IDFC First Bank: Deposit Dip Deliberate, Rebound Expected

IDFC First Bank's CEO, V Vaidyanathan, has stated that the bank's temporary and deliberate slowdown in deposit growth during the fourth quarter is already reversing. He anticipates a return to 20% annual deposit growth by FY27, coupled with reduced credit costs and controlled operating expenses, signaling a strong financial future.

The bank's deposit growth was 17% year-on-year in Q4, a decrease from its usual pace, attributed to a rate cut from 7% to 6.5%. Vaidyanathan noted that while some rate-sensitive customers withdrew funds, the bank anticipated this outcome and is pleased that its core customer base remained stable.

Looking ahead, Vaidyanathan is optimistic about FY27, projecting a 20% deposit growth rate. He also expects credit costs to fall further, with the microfinance book's stress largely resolved. The bank's operating expenses grew by 12.5%, significantly less than its balance sheet expansion of approximately 19%, indicating strong operating leverage.

Despite potential macro-economic impacts from the West Asia crisis on SMEs, Vaidyanathan reported no visible effects as of Q4 and early Q1 FY27. The bank is actively conducting stress tests and scenario simulations to proactively manage sector-specific growth and risks.