IDFC First Bank, a well-known private bank in India, has seen its stock price fall. Over the last five days, its share price declined by 7.9%. This decrease is partly due to the bank’s recent quarterly results, which fell short of expectations, causing investors to worry about its future profitability and stability.
IDFC First Bank reported a substantial 73% reduction in its profit compared to the same quarter the previous year. It’s profit decreased from Rs 7.5 billion to Rs 2 billion. IDFC First Bank’s profit decline in Q2 FY25 is largely due to setting aside funds for risky loans in the microfinance sector and rising credit costs, which reached 3.2%.
Despite the overall decline in profit, the bank’s Net Interest Income (NII) grew by 21%, reaching Rs 47.9 billion. The bank has set aside Rs 5.7 billion in provisions, which are funds reserved to cover potential loan losses. Of this amount, Rs 3.2 billion was allocated specifically for the microfinance sector, which has seen higher risks and Rs 2.5 billion reserved for a toll account in Maharashtra. Additionally, the bank reported improvements in asset quality, with a reduction in its gross Non-Performing Asset(NPA) ratio to 1.9% and its net NPA ratio to 0.5%.
IDFC First Bank is focusing on digital banking, which involves providing banking services through online platforms and mobile applications. It plans to grow its loan book (the total value of all loans issued to customers) by 20% over the next five years. It aims at achieving an AAA rating, the highest credit rating a financial institution can earn, which signals strong financial stability and low risk of default, aligning with its long-term vision for sustainable growth in India’s rapidly expanding economy.
Disclaimer:
This article is published by News Eager for informational purposes only. It should not be considered financial advice or a recommendation to buy or sell securities. Readers are advised to conduct their own research and consult financial professionals before making investment decisions.
