IDFC FIRST Bank Q2 FY24 Profit After Tax up 35% YoY at Rs. 751 crore

Financial results at a glance

The Board of Directors of IDFC FIRST Bank, in its meeting held today, approved the unaudited financial results for the quarter and half year ended September 30, 2023.

Profitability

·Net Profitfor Q2-FY24 grew35%YOY fromRs. 556 crorein Q2-FY23 toRs. 751 crorein Q2-FY24 driven by strong growth in core operating income.

·Core Operating Profit(pre provision operating profit excluding trading gains) grew strongly by38%YOY fromRs. 1,052 crorein Q2-FY23 toRs. 1,456 crorefor Q2-FY24.

·Net Interest Income (NII)grew32%­ YOY fromRs.3,002 crorein Q2-FY23 toRs. 3,950 crorein Q2-FY24.

·Net interest Margin(gross of IBPC and sell-down) was6.32%in Q2-FY24 as compared to5.83%in Q2-FY23 and6.33%in Q1-FY24.

·Fee and Other Incomegrew by46%YoY fromRs.945 crorein Q2-FY23 toRs. 1,376 crorein Q2-FY24.Retail feesconstitute93%of the overall fees for the quarter Q2-FY24.

·Core Operating income(NII plus Fees, excluding trading gains) grew35%fromRs.3,947 crorein Q2-FY23 toRs. 5,326 crorein Q2-FY24.

·Operating Expensegrew by34%YoY fromRs.2,895 crorein Q2-FY23 toRs. 3,870 crorein Q2-FY24.

·Provisionsincreased25%YOY fromRs. 424 crorein Q2-FY23 toRs. 528 crorein Q2-FY24. Thecredit cost(quarterly annualized) as % of average funded assets for Q2-FY24 was1.19%.

·RoA(annualized) improved from1.07%in Q2-FY23 to1.16%in Q2-FY24.

·RoE(annualized) improved from10.13%in Q2-FY23 to11.03%in Q2-FY24.

Deposits & Borrowings

·Customer Depositsincreased by44%YoY fromRs. 1,14,004 croreas of September 30, 2022 toRs. 1,64,726 croreas of September 30, 2023.

·CASA Depositsgrew by26%YoY fromRs.63,305 croreas of September 30, 2022 toRs.79,468 croreas of September 30, 2023. CASA Ratio stood at46.4%as of September 30, 2023.

·Retail depositsgrew by50%YoY fromRs. 84,859 croreas of September 30, 2022 toRs. 1,27,595crore as of September 30, 2023.

·Retail depositsconstitutes77%of total customer deposits as of September 30, 2023.

·Legacy High CostBorrowingsreduced fromRs. 20,449 croreas of September 30, 2022 toRs. 15,002croreas of September 30, 2023.

Funded Assets

·Funded assets(including advances & credit substitutes) increased by26%YoY fromRs. 1,45,362croreas of 30 September 2022 toRs. 1,83,236 croreas of September 30, 2023.

·The Bank continues to wind down infrastructure financing as per stated strategy and now constitutes only1.8%of total funded assets as of September 30, 2023.

·Exposure to top 20single borrowers improved from8%as of September 30, 2022 to6%as of September 30, 2023.

Assets Quality

·Gross NPA (GNPA)of thebankhasimprovedto2.11%as of 30 September 2023 from3.18%of 30 September 2022.

·Net NPA (NNPA)of thebankhasimprovedto0.68%as of 30 September 2023 from1.09%of 30 September 2022.

·GNPAof theRetail, Rural and SME Financehasimprovedto1.53%as of 30 September 2023 from2.03%of 30 September 2022.

·NNPAof theRetail, Rural and SME Financehasimprovedto0.52%as of 30 September 2023 from0.73%of 30 September 2022.

·Excluding the infrastructure financing bookwhich the Bank is running down, theGNPAandNNPAof the Bank would have been1.69%and0.46%respectively as of September 30, 2023.

·SMA-1 and SMA-2(31-90 DPD which is the pre-NPA stage) in Retail, Rural and SME Finance portfolio has reduced from0.89%as of September 30, 2022 to0.77%as of September 30, 2023.

·Collection efficiencyfor urban retail business (excluding prepayments and EMI arrears) in current bucket continues to remain high at99.5%.

·Provision coverage ratio(including technical write-off) of the bank hasincreasedto84.09%as of September 30, 2023 from76.49%as of September 30, 2022.

·Standard restructured bookas % of total funded assets improved to0.38%from1.03%at September 30, 2022.

Capital Position & Liquidity

·Capital Adequacyof the Bank was strong at16.54%with CET-1 Ratio at13.49%as on September 30, 2023.

·During the first week of October 2023, the Bank successfully raisedRs. 3,000 crorefrom set of Marquee investors viaqualified institutional placement (QIP)at an issue price of Rs. 90.25 per share.

·Factoring the above capital raise,the total CRAR as on September 30, 2023 would be 18.06% with CET-1 at 15.01%.

·Average LCRwas strong at122%for the quarter ending on September 30, 2023.

Comments from Managing Director & CEO

Mr. V Vaidyanathan, Managing Director and CEO, IDFC FIRST Bank,said,

“As mentioned before, we are firmly fixated on building our Bank for the “long-run” and are building our fundamentals, our culture and our products keeping long run thinking in mind.

Diversified customer deposits are the most important foundational capability for a Bank. We are sincerely thankful for such goodwill of our esteemed customers because of which our customer deposits continue to grow well at 44% YOY, and our CASA ratio continues to be strong at 46.4%.

We are happy that our asset quality continued to improve. On the Retail, Rural & SME business, where our Bank particularly specializes in, the Gross NPA and Net NPA have remained very low at 1.53% and 0.52% respectively. We will stay very watchful on this front all the time.

We have registered profit of Rs. 1,516 crore in H1-FY24, representing a growth of 47% over PAT of Rs. 1,030 crore in H1-FY23.”