• Loan book grew 20% YoY to INR 2.9 lakh crores, with mortgages, vehicle loans, consumer loans, wholesale loans, and business banking contributing 87% of growth
• Credit card portfolio crossed 4.5 million cards, growing 21% YoY; wealth AUM increased 23% YoY to INR 57,000 crores
• MFI book stabilized at INR 6,662 crores with 89% CBSMU coverage; disbursements up 27% sequentially, collection efficiency improved to 99.7% (near pre-crisis levels)
• Gross NPA improved 8 bps QoQ to 1.61%, Net NPA improved to 0.48%; gross slippages declined 15% QoQ, net slippages down 27%
• Cost of funds reduced to 6%, down 50 bps YoY and 180 bps since bank takeover in 2019, now in line with mid-tier peer banks
• CASA ratio strong at 49.8% (EOP) and 50.4% (average basis); deposits grew 16.8% YoY to INR 2.94 lakh crores
• Fraud incident (INR 646 crores principal, INR 480 crores post-tax) handled decisively with immediate customer repayment; limited deposit outflow observed
• SMA I+II for retail/rural/MSME improved 10 bps to 0.78%; MFI SMA improved 70 bps to 0.79%

IDFC First Bank reported Q4 FY26 results marked by resilience despite a fraud incident (INR 646 crores impact). Normalized PAT (excluding one-time items) grew 145% YoY to INR 746 crores, translating to ~75 bps ROA. Management remains confident about trajectory with improving asset quality (GNPA at 1.61%), strong lending yields (13%+), low credit costs (1.63% in Q4), and operating leverage gains ahead as deposit franchise matures.

For Q4 FY26, reported PAT was INR 319 crores, impacted by one-time items: fraud incident (INR 480 crores post-tax), treasury loss (INR 118 crores post-tax), offset by tax refund (INR 173 crores). Normalized PAT excluding these items was INR 746 crores, up 145% YoY. Full year reported PAT was INR 1,636 crores; adjusted for fraud impact, it was INR 2,119 crores (up 39% YoY). NII growth accelerated to 15.7% YoY (vs 12% in Q3). NIM for Q4 was 5.93% (includes day convention benefits), full year NIM at 5.75%. Fee income grew 21.3% YoY. OpEx for Q4 was INR 6,249 crores including fraud impact; excluding fraud, OpEx was INR 5,603 crores (up 0.3% QoQ, 12.3% YoY). Provisions declined 18% QoQ to INR 1,143 crores. Credit cost for Q4 was 1.63% (vs 2.05% in Q3); full year credit cost at 2.13%. Capital adequacy at 15.6% with CET1 at 13.73%. LCR maintained at 114%.

Management displayed strong confidence despite the fraud incident setback. CEO Vaidya emphasized the bank's unique business model: borrowing at 6% and lending at 13%+ with only 2% credit costs, delivering 11%+ risk-adjusted yield plus 2% fees. He highlighted the lending business generates ~1.5-1.6% ROA while deposit side currently has 1% drag (down from 1.2% last year), which is on trajectory to zero over next few years. Management stressed the 15-year track record in specialized lending segments with granular micro-segmentation (salons, chemists, kirana stores). They emphasized rapid crisis response, technology capabilities, and strong customer loyalty (minimal deposit outflows despite negative social media). CFO Sudhanshu provided detailed guidance: NIM stable at 5.75%, OpEx growth 13-14% (with Q1 higher due to branch expansion and increments), credit cost 170-180 bps for FY27. Management expects MFI book to grow 15-20% and contribute positively after multiple quarters of drag. Strong emphasis on operating leverage improvement with top line expected to grow 18-18.5% vs 11.2% in FY26.

The primary challenge is the deposit franchise maturity - CASA growth was flat in Q4 due to multiple factors: savings rate cuts, fraud incident impact, tight liquidity, advance tax outflows, and West Asia crisis. The liability side currently operates at 145% cost-to-income ratio (vs 100% target), creating overall bank cost-to-income of ~73%. West Asia crisis presents ongoing uncertainty with potential supply chain disruptions, fuel-related risks, and demand disruptions affecting MSME segments. Management identified specific sectors requiring cautious approach. Deposit competition remains intense with financialization of savings moving money to mutual funds. Treasury volatility evident with INR 159 crores loss in Q4 due to yield widening (5-year G-sec widened 40 bps, 10-year widened 32 bps). Certain new products (credit cards, gold loans, prime home loans, rural banking) are currently loss-making as they scale. MFI segment, while improving, still carries 130 crores unused contingent provisions. ECL transition guidelines pending with potential capital requirements. The bank acknowledged need for capital raise given growth trajectory.

Revenue Outlook: Top line (NII + fees) expected to grow 18-18.5% in FY27 vs 11.2% in FY26; NII growth improving from Q3's 12% to Q4's 15.7%

Margin Outlook: NIM expected to remain stable at ~5.75% for FY27 (vs 5.75% in FY26)

Key Targets:

• Credit cost guidance: 170-180 bps for FY27 (down from 213 bps in FY26), includes potential CBSMU recovery benefits
• OpEx growth: 13-14% for full year FY27 (Q1 will be higher due to branch expansion and increments)
• Loan growth: Expected to continue at ~20% YoY trajectory
• MFI book growth: 15-20% in FY27
• Deposit growth: Expected to normalize and grow strongly from Q1 FY27 onwards
• ROA trajectory: Approaching 1% in 'kissing distance', with management emphasizing won't stop at 1% given operating leverage runway
• Liability side cost-to-income: Target reduction from 145% to 100% over next few years

The Q&A session focused heavily on three themes: (1) deposit trajectory post-fraud incident and rate cuts, (2) path to 1% ROA and operating leverage gains, and (3) credit quality sustainability. Analysts sought reassurance on deposit growth normalization - management confidently cited strong April trends, unchanged account openings, and significant customer loyalty. Multiple questions probed the ROA timeline, with management emphasizing the 75 bps normalized Q4 performance but avoiding specific guidance due to macro uncertainties. Analysts appreciated the detailed credit cost guidance (170-180 bps) and margin stability (5.75%). Concerns about West Asia crisis impact on MSMEs were addressed with portfolio review details and cautious sector approach. Questions on OpEx, NIM sustainability, treasury losses, CASA ratio stability, MFI growth plans, ECL transition, and capital needs were comprehensively answered. Management tone was confident and transparent, providing granular business model explanations (lending at 13%+ yields with 2% credit costs, deposit franchise drag reducing from 1% to zero). The recurring message: underlying business trajectory is strong with Q2-Q4 showing sequential improvement, fraud incident is one-time, and operating leverage will drive material profitability gains over next 2-3 years as deposit franchise matures. Analysts seemed satisfied with the strategic clarity but remain watchful on execution, particularly deposit growth recovery and credit quality through macro uncertainties.