IDFC First Bank has released its Q3 results for 2025. it is a good time to invest in IDFC First Bank shares
IDFC First Bank released its Q3FY25 earnings report on January 25th, revealing a significant 53% decrease in standalone net profit to ₹339.4 crore compared to ₹715.7 crore in the same period last year. This decline was primarily due to increased provisions resulting from higher loan slippages.
Formed through the merger of IDFC’s banking arm and Capital First, IDFC First Bank cited reduced income from a slowdown in micro-finance loan disbursals, higher microfinance provisions, and the normalization of credit costs in non-MF businesses as factors impacting their profit.
Key metrics from the Q3 results show that the bank’s net interest income (NII) increased by 14.4% to ₹4,902 crore, while total income rose to ₹11,123 crore. Sequentially, net profit saw a 69% growth from the previous quarter, but a 45.3% decrease on a year-on-year basis for the first nine months of FY25.
Customer deposits and Loans and Advances both experienced significant year-on-year increases, with customer deposits rising by 28.8% to Rs. 2,27,316 crore and Loans and Advances increasing by 22% to Rs. 2,31,074 crore as of December 31, 2024. Additionally, the microfinance portfolio as a percentage of the overall loan book decreased from 5.6% in Q2FY25 to 4.8% in the December quarter.
Our bank is experiencing significant growth in both loans and deposits. Customer deposits have increased by 29% year over year, reaching Rs. 2,27,316 crore, with a sustained CASA ratio of 48%. Loans and advances have also grown steadily by 22% year over year, reaching Rs. 2,31,074 crore,” stated V Vaidyanathan, MD and CEO of IDFC First Bank.
Considering the recent Q3 results of IDFC First Bank, market expert Abhishek Pandya, Research Analyst at StoxBox, highlighted a somewhat subdued performance. The bank reported a 53% decline in PAT, primarily due to increased provisions for microfinance and normalization of credit costs in non-microfinance businesses. Additionally, there was a 14 bps compression in net interest margin on a quarter-over-quarter basis, attributed to the microfinance sector and a growing proportion of the Wholesale Banking business.
Despite these challenges, Pandya noted that credit growth remained strong at 22% year over year. IDFC First Bank has also reduced its microfinance portfolio to 4.8% from 5.6% in Q2FY25. “The NPA ratio has improved, and we will closely monitor management’s comments on asset quality. Furthermore, IDFC First Bank’s operating income has shown robust growth, driven by investment income, and the wealth management business continues to thrive,” Pandya added.
In light of these developments, investors may be wondering whether to buy, sell, or hold IDFC First Bank stock.
“Overall, the performance of IDFC First Bank in the last quarter was lackluster, primarily due to challenges in the microfinance segment. Moving forward, a key aspect to watch will be the management’s approach to addressing issues related to the MFI loan portfolio and maintaining stable margins,” stated an industry expert.
From a technical perspective, Mahesh M Ojha, AVP of Research at Hensex Securities, commented, “IDFC First Bank reported disappointing Q3 results, which could lead to selling pressure on the banking stock come Monday. I recommend a buy-on-dip strategy for investors interested in purchasing IDFC First Bank shares. Consider buying the stock in the ₹60 to ₹61.50 range with an immediate target of ₹64. If the stock closes above ₹64, it could potentially reach ₹68.”
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.