IDFC First Bank on Saturday released its earnings report for the quarter ended March 31, 2026, with profitability impacted by a fraud case at its Chandigarh branch. During the quarter, the bank fully provided for the fraud-related incident, with a post-tax impact of ₹483 crore.

“Management is reasonably certain that no further material financial adjustments are required beyond those already recognised,” IDFC First Bank said in its report.

The private lender posted a profit after tax (PAT) of ₹319 crore for Q4 FY26, up 4.9% year-on-year (YoY) but down 36.5% sequentially. However, adjusting for one-time impacts, including fraud-related expenses, treasury losses, and tax adjustments, normalised PAT stood at ₹746 crore, marking a sharp 145.3% YoY growth and 48.4% QoQ increase.

Net interest income (NII) rose 15.7% YoY to ₹5,677 crore, up from ₹4,906 crore in Q4 FY25. Net interest margin (NIM) remained stable at 5.93%, while core operating profit (excluding trading income) stood at ₹1,492 crore, down 7.8% YoY and 23% sequentially, the bank said in an exchange filing.

Asset quality continued to improve during the quarter. Gross non-performing assets (GNPA) declined to 1.61% from 1.87% a year ago, while net NPAs fell to 0.48% from 0.53%. Stress indicators also improved, with SMA 1 and 2 (retail, rural, and MSME) declining to 0.78%.

Managing Director and CEO V. Vaidyanathan said asset quality across most segments remained stable, except for the microfinance portfolio, which had faced industry-wide stress over the past two years. He added that with the microfinance issue largely behind the bank, asset quality metrics have returned to healthy levels.

“We have always mentioned that the asset quality of all businesses continues to perform well, except for the microfinance book, which was an issue for the entire industry in FY25 and FY26. Hence, with the microfinance issue behind us, GNPA and NNPA have come down to healthy levels of 1.61% and 0.48%, respectively,” he said.

He further added that provisions during Q4 FY26 fell to their lowest level in two years at 1.63% of loans, equivalent to 1.18% of assets.

Looking ahead, the management said deposit growth has started strongly in the first month of FY27 and expressed confidence in maintaining healthy momentum.

The bank’s overall customer business rose 18.6% YoY to ₹5,74,731 crore, driven by strong traction across retail, mortgage, vehicle, and business banking segments. Loans and advances grew 20% YoY to ₹2,90,278 crore, while customer deposits increased 17.3% YoY to ₹2,84,453 crore.

On the liability side, CASA deposits grew 24% YoY to ₹1,46,650 crore, although they declined marginally on a sequential basis. The CASA ratio stood at 49.8%, while cost of funds improved to 6.0% from 6.51% a year ago, indicating better funding efficiency.

The bank also reported improving credit cost trends, with provisions as a percentage of average loans declining to 1.63% in Q4 FY26 from 2.69% in Q1 FY26. For the full year, this stood at 2.13%. Provisions as a percentage of total assets also eased to 1.18% during the quarter.

The bank’s board has recommended a dividend of ₹0.25 per equity share for FY26, subject to shareholder approval.

On Friday, shares of IDFC First Bank ended 0.88% lower at ₹67.23 on the BSE, with a market capitalisation of ₹57,832.63 crore.