IDFC First Bank posted its highest-ever quarterly profit in the June quarter of FY27. The bottom-line rose from Rs 463 crore in the year-ago period to Rs 1,075 crore and net interest income rose 21% to Rs 5,972 crore from Rs 4,933 crore. After reporting a robust quarterly performance, IDFC First Managing Director and CEO V. Vaidyanathan painted an optimistic picture of the private sector lender's financial health, highlighting significant margin expansions and an improving loan book.
In an exclusive interview with NDTV Profit on Monday, July 27, V. Vaidyanathan discussed the bank's recent performance metrics. The CEO identified two primary catalysts for the bank's widening margins: A notable fall in the cost of funds and a strategic reduction in credit costs. The dual tailwinds have strengthened the private sector lender's profitability metrics, leading V. Vaidyanathan to project visible "green shoots" in Return on Equity (RoE) moving forward.
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IDFC First Bank eyes FCNR boost
Addressing asset quality and the composition of the bank's lending portfolio, Vaidyanathan noted that a substantial volume of the bank's mortgages has been successfully generated from its corporate loan relationships. Looking ahead, the bank has set a firm internal target to bring its overall credit costs down to just 1.5% as a percentage of the total loan book.
One of the most significant takeaways from the interview was the lender's aggressive outlook on foreign deposits. The CEO revealed that IDFC First Bank is currently seeing "very strong interest" in Foreign Currency Non-Resident (Bank) or FCNR (B) deposits. Capitalizing on this robust NRI demand, Vaidyanathan expressed confidence that the bank should easily be able to raise between $1.5 billion and $2 billion through the FCNR (B) route, which would further secure their funding base.
V. Vaidyanathan also credited the bank's long-term technology investments for creating unprecedented operational ease. He noted that the bank's digital business segment is currently seeing a "dramatic payback." Specifically, he highlighted the IDFC First banking app, which has prioritized user experience, simplifying the ease of doing business for their retail and corporate customers alike.
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Brokerages bullish on IDFC First Bank
JPMorgan remains highly optimistic about the bank's trajectory, maintaining an 'overweight' rating while hiking its target price to Rs 90 (up from Rs 84). The brokerage highlighted that the bank's core trends are exceptionally strong and that recent management guidance upgrades serve as a definitive positive for the stock. Taking a more measured stance, Morgan Stanley maintained its 'equal-weight' rating but raised its target price to Rs 75 (up from Rs 65). The brokerage acknowledged the bank's Q1 outperformance but cited longer-term valuation concerns as the primary anchor for its neutral rating.
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