IDFC First Bank Attributes ₹590 Crore Loss to Fraud, Expects Robust Growth in FY27

IDFC First Bank Sees Strong Growth Ahead, Moves Past Recent Fraud

Mumbai: IDFC First Bank has announced that the impact of the ₹590 crore fraud uncovered in February is now behind it, with the episode having no effect on new business during the March quarter (Q4FY26). According to the bank's managing director and chief executive officer, V. Vaidyanathan, the bank is confident that this matter is behind them, with Q1FY27 expected to show strong growth.

Key Financials

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The bank's Q4FY26 post-earnings analyst call saw Vaidyanathan emphasize the bank's strong growth prospects despite the recent fraud and geo-political stress. He noted that the bank posted flattish growth in deposits, which is "good news for the quarter that went by," especially as it cut rates on savings deposits. In Q4, total deposits of the bank grew 17% on year and 1% on quarter to ₹2.9 trillion.

IDFC First Bank reported a net profit of ₹319 crore for the quarter, up 4.9% year-on-year but down 36.5% sequentially, reflecting a one-time post-tax impact of ₹483 crore related to the fraud. A trading loss of ₹118 crore during the quarter also weighed on profitability. The lender had on 23 February disclosed a ₹590 crore fraud at its Chandigarh branch, where employees carried out unauthorized transactions in accounts linked to the Haryana government, creating a deposit balance discrepancy.

The bank has since paid the state government ₹590 crore, suspended the employees involved, and filed police complaints against them. On Saturday, the bank said it has fully expensed the impacted amount in Q4 FY26 and that management is "reasonably certain" no further material financial adjustments are required beyond those already recognized.

Expectations for FY27

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Vaidyanathan expects deposits to grow around 5% sequentially going forward. Operating expenditure is expected to remain elevated in Q1FY27 but should start to normalize from Q2 onwards, with operating expenditure growth for FY27 seen at 13-14%. Loans and advances grew 20% year-on-year and 4% sequentially to ₹2.9 trillion. Net interest income rose 15.7% year-on-year and 3.4% sequentially to ₹5,677 crore.

Net interest margin improved to 5.93% in the March quarter from 5.76% in the previous quarter, though it was slightly lower than 5.95% a year earlier. Going into FY27, management expects margins to remain stable around the 5.75% level reported for FY26.