Brickwork Ratings has reaffirmed IDFC FIRST Bank’s long-term rating at BWR AA+/Stable for its outstanding non-convertible debentures (NCDs), totaling ₹621.00 crore. This rating considers the bank’s business growth, asset quality, and capital adequacy. The outlook is stable, reflecting confidence in the bank’s performance and management. This decision reflects the bank’s consistent financial health and strategic initiatives.
Rating Reaffirmation Details
IDFC FIRST Bank has received confirmation that its BWR AA+/Stable rating for outstanding non-convertible debentures aggregating to ₹621.00 crore has been reaffirmed by Brickwork Ratings. This announcement was made on October 8, 2025.
Key Rating Drivers
The rating reaffirmation is supported by several factors including:
- Business growth to ₹5.10 lakh Crs as of June 30, 2025, including gross funded assets of ₹2.53 lakh Crs and customer deposits of ₹2.57 lakh Cr.
- Retail deposits constituting 80% of total customer deposits as of June 30, 2025.
- CASA ratio of 48.0% as of June 30, 2025.
- Capital adequacy with a total CRAR at 15.01% and CET-1 ratio of 12.80% as of June 30, 2025.
Asset Quality
The bank’s asset quality metrics show a Gross Non-Performing Assets (GNPA) ratio below 2% and a Net Non-Performing Assets (NNPA) ratio below 1% as of June 30, 2025. While there was a slight increase in slippages in the retail, rural, MSME finance, and microfinance books, the bank is closely monitoring the microfinance business.
Liquidity and Profitability
The bank’s customer deposits increased by 25.5% YOY for the quarter ending June 30, 2025, reaching ₹2,56,799 Crs. Net profit grew sequentially by 52.1% to ₹463 crore in Q1 FY26. Return on Assets (ROA) stood at 0.53% and Return on Equity (ROE) at 4.83% for Q1 FY26.
Risks and Mitigants
The rating is tempered by a high credit-deposit ratio, though it has been improving, and a cost-to-income ratio above 70%. However, the bank is actively working to reduce these ratios. A retail-centric activity is expected to improve performance. Additionally, the rating considers the impact of provisioning costs in the microfinance sector on profitability. The bank is aiming to restore its ROA and ROE to previous levels by fiscal year 2024.
Management and Operations
The IDFC FIRST Bank management team, headed by Mr. V. Vaidyanathan, is experienced. The bank offers a range of services including Retail, MSME, Rural, and Corporate Banking, and is focused on reducing its reliance on high-cost infrastructure bonds and certificates of deposit.
Source: BSE