Retail-focused non-banking financial company (NBFC) IIFL Finance reported a more than twofold year-on-year increase in net profit to ₹766.4 crore in the September quarter of FY27, compared with ₹376.3 crore a year earlier.
Net interest income (NII), or the difference between interest earned on loans and interest paid on borrowings, rose 50.2% to ₹2,161 crore from ₹1,439 crore.
The company’s consolidated assets under management (AUM), which represent the total loans it manages, grew 38% year-on-year and 8% sequentially to ₹1.24 lakh crore.
Gross non-performing assets (GNPA), or loans overdue by 90 days or more, stood at 1.5%, down 0.07 percentage point from the previous quarter. Net NPA, which accounts for provisions set aside against bad loans, rose 0.05 percentage point to 0.9%. The provision coverage ratio stood at 91%, indicating the extent of bad loans covered by provisions.
IIFL Finance reported an annualised return on assets (ROA) of 3.1% and return on equity (ROE) of 20.1% for the first half of FY27. Its liquidity position stood at ₹13,805 crore, while its capital adequacy ratio was 23.5%.
Gold loans lead growth
Gold loans remained the biggest growth driver, with AUM rising 90% year-on-year and 13% sequentially to ₹65,729 crore. Lending rates in the segment improved slightly from the previous quarter, while gross bad loans stood at 0.90%.
Home loan AUM grew 4% sequentially to ₹43,070 crore, with gross bad loans declining to 1.38%.
Secured loans to micro, small and medium enterprises (MSMEs) also gained momentum, with AUM rising 11% from the previous quarter to ₹11,948 crore. The company said it continued to reduce its exposure to unsecured lending.
Microfinance AUM stood at ₹9,489 crore, broadly unchanged from the previous quarter, while asset quality improved.
IIFL Finance founder and Managing Director Nirmal Jain said AUM grew 38% year-on-year, with secured loans accounting for 90% of the total. He attributed the return on equity of more than 20% to the company’s gold loan and mortgage businesses, lower credit costs and improved operating efficiency.
Jain said home loans and secured MSME lending could gain momentum as gold loan growth moderates. The company is also strengthening risk management, audits, compliance and customer service through artificial intelligence (AI), while expanding partnerships with banks.
IIFL Finance expands AI use
IIFL Finance is using AI in loan assessments, collections, customer interactions and cross-selling.
Voice AI is being used in gold loan sales, with customer acquisition costs below 1% of the loan value during the pilot phase. The company aims to bring this below 0.3% as the programme expands.
AI-based credit assessments are being used for more than 85% of small and medium enterprise loan-against-property applications to prepare credit assessment memoranda.
The company has also used AI-powered video training to reach more than 12,000 sales employees and deployed AI-based fraud detection across all gold loan branches. The system has analysed more than 11 lakh images of gold jewellery.
IIFL Finance said cumulative direct assignment and co-lending originations reached ₹1.7 lakh crore from FY14 through the September quarter of FY27. These arrangements allow the company to distribute or share loans with other lenders, including banks.
Chief Financial Officer Vikas Jain said profit after tax before non-controlling interest more than doubled year-on-year to ₹1,518 crore in the first half of FY27. The growth was supported by improved operating leverage and a 43% reduction in loan losses and provisions.
During the quarter, the company also completed a ₹25 crore tokenised bond transaction, which it described as the first of its kind by a non-public sector undertaking NBFC in India.
Outlook
IIFL Finance said it would focus on expanding secured lending and partnerships with banks, maintaining asset quality and managing capital carefully during the remainder of FY27.
The company is also working towards a proposed equity raise after receiving enabling shareholder approval in July 2026.
IIFL Finance shares closed 0.53% higher at ₹598 apiece on the NSE on October 15.