IIFL Finance Limited (IIFL) declared an interim dividend of ₹4 per share following robust performance in gold loans and a strategic exit from high-risk segments. S&P Global Ratings revised the long-term issuer default rating outlook to positive, citing strengthened risk governance and systems.
IIFL Finance Limited reported a 9.1% quarter-on-quarter increase in loan assets under management (AUM) for the period ended December 31, 2025, reaching ₹98,336 crore. This growth was accompanied by a reduction in Gross Non-Performing Assets (GNPA) to 1.6%, down from 2.14% in the preceding quarter. The company maintains a diversified portfolio across home loans, gold loans, and microfinance, supported by a “phygital” network of approximately 4,800 branches.
Key Development
The Board of Directors approved an interim dividend of ₹4 per equity share for the financial year 2025-26. Parallel to financial results, the company announced the transition of its Chief Information Security Officer, with Kailash Gaonkar succeeding Sameer Gadve effective January 23, 2026. Additionally, the company disclosed it has received a procedural direction from the Income Tax Department for a special audit related to a specified block period, noting that it will cooperate fully with the assessment.
Financial Performance
For Q3FY26, IIFL Finance recorded a profit after tax (pre-NCI) of ₹501.3 crore, representing a 20% increase over the previous quarter. Total income rose to ₹1,995.8 crore, supported by a net interest income of ₹1,098.6 crore. The Return on Assets (ROA) stood at 2.1%, while Return on Equity (ROE) was 11.3%. The company reported a Capital to Risk-weighted Assets Ratio (CRAR) of 27.7%, well above regulatory requirements. Operating expenses included a one-time cost of ₹22.5 crore related to the re-measurement of liabilities under the new Labour Code.
Business Outlook & Strategy
Management has implemented a portfolio re-set, exiting digital unsecured MSME lending, micro-LAP from its housing finance subsidiary, and high-risk microfinance geographies to prioritize asset quality. The company identifies MSME lending as a primary growth engine, targeting an unmet credit demand estimated at ₹20-25 lakh crore within the sector. The strategy remains focused on collateral-backed retail loans and strategic alliances with banks for co-lending opportunities. Currently, gold loans constitute 44% of the AUM mix, followed by home loans at 32%.
Sector And Macro Context
IIFL Finance operates under the RBI’s Scale-Based Regulations and focuses on financial inclusion through its “Bharat” strategy. Approximately 84% of its branches are located in non-metro areas to serve economically weaker sections and underserved segments. The company leverages AI-led risk and governance systems to manage credit risk in the competitive Non-Banking Financial Company (NBFC) landscape. It continues to benefit from its Asset Light model, which facilitates growth via internal accruals and co-lending partnerships.
Analyst Commentary and Risk Factors
The company’s rating is at ‘B+’ while revising the outlook to Positive. Analysts monitor the company’s high provision coverage ratio of 92% as a buffer against potential credit losses. However, investors may consider undetermined outcomes of ongoing Income Tax assessment proceedings and recent GST penalties totaling approximately ₹13.26 crore across Bihar and Gujarat as factors for caution, though the company states these will not have a material financial impact.