- 28 Apr 2025
- ICICIdirect Research
IDFC FIRST BANK REPORTED A WEAK PERFORMANCE IN Q4FY25
News: IDFC First Bank reported a weak performance in Q4FY25, as microfinance exposure continued to weigh on margins as well as credit costs during the quarter. Margins declined 9 bps QoQ to 5.95%, primarily attributable to de-growth in the microfinance book (-13.0% QoQ) and an adverse shift in portfolio mix. On the business front, advances growth remained healthy at 20.4% YoY (4.7% QoQ) to ₹2,41,926 crore, driven by retail and corporate loans. Deposit accretion also remained strong, rising 25.2% YoY (6.7% QoQ) to ₹2,42,543 crore, led by growth in retail and term deposits. Provisions surged 100.8% YoY to ₹1,451 crore, amid higher slippages in the microfinance segment. PAT declined 58% YoY to ₹332 crore in Q4FY25, while the CI ratio stood at 72.8%. GNPA rose 2 bps QoQ to 1.87%, while NNPA increased by 1 bp QoQ to 0.53%.
View: Elevated stress in microfinance portfolio continued to drag down margins and profitability. While loan growth and deposit accretion remained steady, asset quality pressures and high operating costs limited earnings momentum. Management expects credit costs to normalize and cost efficiencies to gradually improve.
Impact: Negative