S&P expects the bank to maintain strong capitalisation over the next 18-24 months, with its risk-adjusted capital (RAC) ratio projected at 10%-10.5%, compared with 10.9% in March 2026. It expects the bank’s loan book to grow around 20% annually over the next two years.
The agency also expects IDFC First Bank to raise up to ₹7,500 crore in additional capital in FY27 to support growth.
Profitability, asset quality
S&P expects the bank’s net interest margin to improve by 5-10 basis points in FY27 before stabilising. It expects the cost-to-income ratio to improve to 65%-70% over the next two years from 75% in FY26, helped by lower credit costs and operating leverage.
The agency expects the bank’s non-performing loan ratio to remain at 1.7%-1.8% over the next two years, with credit costs at 1.5%-1.6% of loans.
S&P said the bank’s asset quality should remain stable, supported by technology-led underwriting, portfolio diversification and a shift towards lower-risk lending segments.
Retail deposits support funding
S&P highlighted the bank’s granular retail deposit base. Core deposits accounted for about 89% of total funding as of March 31, 2026, while retail deposits made up nearly 80% of total deposits.
The CASA ratio stood at 50.8% as of June 30, 2026. The bank’s loan-to-deposit ratio improved to about 95% by June-end from more than 100% in March 2024, as deposits grew faster than loans.
S&P said IDFC First Bank’s market share remains modest, at about 1.3% of loans and 1.1% of deposits in India’s banking sector.
The Stable Outlook reflects S&P’s expectation that the bank will maintain strong capitalisation, manageable asset-quality risks and a granular retail funding profile over the next two years.
Shares of IDFC First Bank were trading at ₹86.06 on the BSE on Friday (August 14), down 0.51%.
First Published: Aug 14, 2026 10:51 AM IST
