IDFC First Bank Q2 FY27: Profit Dips 8.6% QoQ, NII Up 21%

Asset Quality Improves

Gross NPA declined to 1.32 per cent from 1.51 per cent in the previous quarter, while net NPA fell to 0.40 per cent from 0.44 per cent. Provisions also came down to ₹1,137 crore from ₹1,452 crore in Q2 FY26.

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IDFC First Bank Q2 FY27: Profit Dips 8.6% QoQ, NII Up 21%

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Why It Matters: The FCNR(B) Strategy

The quarter’s biggest strategic move was the bank’s mobilisation of Foreign Currency Non-Resident (Bank) deposits, which are foreign-currency deposits from NRIs. MD and CEO V. Vaidyanathan said, “Raising over Rs 34,000 crore FCNR(B) deposits gives us 3-5 year liquidity at 1 per cent lower cost than domestic deposits.”

This explains the slight dip in the CASA ratio to 48.4 per cent from 50.1 per cent, as the large FCNR(B) inflows increased the share of term deposits. For the bank, locking in long-term funding at a lower cost could support margins and lending growth in the coming years.

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Costs Under Control

Vaidyanathan also said operating expense growth lagged income growth by 500 basis points for two quarters, with the cost-to-income ratio continuing to fall and return on assets nearing 1 per cent. Improving efficiency has been a key focus area for the bank.

Stock Performance

Shares of IDFC First Bank ended Friday’s session, ahead of the results, at ₹72.35 on the BSE, down 3.47 per cent. The stock has a 52-week high of ₹89.58 and a 52-week low of ₹58.08.

What Comes Next

Investors will watch how the stock reacts to the results when markets reopen, and whether the bank can sustain strong loan growth while keeping asset quality stable and moving its return on assets above 1 per cent.