IDFC First Bank says ₹590 crore fraud impact behind it, sees strong FY27 growth

MUMBAI: IDFC First Bank said in a statement on Saturday. ₹The 590 crore fraud uncovered in February is now behind us and this incident had no impact on new business in the March quarter (Q4FY26).

Speaking during the bank’s Q4FY26 post-earnings analyst call, V. Vaidyanathan, managing director and chief executive officer, said similar crises in other banks usually take around a year to stabilise, but that is not the case here.

“We’re pretty confident that this issue is behind us. You’ll see strong growth at the bank in the first quarter of 2020,” he said, adding that despite fraud and geopolitical stress, the bank posted flat growth in deposits, which was “good news for last quarter,” especially as it lowered savings deposit rates.

“The news was very hot when the news broke in February and the whole of March. The number of accounts opened was as high as the previous February, which was equal to January. So new account openings are coming in extremely strong,” Vaidyanathan said.

In the 4th quarter, the bank’s total deposits increased by 17% on an annual basis and 1% on a quarterly basis. ₹2.9 trillion, but low-cost current account and savings account (Casa) deposits fell 2.5% in the quarter. The share of Casa deposits stood at 49.8% as of the end of March; This rate was above 46.9% in the same period the previous year, but below 51.6% in the previous quarter.

Vaidyanathan said he expects deposits to increase by around 5% sequentially going forward.

IDFC First Bank announced net profit ₹319 crore for the quarter, up 4.9% y-o-y but down 36.5% sequentially, reflecting one-off post-tax impact ₹483 crore related to fraud. business loss ₹118 crore during the quarter also put pressure on profitability.

The lender had made a statement on February 23. ₹590 crore fraud at Chandigarh branch where employees created discrepancy in deposit balance by carrying out unauthorized transactions in accounts linked to Haryana government. The bank has since made payments to the state government ₹590 crore, suspended the employees involved and filed a police complaint against them.

On Saturday, the bank said it had expensed the entire affected amount in Q4 FY26 and that management was “reasonably confident” that no further material financial adjustments beyond those already agreed were required.

High operating expenses also put pressure on profitability.

Operating expenses increased ₹6,249 crore in Q4, up 12% sequentially and 25% year-on-year, driven by the opening of approximately 80 new branches and employee increases. The management stated that expenses are expected to remain high in the 27th quarter, but they should start normalizing from the 2nd quarter, adding that the increase in operating expenses for FY27 is seen at 13-14%.

Vaidyanathan said the expenses were high because the bank was in the phase of expanding its portfolios, unlike big banks that operate with minimum incremental expenses.

“You see, liabilities are a loss-making thing, I do not deny it. Credit costs are loss-making, gold loans are loss-making, the new ledger in housing loans is loss-making, I do not deny it. Because these are the things we are building for the future. Part of the rural ledger we have created is also loss-making,” he said.

Loans and advances increased by 20% year-on-year and 4% respectively. ₹2.9 trillion. Net interest income increased by 15.7% annually and 3.4% sequentially. ₹5,677 crore.

Net interest margin increased to 5.93% in the March quarter from 5.76% in the previous quarter, but was slightly below 5.95% in the same period a year ago. Going into FY27, management expects margins to remain stable at the 5.75% level reported for FY26.

Going into FY27, management expects NIM to remain stable at 5.75% reported in FY26, given that the bank also plans to continue growing its low-margin cumulative wholesale and business banking portfolios.