IDBI Bank reported a standalone net profit of ₹2,205 crore for the second quarter of FY27, marking a 4% increase quarter-on-quarter and a 14% rise year-on-year when excluding one-off gains from the previous year. Total revenue stood at ₹8,510 crore, up 20% YoY from ₹7,100 crore in the corresponding period.

The bank's operating profit stood at ₹2,893 crore, up 33% QoQ and 59% YoY (excluding one-off items). Net Interest Income (NII) grew significantly by 29% YoY and 21% QoQ to reach ₹4,228 crore, driven by improved margins and business growth.

Asset Quality Trends

Asset quality metrics showed continued improvement during the quarter. The Gross Non-Performing Assets (GNPA) ratio improved to 2.12% from 2.65% in the corresponding period last year and 2.30% in the previous quarter. The Net Non-Performing Assets (NNPA) ratio edged up marginally to 0.17% from 0.16% quarter-on-quarter but remained lower than the 0.21% recorded a year ago.

*Q2FY26 figures included a one-off gain of ₹1,699 crore from the sale of NSDL shares.

Business Growth and Margins

Total business grew by 18% YoY to ₹6,27,216 crore. Total deposits increased by 17% YoY to ₹3,55,684 crore, while net advances grew by 18% YoY to ₹2,71,533 crore. The CASA ratio stood at 43.82%, with CASA balances rising 12% YoY to ₹1,55,877 crore.

Net Interest Margin (NIM) expanded to 4.11%, reflecting a 40 basis points increase YoY and a 50 basis points rise QoQ. The cost of deposits declined to 4.55%, down 14 bps YoY. The Cost-to-Income ratio improved to 48.17%, showing a reduction of 385 bps QoQ.

What the Numbers Show

A key divergence is visible between the headline YoY profit decline and the underlying operational strength. While reported net profit fell 39% YoY due to the absence of the ₹1,699 crore one-off gain recorded in Q2FY26, the core profitability metrics tell a different story. Excluding this non-recurring item, net profit rose 14% YoY, and operating profit surged 59% YoY.

This suggests that the bank's fundamental earnings power has strengthened significantly. The expansion in NIM by 40 bps YoY, coupled with an 18% growth in advances, indicates that the bank is generating higher yields on its loan book despite a competitive interest rate environment. Furthermore, the improvement in GNPA to 2.12% alongside robust business growth signals that asset quality stabilization is supporting sustainable revenue expansion rather than being achieved through aggressive write-offs at the expense of growth.

IDBI Bank 's strategic sale has moved forward with the government declaring Fairfax Financial Holdings' wholly owned subsidiary the "Strategic Buyer" for a 60.72% stake. The transaction is valued at ₹52,878.08 crore (approximately US$5.6 billion) at a price of ₹81 per share.

This designation resolves previous uncertainty regarding the disinvestment process, which had been contingent on market conditions. The deal represents a significant step in the bank's ownership restructuring and is expected to be the largest foreign direct investment in the financial sector so far.

Strategic sale update

The Cabinet Committee on Economic Affairs approved the transaction on October 14, 2026. The bidding process involved a two-stage competitive mechanism. Initially, bids were invited in FY26 with a reserve price of ₹94.42 per share, but these fell short and were not approved. Subsequently, best offer bids were invited in FY27.

Two independent valuation agencies determined the fair value using the Market Multiple Method and the Asset Valuation Method based on March 31, 2026 accounts. The average benchmark price was fixed at ₹75.99 per share. The winning bid of ₹81 per share exceeded this benchmark and was adjudged reasonable.

Consolidation plans: Digit and IIFL

Fairfax proposes to contribute its interests in Go Digit Life Insurance Limited, Go Digit General Insurance Limited (collectively "Digit"), and IIFL Capital Services Limited ("IIFL Capital") to IDBI Bank. This move aims to create a leading unified Indian financial services company offering banking, insurance, investment banking, and wealth management services.

The contribution of these entities is subject to approvals from the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), and the Insurance Regulatory and Development Authority of India (IRDAI). Fairfax expects the operations of the newly combined company to be led by Rakesh Sharma, current MD and CEO of IDBI Bank, with C.V.R. Rajendran and N.S. Kannan joining the leadership group.

Ownership structure post-transaction

The 60.72% equity stake being sold comprises:

• 30.48% held by the Government of India (GoI)
• 30.24% held by the Life Insurance Corporation of India (LIC)

Post-transaction, the GoI will retain a residual 15% stake, while LIC will hold 19%. Both entities will withdraw their nominees from the Board and become public shareholders. The GoI retains the option to sell its residual stake through the open market via the Alternative Mechanism.

What the numbers show

The deal price of ₹81 per share represents a 6.7% premium over the average fair valuation benchmark of ₹75.99 per share. Additionally, this price reflects an approximate 23% premium to IDBI Bank's book value as of June 30, 2026, measured under Indian Accounting Standards. This premium suggests Fairfax valued the bank's intrinsic worth higher than independent agencies' assessments, signaling confidence in IDBI's turnaround potential under private management. The transaction bypasses volatile stock market prices, which ranged from ₹61.01 to ₹118.38 during the valuation period, relying instead on fundamental asset and market multiple metrics.