IDFC FIRST Bank Q2 FY27 Results: Profit Jumps 196.5% to ₹1,045 Crore

IDFC FIRST Bank Q2 FY27 Results: There has been an improvement in profitability by IDFC FIRST Bank in Q2 of FY 2026-27, with Profit after Tax rising 196.5% year on year to ₹1,045 crore. The profitability figures for the second quarter ending 30th September 2026 have been influenced by increased profitability, deposits and advances, and quality assets.

The figures for IDFC FIRST Bank’s profitability come at a time when there is still stiff competition in India’s banking industry, whereby banks are working on raising deposits, advancing loans, improving the efficiency of operations, and the quality of credit. The performance of IDFC FIRST Bank’s profitability has also been impacted by its initiatives to diversify sources of funds through Foreign Currency Non-Resident Deposits.

IDFC FIRST Bank Q2 FY27 Financial Highlights

In the second quarter results of IDFC FIRST Bank, there is an improvement in many financial parameters. Profit has increased drastically from the corresponding quarter of the previous financial year, and deposits and advances have grown at double digits annually.

The major financial highlights for Q2 of FY27 are tabulated below:

It is clear that the profits of the bank have gone up along with the lending and deposit business. But for a complete analysis, quarterly comparison and operational costs have to be considered.

Net Profit Jumps 196.5% Year-on-Year

Net interest income is one of the most important indicators of a bank’s core earnings performance. It represents the difference between interest earned on loans and investments and interest paid on deposits and borrowings. IDFC FIRST Bank’s net interest income increased 21% year-on-year to ₹6,184 crore in Q2 FY27, compared with ₹5,113 crore in the corresponding quarter of the previous financial year.

The increase reflects the expansion of the bank’s lending operations and its ability to generate interest income from its asset portfolio. Sustained growth in net interest income can support profitability, provided the bank manages its funding costs and credit risks effectively. Banks must balance competitive lending rates with the interest paid to depositors, particularly when competition for deposits becomes more intense.

For IDFC FIRST Bank, future net interest income will depend on loan growth, the composition of its loan portfolio, deposit pricing and the performance of its funding strategy.

Net Interest Income Rises 21% to ₹6,184 Crore

Net interest income is one of the key measures of how the performance of the bank is doing in terms of earning money. Net interest income is basically the difference between interest earned on assets and interest incurred on liabilities. The net interest income of IDFC FIRST Bank rose by 21% YoY to ₹6,184 crore in Q2 FY27 from ₹5,113 crore during the same period last year.

This rise has been brought about by the expansion in the lending activities of the bank and interest that it earns through its asset portfolio. A consistent increase in net interest income can help in increasing the profitability of a bank, assuming that the cost of funds and credit risk is managed well by the bank. Banks have to strike a balance between their lending rate and interest paid on deposits especially if competition for deposits rises.

The future of net interest income for IDFC FIRST Bank will be largely determined by the growth in loans and loan portfolio of the bank and how they are able to manage their funding.

Core Operating Profit Increases 38.5%

IDFC FIRST Bank’s core operating profit stood at ₹2,527 crore in Q2 FY27, which marks a 38.5% increase over the comparable quarter of the last fiscal year. The core operating profit does not include any trading gains and gives us an indication of the performance of the underlying operations of the bank.

This implies that the bank’s operating income has increased despite efforts to control the speed of expense growth. As per management, operating expense growth has been about 500 basis points behind income growth for the second straight quarter. IDFC FIRST Bank’s incremental cost to income ratio was 55% in H1FY27. The core cost to income ratio of IDFC FIRST Bank, which does not include trading gains, improved to 70.16% in Q2 FY27 from 70.73% in Q1 FY27.

Cost to income ratio is a measure of the cost incurred by a bank for generating operating income. Lower the cost to income ratio, the higher the efficiency of operations but the metric has to be seen in light of business growth, technology expenditure, and quality of service. It is important for the bank to continue improving in this metric.

Deposits Grow 25.9% to ₹3.48 Lakh Crore

Growth in deposits continued to be another key highlight in IDFC FIRST Bank’s financial results for the quarter. The total deposits witnessed a growth of 25.9% YoY and 11.8% QoQ to ₹3,48,583 crore at the end of Q2 FY27. Deposits are essential for banks to have funding for lending and other activities. An increase in deposits can enable the lender to grow their lending activity; however, the cost and sustainability of such deposits matter just as much.

The average CASA ratio of the bank was 48.4% during the quarter. The ratio was lower than 50.1% that was reported by the lender in the last quarter, mainly owing to the considerable mobilization of Foreign Currency Non-Resident (Bank) deposits. CASA is usually a key ratio for banks since current and savings accounts can be cheaper in terms of the source of funding for the bank relative to some term deposits. Thus, the change in the CASA ratio needs to be considered in the broader scheme of things from the point of view of funding strategy of the bank.

IDFC FIRST Bank Q2 FY27 Results: Loans and Advances Rise 30.1%

Generally, an Indian can become a director of an incorporated company in UAE, including Dubai, in accordance with the provisions of the corporate law, immigration law, foreign exchange law and tax law of the UAE. But the situation changes if the person is also holding shares and has invested funds and is receiving remuneration as a director from the foreign company, or has control over the foreign company from India. Under the Foreign Exchange Management Act, 1999 (FEMA) and the Overseas Investment (OI) framework of 2022, the distinction between a director and a shareholder is of great importance.

The mere acceptance of an appointment does not constitute an overseas investment by a person who is appointed as a director but does not purchase shares in the company. On the other hand, if the person joins the UAE company as a subscriber or acquires an equity in the company, the transaction may be subject to the Overseas Direct Investment (ODI) rules. Certain differences can cause regulatory and tax issues for entrepreneurs, startup founders and professionals who are interested in directlyorship in Dubai and it is essential to understand them before signing the company documents.

Can a person who is an Indian Resident be a Director of a Dubai Company?

In general, a UAE company can have an Indian resident as a director, as long as it is in accordance with the UAE laws and regulations regarding company incorporation and applicable laws. It is important to first comprehend the type of appointment that is being sought. A person can be an independent director, executive director, shareholder-director or a non-executive director. Responsibilities and financial arrangements may vary for each arrangement.

For instance, an Indian professional could be a board member of a company based in Dubai but might not buy any shares in the company. It would not normally be an equity investment in this case, but rather an appointment. But, the analysis is different if the person is appointed as a shareholder or contributes capital to the company.

A director who does not also own shares in a company is in a different position to a director who does own shares in a company. Likewise, a director whose position is remunerated may have personal income tax liabilities based on the nature of the remuneration and his or her residential status. The real rights and obligations of the individual are more important than what may be written in the company’s documents.

To learn about the FEMA and Overseas Direct Investment Rules.

Foreign exchange transactions of Indian residents are regulated by FEMA. The Overseas Investment Rules, Regulations and RBI directions provide the guidelines for investments and financial commitments abroad. Generally ODI is defined under the Overseas Investment Rules, 2022 as investment in a listed foreign entity that satisfies certain requirements or investment in an unlisted foreign entity in a specified form of equity investment.

Some investments can also be classified as ODI based on the control that the investor has over the investment. Therefore, an Indian resident who invests in an unlisted company in Dubai should look into the ODI mechanism in detail before investing in such a company. This can include ascertaining eligibility of the UAE company’s business and proposed investment, amount and type of investment, visiting a designated Authorised Dealer Category-I bank, and filling out the required documentation and reporting, such as Form FC (where applicable). Depending on the structure of the transaction, eligibility and where applicable, certain restrictions or approvals may apply and hence the route to follow. The process of overseas investment is not the same for all investments.

What Should Do If Shares Needed for the Directorship?

Certain companies might have their constitutional documents or any other suitable arrangement that directs the directors to be shareholders. If a Resident of India will have to buy the shares in order to be a Directorship, then an automatic exemption of FEMA should not be granted by the mere small investment made.

For instance, Dubai entity need a proposed director to subscribe 1% of its equity. The individual could think the quantity of money is not that much as compared to the company’s total capital. However, the acquisition needs to be evaluated in accordance with the relevant foreign investment regulations. The key questions involve eligibility of the Company as foreign entity, whether such investment is classified as ODI, whether the individual complies with the eligibility criteria and the mechanism of fund remittance.

Asset Quality Remains Stable

Quality of Assets plays an important role in the evaluation of a bank’s performance since non-performing loans could adversely impact earnings and provision requirement. According to the reports of IDFC FIRST Bank, the GNPA ratio and NNPA ratio for Q2 FY27 stood at 1.32% and 0.40%, respectively.

The GNPA ratio represents the percentage of gross advances that have been identified as non-performing. On the other hand, NNPA ratio is calculated taking into account provisions made against the loan. Credit cost as a percent of average assets of IDFC FIRST Bank decreased to 1.01%.

The ratios mentioned above indicate that the quality of assets remains unchanged during the period under discussion. However, the investors have to pay attention to loan recovery, slippages and provisions made in different lending groups. Sustainable loan growth implies proper risk management and adequate provisions.

Bank Raises ₹34,390 Crore Through FCNR(B) Deposits

One of the key highlights during Q2 FY27 was the mobilization of ₹34,390 crore, or approximately $3.6 billion, through FCNR(B) deposits by IDFC FIRST Bank. FCNR(B) Deposits are a form of foreign currency deposit maintained by eligible Non-Resident Indians in authorized banks in India. FCNR(B) deposits can serve as a further source of funding and deposit diversification for banks.

IDFC FIRST Bank informed that the above deposits have been raised without the need for any international branches/subsidiaries/representative office outside India for the Bank. Majority of the deposits were in the tenure of three to five years. As per the bank, this serves the purpose of providing structural liquidity and has a fully loaded cost of funding, including benefits from Priority Sector Lending, about 1% cheaper compared to the cost of raising domestic fixed deposits.

This funding is expected to contribute to net interest income, EPS and ROE in the future. Though the above deposits lead to increase in balance sheet, net interest margin may get affected based on the cost of fund, the return generated from the assets created and the efficient utilization of the funds.