% YoY, NII cracks 40%

Core Insights - IDFC Bank reported a significant 75.5% year-on-year increase in standalone net profit for Q2 FY26, reaching Rs 352.31 crore, up from Rs 200.69 crore in the same quarter last year [1][7] - The bank's net interest income (NII) experienced a sharp decline of 40% year-on-year, falling to Rs 5,112.57 crore from Rs 8,540.03 crore [1][7] - The net interest margin (NIM) decreased by 59 basis points year-on-year to 5.59%, compared to 6.18% a year ago and 5.71% in the previous quarter [2][7] Financial Performance - The gross non-performing asset (NPA) ratio improved slightly, declining by 6 basis points to 1.86%, while the net NPA increased by 4 basis points to 0.52% year-on-year [2][7] - Total customer business grew by 21.6% year-on-year, reaching Rs 5,35,673 crore as of September 30, 2025, compared to Rs 4,40,640 crore a year earlier [7] - Loans and advances rose by 19.7% year-on-year to Rs 2,66,579 crore from Rs 2,22,613 crore [7] - Customer deposits increased by 23.4% year-on-year to Rs 2,69,094 crore as of September 30, 2025, up from Rs 2,18,026 crore a year earlier [7] Deposits and Cost of Funds - CASA deposits grew by 26.8% year-on-year to Rs 1,38,583 crore, with the CASA ratio improving by 119 basis points to 50.07%, up from 48.88% in the same quarter last year [5][7] - The bank's cost of funds decreased by 23 basis points year-on-year to 6.23% [5][7] Management Commentary - The CEO of IDFC First Bank indicated that the stress in the microfinance institution (MFI) sector appears to be resolving, and the bank's asset quality has remained stable over the past decade [6][7] - The bank is experiencing improving operating leverage, with total business growth outpacing operational expenditure increases in both FY25 and H1 FY26 [6][7]