IDFC First Bank Reports 32% YOY Growth in Customer Deposits

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, 2024.

Deposits & Borrowings

• Customer Deposits increased by 32.4% YOY from Rs. 1,64,726 crore as of September 30, 2023 to Rs. 2,18,026 crore as of September 30, 2024.

• Retail Deposits grew by 37.4% YOY from Rs. 1,27,595 crore as of September 30, 2023 to Rs. 1,75,300 crore as of September 30, 2024.

• CASA Deposits grew by 37.5% YOY from Rs. 79,468 crore as of September 30, 2023 to Rs. 1,09,292 crore as of September 30, 2024.

• CASA Ratio stood at 48.9% as of September 30, 2024.

• Retail Deposits constitutes 80.4% of total customer deposits as of September 30, 2024.

• The Cost of Funds for the Bank was 6.46% in Q2-FY25, improved marginally from last quarter. Excluding the high-cost legacy borrowings, the cost of funds was 6.37% in Q2-FY25.

Payment & Fee Businesses

• The number of total credit card issued crosses 3 million mark during last quarter. With growing business, the cost to income ratio for credit card business continues to improve and was at 99.8% in Q2-FY25 as compared to 104.1% in Q1-FY25.

• Overall, Wealth Management AUM of the Bank crossed Rs. 20,000 crore during Q2 FY25.

• IN FASTag business, the Bank continues to remain the largest issuer bank with 20 million FASTag issued.

Loans and Advances

• Loans and Advances (including credit substitutes) increased by 21.5% YOY from Rs. 1,83,236 crore as of September 30, 2023 to Rs. 2,22,613 crore as of September 30, 2024.

• The retail book of the bank grew by 25% YoY while the corporate (non-infrastructure) loans grew by 20.0% YoY during the quarter.

• The Bank’s legacy infrastructure book reduced by 21% YoY to Rs. 2,654 crore as of September 30, 2024, 1.2% of the total funded assets of the Bank.

• Microfinance portfolio as % of overall loan book reduced from 6.3% in June-2024 to 5.6% in Sep-2024.

Assets Quality

• Gross NPA was 1.92% as of September 30, 2024, against 2.11% as of September 30, 2023.

• Net NPA was 0.48% as of September 30, 2024, against 0.68% as of September 30, 2023.

• Gross NPA of the Retail, Rural and MSME Finance stood at 1.57% as of September 30, 2024 as compared to 1.53% as of September 30, 2023.

• Net NPA of the Retail, Rural and MSME Finance was 0.52% as of September 30, 2023 and 0.53% as of September 30, 2024.

• Excluding the infrastructure financing book, which the Bank is running down, the GNPA and NNPA of the Bank would have been 1.66% and 0.47% respectively as of September 30, 2024.

• PCR of the bank increased to 75.27% as of September 30, 2024 from 68.18% as of September 30, 2023 and 69.38% as of June 30, 2024.

• Collection Efficiency:

• The early bucket collection efficiency in the retail book excluding MFI remained stable at 99.5%

• In the Microfinance book, the collection efficiency reduced from 99.0% in Q1-FY25 to 98.6% Q2-FY25.

• SMA Positions:

• SMA-1+2 in Retail, Rural and MSME Finance portfolio excluding the micro-finance book improved on QoQ basis from 0.95% as of June 30, 2024 to 0.87% as of September 30, 2024.

• The SMA-1+2 ratios in the microfinance business stood at 2.5% as of Sep 30, 2024, increased from 1.7% as of June 30, 2024.

• Microfinance business is incrementally insured by CGFMU where the insurance coverage of the portfolio has increased from 0% to 50% in 9 months and likely to go up to 75% by March 2025.

• Provisions:

• Provisions for Q2 FY25 stood at Rs. 1,732 crore, primarily on account of prudent provisioning buffer of Rs. 568 crore created for

1. MFI business (Rs. 315 cr). Covers ~ 99% of the SMA-1+2 portfolio. It is 2.5% of the entire portfolio in this business segment as of Sep-2024.

2. One legacy toll account (Rs. 253 cr). Impact on the infrastructure borrower because of withdrawal of toll fees on LMV of State Government recognised). May be added back to Bank’s profit depending on toll collections and if Government compensates client.

• Without the MFI business and toll account mentioned above the credit costs for Q2-FY25 would be ~1.8%.

Profitability

• Net Interest Income (NII) grew 21% YOY from Rs. 3,950 crore in Q2 FY24 to Rs. 4,788 crore in Q2 FY25.

• Fee and Other Income grew by 18% YOY from Rs. 1,376 crore in Q2 FY24 to Rs. 1,622 crore in Q2 FY25.

• Operating income grew 21% from Rs. 5,380 crore in Q2 FY24 to Rs. 6,515 crore in Q2 FY25.

• Operating Expense grew by 18% YOY from Rs. 3,870 crore in Q2 FY24 to Rs. 4,553 crore in Q2 FY25.

• Core Operating Profit (excluding trading gain) grew by 28% YOY from Rs. 1,456 crore in Q2 FY24 to Rs. 1,857 crore for Q2 FY25. Including Trading gains, Core Operating Profit increased by 30% YOY.

• Due to the higher provisioning, primarily on account of Microfinance book and the infrastructure toll account, Net Profit de-grew 73% YOY from Rs. 751 crore in Q2 FY24 to Rs. 201 crore in Q2 FY25.

• Excluding the additional provision on toll account and micro-finance business, the adjusted Profit after Tax would have been Rs. 626 crore

Capital Position

• The Bank successfully raised Rs. 3,200 crore of fresh equity capital from marquee domestic institutional investors in July 2024

• The Bank also successfully completed merger with IDFC Ltd in October 2024 through which Rs. 618 crore of capital have been added to the net-worth whereas the outstanding share count has reduced by 16.64 crore shares.

• Including profits for Q2-FY25 and post the impact of merger as mentioned above, total CRAR as on September 30, 2024 would have been 16.60% with CET-1 ratio of 14.08%.

Comments from Managing Director & CEO

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

Our core drivers are strong. Our brand, technology, and high service levels are enabling strong growth in deposits. Ability to grow deposits is a key strategic strength of the Bank. Deposits grew healthily at 32% YoY. Our CASA ratio sustained at 48.9%.

Our overall Loan growth is stable at 21.5% on YoY basis. We saw impact on microfinance business as is seen in rest of industry. Since January 2024, the MFI disbursals are insured with CGFMU. 50% of the book is now insured and expected to reach 75% by end March 2025.

Overall asset quality broadly remained stable with Gross NPA was at 1.92% and Net NPA at 0.48%. Our PCR has now improved to 75%.

We have created additional provisioning buffer of Rs. 315 crore for microfinance segment as a prudent measure. Bank has taken additional provision of Rs. 253 cr for one toll road related to Mumbai’s entry point which was affected because of the State government waiving toll on LMV. Bank will recognize this back as profits depending on toll collections and the government’s compensation to the client.This quarter, we have disclosed SMA 1+2 ratios and trend for every product segment. SMA 1+2 have improved QoQ, excluding the MFI business.

On the profitability front, the Core Operating Profit rose to 28% YoY to reach Rs. 1,857 crore excluding trading gains.

Our core operating performance is strong, we are confident to revive our profitability going forward.”