IDFC First Bank Q1 Profit Falls 32%, Stock in Focus

IDFC First Bank Profit Drops 32% in Q1; Brokerages Remain Cautious

IDFC First Bank’s net profit dropped by 32% to ₹462.6 crore in the April-June quarter, compared to ₹681 crore in the same period last year. The fall in profit was mainly due to rising bad loans in its microfinance portfolio.

Despite the decline in profit, the bank’s net interest income (NII) increased by 5% to ₹4,933 crore, up from ₹4,695 crore a year ago.

However, the bank’s asset quality weakened slightly. Gross non-performing assets (GNPA) rose to 1.97% from 1.87% in the previous quarter, and net NPA edged up to 0.55% from 0.53%.

ALSO READ | Buy Waaree Energies, Avoid Suzlon & Reliance Power

Even though profits were down, they were 16% higher than JPMorgan’s estimates, helped by stronger trading income. Still, JPMorgan kept a ‘neutral’ rating with a price target of ₹65, saying core business performance remains weak.

Nuvama Institutional Equities also gave a ‘hold’ rating with a ₹68 target. They noted that while microfinance issues reduced, overall loan and deposit growth was steady. The drop in net interest margin (NIM) by 24 basis points was better than peers.

Meanwhile, global brokerage Jefferies maintained a ‘buy’ call with a price target of ₹82. They highlighted that profits were only slightly below estimates due to higher credit costs. They also pointed out that loan defaults outside the microfinance segment increased because of weak economic conditions. Jefferies said improvement in return on assets (RoA) will be important going forward.

ALSO READ | iQOO Z10R : Price, Specs, Launch Date & Availability