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IDFC First Bank sees NIM recovery to 5.8% by FY27-end despite FCNR(B) drag

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IDFC First Bank sees NIM recovery to 5.8% by FY27-end despite FCNR(B) drag

IDFC First Bank sees NIM recovery to 5.8% by FY27-end despite FCNR(B) drag

The bank’s margins came under pressure in the September quarter due to foreign currency non-resident bank (FCNR(B))-backed lending, surplus liquidity awaiting deployment, a shift in the asset mix towards business and wholesale banking, and an additional day-count impact

Strong loan growth boosted IDFC First Bank’s quarterly profit, despite pressure on margins.

FCNR(B)-backed lending reduced NIM by 16 basis points, while surplus liquidity contributed another 7 basis points of pressure.

FCNR(B) deposits offer an estimated 100-basis-point funding cost advantage, with Rs 34,390 crore mobilised through these deposits.

Advances grew 30% year on year and net interest income rose 21% in Q2FY27, while income growth continued to outpace operating expenses.

RoA is expected to improve from around 1% in FY27 to 1.2-1.3% in FY28-29, although El Niño-related rural stress remains a monitorable.

8% by the end of FY27, as surplus liquidity is deployed and the benefit of repo rate hikes flows through to yields on loans linked to the policy rate. 8% in FY28. The bank’s margins came under pressure in the September quarter due to foreign currency non-resident bank (FCNR(B))-backed lending, surplus liquidity awaiting deployment, a shift in the asset mix towards business and wholesale banking, and an additional day-count impact, according to an Axis Securities report.



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