IDFC FIRST Bank Q3 FY26 Profitability Rises on Strong Deposits and Stable Asset Quality

IDFC FIRST Bank reported stronger profitability for Q3 FY26, as the Board approved unaudited results for the quarter and nine months ended December 31, 2025. Net profit jumped 48.1% year-on-year to Rs 503 crore and 42.6% sequentially, helped by stable asset quality and lower credit costs, even as the interest rate backdrop stayed volatile during the period.

Net interest margin for Q3 FY26 stood at 5.76%, up 17 basis points quarter-on-quarter, though marginally softer versus last year due to base effects. Core operating profit for the quarter increased 11.6% year-on-year to Rs 1,937 crore, reflecting operating leverage, disciplined cost control and healthy spreads across the lending portfolio.

As of December 31, 2025, total client business rose to Rs 5.62 lakh crore, marking 22.6% year-on-year growth and around 5% sequential growth. IDFC FIRST Bank served 35 million clients, with customer business of Rs 5,62,090 crore, including Rs 2,82,662 crore in deposits and Rs 2,79,428 crore in loans and advances, highlighting continued expansion across segments.

During Q3 FY26, IDFC FIRST Bank expanded reach to over 60,000 cities, towns and villages, operating through 1,066 branches. Loans increased 20.9% year-on-year, while customer deposits grew 24.3% year-on-year. These trends underlined the bank’s focus on broad-based growth across retail, rural, MSME and other customer categories during the reported period.

On the asset side, loans and advances stood at Rs 2.79 lakh crore, up 20.9% year-on-year and 4.8% quarter-on-quarter. Gross NPAs improved to 1.69%, down 25 basis points year-on-year and 17 basis points sequentially, while net NPAs remained low at 0.53%, indicating contained credit costs and prudent underwriting standards.

Early stress indicators also moved favourably. The SMA 1+2 portfolio in the retail, rural and MSME businesses declined to 0.88%. This signalled better early-stage delinquency control, stronger collection efforts and tighter credit discipline, which together supported the improvement in headline asset quality ratios for IDFC FIRST Bank across Q3 FY26.

IDFC FIRST Bank Q3 FY26 results: deposits, CASA and cost of funds

Deposits continued to underpin balance sheet growth, rising 24.4% year-on-year to Rs 2.83 lakh crore. The CASA ratio climbed 390 basis points over the previous year to 51.6%. CASA deposits themselves grew at more than 33% year-on-year, supporting a lower blended funding cost and improving the structural strength of the liability franchise.

The bank’s cost of funds declined to 6.11%, an improvement of 38 basis points year-on-year and 12 basis points quarter-on-quarter. Management viewed this as a key support for margins in coming periods, as the benefit of higher CASA and revised savings rates filtered through to lending yields and overall profitability metrics.

IDFC FIRST Bank Q3 FY26 results: capital position and management commentary

Capital adequacy remained strong at 16.22% as of December 31, 2025, rising meaningfully on a sequential basis. This capital buffer provided meaningful headroom to fund future growth in loans and investments, while also absorbing any potential shocks from interest rate movements or cyclical shifts in asset quality across portfolios.

Mr. V Vaidyanathan, MD and CEO said "We are seeing a strong business momentum across all our main lines of businesses, including lending, deposits, wealth management, transaction banking etc. Our asset quality has improved with GNPA at 1.69% and Net NPA at 0.53% as of 31st December 2025. On cost of funds, we expect it to further drop from here because of recent revision in savings rates, which will enable us to expand our lending franchise.

IDFC FIRST Bank Q3 FY26 results: key metrics snapshot

The combination of higher margins, controlled operating expenses, better asset quality and a lower funding cost supported earnings quality in Q3 FY26. Management highlighted that the strengthened capital base and growing retail deposit franchise should help sustain growth, while stable early stress indicators may keep credit costs normalised.

Metric	Q3 FY26 / As of 31-Dec-2025
Net interest margin	5.76%
Net profit	Rs 503 crore (48.1% YoY, 42.6% QoQ)
Core operating profit	Rs 1,937 crore (11.6% YoY)
Capital adequacy ratio	16.22%
Gross NPA	1.69%
Net NPA	0.53%
Loans and advances	Rs 2.79 lakh crore (20.9% YoY, 4.8% QoQ)
Total deposits	Rs 2.83 lakh crore (24.4% YoY)
CASA ratio	51.6% (up 390 bps YoY)
Cost of funds	6.11% (down 38 bps YoY, 12 bps QoQ)
Total client business	Rs 5.62 lakh crore (22.6% YoY)

IDFC FIRST Bank entered the final quarter of FY26 with higher profitability, stable capital and improving liability metrics. Growth in loans, deposits and client business, along with healthier asset quality indicators and a lower cost of funds, positioned the bank to support further expansion while maintaining focus on risk controls and disciplined execution.