IDFC First Bank Q4 results: IDFC First Bank share price advanced 3% on Monday, 27 April, to its day’s high of ₹69.29 per share on BSE after the private sector lender posted strong earnings for the quarter ended March 2026 (Q4FY26).
The bank reported a modest rise in earnings for the fourth quarter of FY26, with net profit increasing 5% year-on-year to ₹319 crore, compared to ₹304 crore in the same period last year. However, its performance was supported by steady growth in lending operations and improvement in asset quality, even as it navigated challenges related to a fraud incident during the quarter.
Total income for the quarter climbed to ₹12,183 crore from ₹11,308 crore a year ago, reflecting continued business expansion. Interest income also saw a healthy uptick, rising to ₹10,553 crore from ₹9,413 crore in the corresponding quarter of the previous financial year.
The private bank has advanced over 10% in the last 1 month but fell 18% in the past 3 months. However, in the last 1 year, it has been flat, up just 3%.
Asset quality improves, but fraud incident casts shadow
The bank reported a marginal improvement in its asset quality metrics. Gross non-performing assets (GNPA) ratio declined to 1.61% from 1.87% a year ago, while net NPAs (NNPA) improved to 0.48% from 0.53% in the same period. Provisioning trends also showed a sharp improvement. Provisions as a percentage of average loans fell significantly to 1.63% in Q4 FY26, compared to 2.69% in Q1 FY26, while the full-year average stood at 2.13%.
Operationally, the bank maintained steady momentum, with 87% of its year-on-year loan growth driven by core segments such as mortgage loans, vehicle financing, consumer loans, business banking, and wholesale lending.
Commenting on the performance, Managing Director and CEO V. Vaidyanathan said the bank’s asset quality remained stable across businesses, except for the microfinance segment, which had faced industry-wide challenges in FY25 and FY26. He noted that with these issues largely behind, GNPA and NNPA levels have improved to healthier levels. He also highlighted that Q4 FY26 provisions were at a two-year low and expressed confidence in continued deposit growth, citing a strong start to Q1 FY27.
However, the quarter was not without setbacks. The Haryana government de-empanelled the bank and ordered the withdrawal of state funds following the detection of a ₹590 crore fraud at its Chandigarh branch in February 2026. The state government has halted all dealings with the bank and directed departments to shift funds to public sector banks, while also initiating a probe by the Central Bureau of Investigation into the matter.
Despite this development, the bank stated that it has fully accounted for the financial impact of the incident. While the fraud case may weigh on sentiment in the near term, the improvement in core operating metrics and asset quality suggests underlying resilience in the bank’s business model.
Should you buy?
IDFC First Bank remains under pressure in the near term following the recent fraud incident, with brokerages flagging a hit to investor confidence. However, improving funding costs, stabilising credit trends, and steady loan growth are seen as supporting earnings resilience going ahead.
Elara Securities said, “IDFCFB has faced near-term headwinds following the recent fraud incident; however, improvement in cost of funds, stabilizing credit costs (with MFI stress likely peaking), and healthy credit growth have supported earnings resilience.”
The brokerage indicated that while operational fundamentals are improving, the recent developments have weighed on sentiment, and any re-rating of the stock is likely to be gradual. It noted that future upside will depend on a consistent improvement in earnings visibility and asset quality outcomes.
Elara further said it has trimmed its FY27 and FY28 earnings estimates by 6.5% and 3.5%, respectively, reflecting the near-term impact of the challenges. It maintained an Accumulate rating on the stock but lowered the target price to ₹78 from ₹90 earlier, valuing the bank at 1.2x FY28 estimated book value, while also introducing FY29 estimates.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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