IDFC First Bank Q3 Results: Net profit slumps 53% to ₹339 crore, NII up 14% YoY; Asset quality stable

IDFC First Bank Q3 Results: IDFC First Bank announced its October-December quarter results for fiscal 2024-25 (Q3FY25) on Saturday, January 25, 2025, reporting a sharp drop of 53 per cent in standalone net profit to ₹339.4 crore, dragged by increased provisions due to higher loan slippages, compared to ₹715.7 crore in the corresponding period last year.

The private sector lender was formed by merging the banking arm of project financer Infrastructure Development Finance Company (IDFC) and Capital First. The bank said its profit was impacted by reduced income from slowing down the disbursal of micro-finance (MF) loans, an increase in microfinance provisions, and the normalization of credit costs of non-MF businesses.

Also Read: IDFC First Bank Q2 Results: Net profit plummets 73% to ₹200.7 crore, NII up 21% YoY; Asset quality improves

IDFC First Bank Q3 Results: Key Metrics

IDFC First Bank’s net interest income (NII)—the difference between interest earned and paid—rose 14.4 per cent to ₹4,902 crore compared to ₹4,286.6 crore in the year-ago period. The total income increased to ₹11,123 crore during the quarter from ₹9,396 crore in the same period a year ago.

Sequentially, the net profit grew by 69 per cent from Rs. 201 crore in the preceding September quarter of FY25. The 9M-FY25 net profit decreased by 45.3 per cent on a year-on-year (YoY) basis. Customer deposits increased 28.8 per cent YoY from Rs. 1,76,481 crore as of December 31, 2023, to Rs. 2,27,316 crore as of December 31, 2024.

Loans and Advances (including credit substitutes) increased by 22 per cent YoY from Rs. 1,89,475 crore as of December 31, 2023, to Rs. 2,31,074 crore as of December 31, 2024. Microfinance portfolio as percentage of overall loan book reduced from 5.6 per cent in Q2FY25 to 4.8 per cent in the December quarter.

Follow Live Updates: IDFC First Bank Q3 Results 2025 Highlights: Net profit falls 53% to ₹339 crore, NII rises 14%

Interest income increased to ₹9,343 crore from ₹7,879 crore a year ago. On the asset quality front, the bank’s gross non-performing assets (NPA) ratio improved to 1.94 per cent from 2.04 per cent a year ago. Similarly, net NPAs, or bad loans, decreased to 0.52 per cent from 0.68 per cent at the end of the third quarter of the last fiscal year.

The provisions for the Non-microfinance book were stable. The annualized provision for Q3-FY25, including micro-finance, stood at 2.31 per cent of the total funded assets. Excluding the micro-finance portfolio, the quarterly annualized credit cost for the loan book for Q3FY25 was stable at 1.8 per cent.

However, overall provisions, excluding tax, doubled to ₹1,338 crore from ₹655 crore in the same quarter a year ago. The provisions coverage ratio on non-performing loans was 78.2 per cent as of December 31, 2024. The gross slippage for Q3-FY25 was ₹2,192 crore, compared to ₹2,031 crore in Q2 FY 2025, an increase of ₹162 crore.

The bank’s net interest margin (NIM) was 6.04 per cent for Q3FY25 compared to 6.18 per cent in Q2FY25. The private lender’s NIM declined during the December quarter, largely due to a decline in the micro-finance business and an increase in the composition of the wholesale banking business.

Also Read: IDFC First Bank Q3 Results Preview: Net profit expected to decline 30% YoY, asset quality stress likely to persist

“Majority of the increase in slippage in Q3FY25 was from the microfinance business, which constituted ₹143 crore out of the said ₹162 crore. Hence, gross slippage on the Retail, MSME, Agri and Corporate Loans, i.e. the non-microfinance business, was stable. These businesses constituted about 95 per cent of the total bank book,” said IDFC First Bank.

The Capital Adequacy Ratio also declined to 15.65 per cent in the December quarter from 16.73 per cent at the end of the third quarter of the previous financial year. The bank completed a merger with IDFC Ltd. in October 2024, through which ₹618 crore of capital was added to the net worth, whereas the outstanding share count was reduced by 16.64 crore.

“Our bank continues to grow well on loans and deposits. Our customer deposits are growing strongly at 29 per cent YoY to reach Rs. 2,27,316 crore, with the CASA ratio sustaining at 48 per cent. The loans and advances grew steadily by 22 per cent YoY to reach Rs. 2,31,074 crore,” said V Vaidyanathan, Managing Director and CEO of IDFC First Bank.

“We are specifically tracking the micro-finance loan book closely considering the industry situation.” According to the CEO, excluding the micro-finance loan book, the GNPA and NNPA of the bank’s book are even lower at 1.81 per cent and 0.49 per cent, respectively.

“The credit issues in the Microfinance segment are transitionary issues, which are likely to be resolved within a few quarters. The Bank built this business because it was important from a priority sector lending norms point of view, particularly meeting PSL norms for Weaker Sections and Small and marginal farmers PSL categories,” added Vaidyanathan.

The bank’s core operating profit (excluding trading gain) grew by 15 per cent YoY from Rs. 1,515 crore in Q3 FY24 to ₹1,736 crore in Q3 FY25, impacted by micro-finance business. On Friday, shares of IDFC First Bank settled 1.32 per cent to ₹62.27 apiece on the BSE. The bank commands a market cap of ₹45,584.84 crore.