Mumbai, January 8, 2026, 11:22 IST
- Stock rebounds after lender trims savings rates by up to 200 bps from Jan. 9
- Nomura starts coverage with a Buy rating and a Rs 105 target price
- Brokerage sees margins stabilising as deposit costs ease, with microfinance stress still a watch
Shares of IDFC First Bank rose on Thursday after the lender cut savings account interest rates by up to 200 basis points (a basis point is 0.01 percentage point) and reshuffled balance slabs from Jan. 9. The stock was up nearly 2% at about 86 rupees by 10:45 a.m. IST, after climbing around 3% from the day’s low.
The move lands at a touchy time for banks that have been paying up for deposits. IDFC First has leaned on a high savings rate to pull in money, and any sign that funding costs are starting to ease tends to get noticed fast.
Nomura on Wednesday initiated coverage with a “buy” rating and a target price of 105 rupees, saying profitability should improve as the bank gains operating leverage. The brokerage said returns were “expected to be at 1.2 per cent and 11.8 per cent, respectively, by the financial year 2028”. Business Standard
The revised savings schedule cuts the top rate to 6.5% a year from 7%, while balances between 100,000 rupees and 1 million rupees will earn 5%. Balances above 1 million and up to 100 million rupees will earn 6.5%, while larger accounts taper from 6% to 4% under the new structure, NDTV Profit reported.
Nomura expects net interest margin — the spread between what a bank earns on loans and pays on deposits — to bottom out in fiscal 2026 and recover in fiscal 2027 as term deposits, or fixed deposits, reprice. It estimated that another 50–100 basis point cut in savings rates could add 17–33 basis points to margins and 12–23 basis points to return on assets.
The brokerage also pointed to a funding mix it says has become cheaper: current and savings account deposits, known as CASA, were about 50% in the first half of fiscal 2026, while borrowings were 13% of the funding mix. It flagged a sharper tilt to retail lending, with the retail-to-wholesale mix at 80:20, versus 37:63 in fiscal 2019.
But the margin story depends on keeping deposits sticky after the rate cut, and on credit costs easing as projected. Nomura said stress has been concentrated in the microfinance portfolio and contained elsewhere; a broader flare-up, or slower growth, would push those profitability targets out.
