IDFC First Bank has successfully raised ₹4,876 crore through a preferential allotment of shares, marking a significant step in strengthening its capital base. The bank's Board Committee approved the issuance of 81.27 crore compulsorily convertible cumulative preference shares (CCPS) to Currant Sea Investments B.V. at ₹60 per share.

Key Details of the Share Allotment

• Number of Shares: 81,26,94,722 CCPS
• Face Value: ₹10 per share
• Issue Price: ₹60 per share
• Total Amount Raised: ₹4,876 crore
• Allotment Approval Date: August 1, 2025

The preferential allotment comes after the bank received in-principle approvals from both the BSE Limited and National Stock Exchange of India Limited on May 15, 2025.

Financial Performance and Outlook

In its recent financial results, IDFC FIRST Bank reported a net profit of ₹463 crore for the first quarter. This represents a 52% increase sequentially but a 32% decrease year-on-year, primarily due to challenges in the microfinance business and increased provisions in other segments.

Key Financial Metrics

The bank's customer deposits crossed the ₹2.5 lakh crore milestone, reaching ₹2.57 lakh crore, with a strong year-on-year growth of 26%. The CASA (Current Account Savings Account) ratio improved to 48%, with CASA deposits growing by 30% year-on-year.

Management Commentary

V. Vaidyanathan, Managing Director and CEO of IDFC FIRST Bank, expressed confidence in the bank's future prospects. He stated, "We are focused on building a quality brand, a quality bank with good customer journeys, robust systems, and advanced technology. These efforts will eventually reflect in the bank's performance."

The bank expects its net interest margins to improve to around 5.8% by the fourth quarter of the fiscal year, driven by the repricing of deposits and stabilization of the microfinance business.

Future Outlook

IDFC FIRST Bank remains optimistic about its growth trajectory, expecting improvements in its financial metrics in the coming quarters. The recent capital raise is expected to further strengthen the bank's position in the market and support its expansion plans.

The bank continues to focus on moderating its operating expenses, with a target to bring down the cost-to-income ratio to 65% by FY27. Management also anticipates credit costs to stabilize around 2-2.05% for the current fiscal year.

As IDFC FIRST Bank navigates through the challenges in the microfinance sector and adapts to the changing interest rate environment, it remains committed to building a strong, customer-centric universal bank in India.

IDFC First Bank has released its financial results for the first quarter, showcasing a mixed performance with strong deposit growth but challenges in the microfinance sector.

Balance Sheet Growth and Deposit Milestone

The bank reported a robust 18.00% year-on-year growth in its balance sheet size, reaching ₹3.60 lakh crore. Customer deposits crossed a significant milestone of ₹2.57 lakh crore, growing at an impressive 26.00% year-on-year. The CASA (Current Account Savings Account) ratio improved to 48.00%, with CASA deposits growing strongly at 30.00% year-on-year.

Branch Expansion and Asset Growth

During the quarter, IDFC FIRST Bank added 14 new branches, bringing its total branch count to 1,016. The bank's funded assets registered a strong growth of 21.00% year-on-year, reaching ₹2.53 lakh crore. This growth was primarily led by segments such as mortgages, vehicles, business banking, working capital loans, and the wholesale book. Notably, the wholesale book grew at a faster pace of 39.00% year-on-year.

Microfinance Challenges

IDFC FIRST Bank faced significant challenges in its microfinance business, with the book declining by 37.00% year-on-year to ₹8,354 crore. This decline was attributed to sector-wide challenges in the microfinance industry.

Asset Quality

The bank's asset quality metrics showed a slight deterioration:

Excluding the microfinance book, the GNPA ratio increased from 1.63% to 1.70% at the bank level.

Profitability and Net Interest Margin

IDFC FIRST Bank reported a profit after tax of ₹463 crore for the quarter, representing a 52.00% sequential growth. However, on a year-on-year basis, the profit declined by 32.00%, primarily impacted by challenges in the microfinance business and some increase in provisions in other segments.

The bank's net interest margin (NIM) moderated by 24 basis points to 5.71% due to repo rate pass-through and the decline in the microfinance book. Management expects the margins to improve by the fourth quarter, potentially reaching around 5.80%, subject to any further repo rate cuts.

Capital Raise and Credit Cost Guidance

IDFC FIRST Bank expects to conclude its ₹7,500 crore capital raise in Q2. The management has guided for a credit cost of around 2.00-2.05% for the full year, maintaining its focus on long-term bank-building strategy while acknowledging short-term margin pressures from rate cuts and deposit repricing.

Conclusion

IDFC FIRST Bank's Q1 results reflect a resilient performance in core banking operations, with strong deposit growth and asset expansion. However, challenges in the microfinance sector and margin pressures have impacted overall profitability. The bank remains focused on its long-term strategy and expects improvements in the coming quarters as the benefits of deposit repricing and stabilization in the microfinance book materialize.