ICRA has reaffirmed its [ICRA]AA+/Stable rating for IDFC FIRST Bank’s debt instruments, totaling ₹12,520 crore. The reaffirmation recognizes the bank’s comfortable capital position and its successful capital-raising initiatives, including ₹7,500 crore raised in FY2026. While the bank faces challenges from elevated operating expenses and one-off costs, its strategic shift toward a granular retail loan book and expanding deposit franchise remains a key strength for long-term growth.
Rating Rationale and Financial Profile
The rating agency highlighted IDFC FIRST Bank’s robust capitalization, noting a Common Equity Tier I (CET I) ratio of 13.73% and a CRAR of 15.60% as of March 31, 2026. Despite moderate internal accruals, the bank’s proactive approach to equity infusion ensures sufficient buffers to meet regulatory requirements and fund its anticipated growth targets.
In FY2026, the bank recorded ₹28,874 crore in total income, with a profit after tax of ₹1,636 crore. Performance was impacted by a one-off ₹646 crore cost related to a fraud incident in Q4 FY2026 and a decline in the microfinance portfolio, which temporarily pressured margins.
Strategic Focus on Retail and Deposits
The bank continues to transition toward a more granular and diversified loan book. Retail, rural, and SME banking accounted for 80% of the total portfolio as of March 31, 2026. Net advances grew by 20% on a year-on-year basis, reflecting the success of this strategy.
The deposit franchise remains a core priority. Total deposits grew 16.8% to ₹2.94 lakh crore over the past year. The bank has successfully improved its CASA ratio to 49.8%, up from 46.9% in the previous fiscal, and maintains a healthy retail deposit share of 79%, which supports stability in its funding profile.
Future Outlook and Risk Management
Looking ahead, the bank is focusing on improving its cost-to-income ratio and reducing credit costs. Gross fresh slippage rates showed improvement, moving to 3.7% in FY2026 from 4.2% in FY2025. As the bank scales its digital infrastructure and branch network, management anticipates steady improvements in operating profitability. Furthermore, the bank has fully redeemed ₹3,883.70 crore in non-convertible debentures (NCDs), leading ICRA to formally withdraw the rating on these matured instruments.
Source: BSE
