IIFL Finance posted a 50% increase in net interest income to INR 21.6 billion for the second quarter of fiscal 2027. The company's management has set a target for 25% asset growth in the current fiscal year. While financial metrics show improvement, investors are observing the firm's progress in rebuilding its gold loan portfolio following earlier regulatory restrictions.
IIFL Finance delivered strong growth in the second quarter of fiscal year 2027, reporting a 50% year-on-year rise in net interest income to INR 21.6 billion. The company’s financial results reflect improved operational efficiency and a controlled approach to costs, which helped boost profitability during the quarter.
Operating expenses for the period grew by 13%, which was slower than the pace of revenue growth. This efficiency allowed the company to lower its cost-to-income ratio to 42.1%, compared to 45.2% in the same period last year. Additionally, the company reported an annualized credit cost of 1.4%, a significant drop from 3.4% in the previous year, suggesting that fewer loans turned bad during the quarter.
Looking ahead, management has outlined a growth plan that targets a 25% year-on-year increase in total assets under management for fiscal 2027. To support this, the company plans to increase its reliance on off-book loan assets—where it acts as a service provider alongside other lenders—to roughly 40% of its total portfolio. This strategy is designed to help the company achieve a long-term return on equity target of 18% to 20%.
Investors are currently monitoring how the company executes this growth strategy while managing the aftermath of previous regulatory challenges. Earlier, the company faced restrictions from the Reserve Bank of India on its gold loan business, which significantly impacted its operations. While the regulator later lifted these restrictions, the company is in a recovery phase, working to regain market share and stabilize its gold loan portfolio, which has historically been a core business segment.
Financial performance in the coming quarters will depend on the company's ability to maintain asset quality and manage borrowing costs in a competitive lending environment. With the gold loan segment recovering, the focus remains on whether the firm can sustain its margins and meet the projected asset growth targets without facing new regulatory hurdles. Stakeholders will be watching upcoming quarterly filings for updates on loan book growth, asset quality trends, and the progress of the co-lending strategy.