Earnings Outlook
IDFC First Bk Jul-Sept PAT seen at INR 6.92 bln, down 8%
This story was originally published at 13:35 IST on 16 October 2024
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NEW DELHI - IDFC First Bank is expected to post a net profit of INR 6.92 billion for Jul-Sept, according to the median of estimates of six brokerages. At INR 6.92 billion, the quarterly profit would be 7.9% lower from a year ago and only 1.7% higher than the first quarter of 2024-25 (Apr-Mar). IDFC First Bank is scheduled to announce its quarterly results on Oct. 26.
According to the brokerages, the private lender's net interest income is seen a handy 23.8% year-on-year higher at INR 48.91 billion in Jul-Sept. Centrum Broking sees a "decent growth" in loans, while Axis Securities said IDFC First Bank's advances and deposit growth momentum is expected to be "strong", with growth in net interest income to remain "healthy".
In Jul-Sept 2023, the bank's net interest income was INR 39.50 billion, while it stood at INR 46.95 billion in the first quarter of 2024-25 (Apr-Mar). The bank informed the exchanges earlier this month that as on Sept. 30, its loans and advances were up 21.3% on year, while deposits were 32.2% higher.
"Sequential loan growth will be in the 5.0?llpark due to idiosyncratic growth trajectory. NII (net interest income) growth will be slightly slower than average loan growth due to rise in cost of deposits outpacing yield on advances. Consequently, NIM (net interest margin) will be slightly lower sequentially," YES Securities said in a pre-earnings report.
The bank's net interest margin in Apr-Jun was 6.22%. Apart from YES Securities, Axis Securities too expects a sequential moderation in the margin. The bank had explained the fall in the margin in Apr-Jun as being due to it carrying more government Treasury-bills as part of its investment books--which hurt the margin by about 8 basis points--and an increase in cost of funds.
On the cost front, brokerages see some deterioration in IDFC First Bank's asset quality in Jul-Sept, especially in the retail and microfinance loan book. In the first quarter, the bank's microfinance book--which makes up about 6% of its total loans--had witnessed a fall in asset quality due to the massive floods in Tamil Nadu. According to Emkay Global Financial Services, the bank's slippages in Jul-Sept will be "elevated...due to stress in the MFI (microfinance) book".
Parts of Tamil Nadu are facing severe flooding during the northeast monsoon, with the India Meteorological Department issuing a red alert for Chennai and some other districts. The IMD has issued a red alert for Chennai and other districts, forecasting heavy to very heavy rainfall over the next two days.
As on Jun. 30, IDFC First Bank's gross non-performing assets ratio stood at 1.90%, while the net ratio was 0.59%. Shares of the bank were trading at INR 72.73 on the National Stock Exchange at 1105 IST Wednesday, largely unchanged from close at Tuesday.
Following are the Jul-Sept earnings estimates of IDFC First Bank based on reports compiled by Informist from six brokerages:
| BROKERAGE | NET INTEREST INCOME (in INR million) | NET PROFIT (in INR million) |
| Anand Rathi Share and Stock Brokers | 49,031.00 | 7,422.00 |
| Axis Securities | 48,980.00 | 6,000.00 |
| Centrum Broking | 49,331.00 | 6,065.00 |
| Emkay Global Financial Services | 48,763.00 | 62,709.00 |
| Motilal Oswal Financial Services Ltd. | 48,425.00 | 5,696.00 |
| YES Securities | 48,939.00 | 8,815.00 |
| Average | 48,911.50 | 6,922.50 |
| Number of responses | 6 | 6 |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Reported by Siddharth Upasani
Edited by Vandana Hingorani
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