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Informist, Wednesday, Jul 24, 2024

By Nishat Anjum

MUMBAI – IDFC FIRST Bank's net profit for Apr-Jun is seen falling 8% on year to 7.05 bln rupees due to a rise in operating expenses, according to estimates from six brokerage firms. The lender's bottomline is seen falling 2.7% on a sequential basis.

"Opex (operational expenditure) growth will be higher than loan growth due to the appraisal season," YES Securities (India) said in a pre-earnings research report. In Jan-Mar, operating expenses for the bank rose 29% on-year to 44.47 bln rupees.

Nuvama Wealth Management Ltd estimated the lowest net profit of 6.50 bln rupees, while the highest estimate was 7.93 bln rupees by Emkay Global Financial Services. The private lender is scheduled to detail its quarterly earnings on Saturday.

Brokerage firms also see the lender's net interest margin to be slightly lower on a sequential basis. "We expect NIMs to contract quarter-on-quarter, which coupled with elevated opex (operating expenses) should keep the bank's RoA (return on assets) in check," Emkay Global Financial Services said. In the previous quarter, the bank's net interest margin fell to 6.35% from 6.42% a quarter ago.

Meanwhile, in the reporting quarter, the net interest income growth is expected to be slightly slower than average loan growth due to a rise in cost of deposits outpacing yields on advances, brokerage firms noted. The bank reported net interest income of 45 bln rupees in Jan-Mar, which was a rise of 24% on an annualised basis.

The lender's asset quality is expected to be largely stable, brokerages said. As of Mar 31, the gross non-performing asset ratio was 1.88%, against 2.04% at the end of December. The net bad loan ratio fell to 0.60% against 0.68% a quarter ago.

Emkay Global Financial Services sees slippages to remain on the higher side, while YES Securities said slippages and provisions would be largely stable on a sequential basis. During Jan-Mar, provisions and contingencies jumped 50% on year, and 10% on quarter, to 7.22 bln rupees.

Meanwhile, Axis Securities expects advances and deposit growth momentum to remain strong in Apr-Jun. The bank did not release its provisional data for the June quarter. In Jan-Mar, gross advances rose 25% on year to 2 trln rupees. Customer deposits rose 42% on year to 1.93 trln rupees as of Mar 31. The current account and savings account ratio for Jan-Mar was 47.2%.

Key monitorables for the private lender are cost-to-income outlook, traction in deposit growth and margins, brokerage firms said. Shares of the bank closed 1.2% lower at 75.66 rupees on the National Stock Exchange.

Following are the Apr-Jun earnings estimates of IDFC FIRST Bank, in mln rupees, based on reports compiled by Informist from six brokerages:

End

Edited by Vidhi Verma

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