Federal Bank vs IDFC First Bank (2026): NIM, CASA, NPAs, ROA & Which Is Better?

Federal Bank vs IDFC First Bank: Q1 FY2027 scoreboard

Federal Bank's Q1 was a margin-recovery quarter

NII increased 26% even though advances grew only about 15%.

That divergence is the essence of Federal Bank's Q1 earnings improvement.

NIM expanded by approximately 39 basis points year on year to 3.33%.

Cost of funds declined about 60 basis points.

Cost of deposits declined 57 basis points to approximately 5.21%.

The bank therefore extracted significantly more net interest income from a loan book that was growing at a relatively normal mid-teens rate.

Federal's earnings were not dependent on treasury gains

Net profit increased nearly 37% even though treasury conditions were weaker.

Fee income rose about 22%.

Operating profit increased strongly.

Cost-to-income improved to approximately 52.5% despite the bank absorbing annual wage revisions.

This matters because a bank can occasionally produce a spectacular quarter from bond-market gains.

Federal's Q1 improvement came primarily from core NII, fees, lower funding costs and lower credit cost.

IDFC First's Q1 was an operating-leverage quarter

PAT increased 132% to a record ₹1,075 crore, but the most important number is that ROA finally crossed 1%.

IDFC First has spent years carrying a high cost structure because it was building a national retail bank almost from scratch.

Branches, technology, credit cards, customer service, rural banking and deposit acquisition costs arrived before the full revenue base did.

Q1 FY2027 provides evidence that those fixed investments are beginning to scale.

Core operating profit increased approximately 36% year on year.

Cost-to-income excluding trading gains improved by more than three percentage points to about 70.7%.

IDFC First has the much stronger CASA ratio

CASA represented 50.8% of deposits at June 2026.

Federal Bank's CASA ratio was approximately 32.23%.

IDFC First's CASA deposits increased almost 25% year on year to ₹1.58 lakh crore.

That is remarkable considering the bank entered its 2018 merger with a CASA ratio below 10%.

A high CASA ratio supports lower funding costs and gives IDFC First more room to sustain a high NIM.

Federal's liability moat is different: NRI deposits

Federal Bank had more than ₹1.05 lakh crore of non-resident deposits at June 2026.

NR deposits increased about 14.2% year on year.

The bank has a long-standing remittance franchise among overseas Indians, particularly customers with Kerala and Gulf-region links.

This creates a deposit source that is difficult for a newer private bank to reproduce quickly.

Federal's CASA is lower than IDFC First's, but its liability franchise has historically been granular and sticky.

IDFC First is now growing loans materially faster

Total loan assets including credit substitutes increased approximately 20.6% year on year to ₹3.05 lakh crore.

Retail, agriculture and MSME loans reached about ₹2.41 lakh crore.

Wholesale loans increased more than 30% from a smaller base.

The bank has therefore reached a point where its transformed loan book is not only retailised but also larger than Federal Bank's gross-advances base.

Federal is deliberately leaning into higher-yielding niches

Gold loans grew approximately 33% year on year.

Commercial banking increased roughly 23%.

Commercial vehicle and construction-equipment finance grew about 21%.

Loan against property grew around 21%.

Credit cards increased roughly 36%.

These categories can improve portfolio yield without forcing Federal Bank to abandon its historically conservative credit culture.

Gross NPA is effectively tied

Federal Bank reported GNPA of 1.52%. IDFC First reported 1.51%.

At the headline gross-NPA level, there is almost no difference.

The more useful comparison is what happens after provisions.

Federal's NNPA is only 0.18%.

IDFC First's is 0.44%.

Federal therefore has significantly more protection already recognised against its stressed assets.

Federal's provision coverage is a major hidden strength

Provision coverage excluding technical write-offs reached approximately 87.4%.

Including technical write-offs, coverage exceeded 94%.

Federal's net NPA is consequently at a decadal low.

Fresh slippages declined almost 38% year on year.

The slippage ratio improved to about 0.61%.

This combination makes Federal's current credit profile unusually clean for a bank trading outside India's largest private-bank group.

IDFC First's asset quality is improving too

GNPA improved 45 basis points year on year to 1.51%.

NNPA improved to 0.44%.

The RAM portfolio reported GNPA around 1.40%.

SMA-1 and SMA-2 remained contained.

Stress from the previous microfinance cycle has also moderated.

That improvement is essential because IDFC First's high NIM partly reflects lending segments with higher inherent yields and risk than a conservative corporate bank.

The margin comparison needs portfolio context

IDFC First's 5.96% NIM is almost twice Federal Bank's 3.33%.

That does not mean IDFC First is automatically twice as profitable.

Higher-yielding retail, MSME and consumer products usually require more distribution expense and potentially higher credit cost.

Federal Bank's portfolio includes more traditional secured, corporate and commercial-bank exposures with narrower spreads.

That is why ROA and ROE must be considered alongside NIM.

ROA currently favours Federal Bank

Federal Bank's annualised Q1 ROA was approximately 1.22%.

IDFC First reached 1.06%.

The gap of 16 basis points is not enormous.

The trend matters more.

Federal's ROA has already spent several quarters around or above the 1.2% area.

IDFC First only recently crossed 1%.

If IDFC First continues improving operating leverage, this is one of the most important gaps to watch.

ROE shows a larger difference

Federal Bank generated approximately 12.0% ROE versus IDFC First around 9.0%.

IDFC First has explicitly said it is targeting a much higher long-run ROE as the bank scales.

Moving from 9% toward 15%-plus would materially change how investors value the franchise.

Federal's task is different: improve ROE from the low teens while preserving today's exceptionally low credit cost.

Federal currently has the stronger capital cushion too

Total capital adequacy was approximately 16.97% and Tier-I capital 15.89%.

IDFC First reported total CRAR of approximately 15.05% and CET1 around 13.33%.

Both exceed regulatory requirements.

Federal has more current headroom on reported ratios.

IDFC First can still support strong growth, but rapid 20%-plus lending expansion makes internal capital generation increasingly important.

Valuation produces the most interesting reversal

The bank with the higher NIM and faster growth is actually cheaper on book value.

Federal Bank reported June 2026 book value per share of approximately ₹161.87.

At Bull Run's ₹346.95 August 25 price, that implies roughly 2.14x book.

IDFC First reported book value per share of approximately ₹56.47.

At ₹85, the stock trades around 1.51x book.

This is the central rerating opportunity in IDFC First.

The market is still discounting the bank because its ROE remains below Federal's despite a much richer NIM.

Why Federal can deserve the higher P/B

Higher book multiples are justified when returns and credit quality are more dependable.

Federal currently has:

• 12% ROE versus IDFC First near 9%.
• 1.22% ROA versus 1.06%.
• 0.18% NNPA versus 0.44%.
• Lower credit cost.
• Higher provision coverage.
• A mature deposit franchise with a strong NRI moat.

The premium therefore has fundamental support.

Why IDFC First's lower P/B can disappear quickly if ROE rises

A bank trading at 1.5x book with 9% ROE is not automatically cheap.

But a bank trading at 1.5x book that can move ROE from 9% toward 14%-16% is a very different valuation proposition.

IDFC First's 5.96% NIM means the revenue engine already exists.

The rerating thesis depends on reducing cost-to-income, normalising provisions and continuing deposit growth.

Federal's stock has already undergone a major rerating

Federal Bank's one-year return of almost 78% shows that the market has already rewarded margin recovery, cleaner NPAs and stronger earnings.

IDFC First has also rerated but by much less.

Both stocks now trade far above their respective 52-week lows, so the comparison should focus on future book-value compounding rather than assuming the previous year's rerating repeats.

Federal Bank: the quality-improvement thesis

IDFC First Bank: the operating-leverage thesis

Federal Bank vs IDFC First Bank FAQs

Which bank has higher NIM?

IDFC First Bank, at approximately 5.96% versus Federal Bank at 3.33%.

Which has lower net NPAs?

Federal Bank, at only 0.18% versus IDFC First at 0.44%.

Which bank is growing loans faster?

IDFC First, with total loan assets up approximately 20.6% compared with Federal Bank advances growth of about 14.9%.

Which has higher CASA?

IDFC First, at approximately 50.8% versus Federal Bank at 32.23%.

Which has higher ROA?

Federal Bank at approximately 1.22% versus IDFC First at 1.06%.

Which has higher ROE?

Federal Bank at approximately 12.0% versus IDFC First around 9.0%.

Which is cheaper on P/B?

IDFC First, at roughly 1.5x June 2026 book value versus Federal Bank around 2.1x.

What is the biggest IDFC First catalyst?

Operating leverage. If cost-to-income and provisioning continue declining, its high NIM can translate into a substantially higher ROA and ROE.

Research sources

• Bull Run current market, ownership and technical data
• Federal Bank official Q1 FY2027 results and investor presentation
• IDFC First Bank official Q1 FY2027 financial reports
• IDFC First Bank investor relations