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Informist, Saturday, Oct. 26, 2024

 

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--IDFC First Bank Jul-Sept net profit INR 2.01 bln
--Analysts saw IDFC First Bank Jul-Sept net profit INR 6.92 bln
--IDFC First Bank Jul-Sept net profit INR 2.01 bln vs INR 7.51 bln yr ago
--IDFC FIRST Bank gross NPA ratio 1.92% as on Sept 30 vs 1.90% qtr ago
--IDFC First Bank Jul-Sept total income INR 106.84 bln vs INR 87.86 bln year ago
--IDFC FIRST Bank net NPA ratio 0.48% as on Sept 30 vs 0.59% qtr ago
--IDFC FIRST Bank Basel III capital adequacy ratio 16.01% as on Sept 30
--IDFC First Bank Jul-Sept provisions INR 17.32 bln vs INR 5.28 bln year ago
--IDFC First Bank Apr-Sept net profit INR 8.81 bln vs INR 15.16 bln yr ago
--IDFC First Bank Apr-Sept total income INR 210.92 bln vs INR 170.67 bln
--IDFC FIRST Bank Jul-Sept net interest income INR 47.88 bln, up 21% on year
--IDFC FIRST Bank Jul-Sept net interest margin 6.18% vs 6.22% quarter ago
--IDFC FIRST Bk: Made INR 3.15-bln contingency provision for microfin ops
--IDFC FIRST Bk: INR 2.53 bln extra provision for Maharashtra toll waiver
--IDFC FIRST Bk: Plans to grow branch network by 10?ch year in near term
--IDFC FIRST Bank credit-deposit ratio 97.7% as on Sept 30
--IDFC FIRST Bank customer deposits at INR 2.18 tln as on Sept 30
--IDFC FIRST Bank:Jul-Sept cost of deposits at 6.38%, unchanged from qtr ago
--IDFC FIRST Bank loan book at INR 2.23 tln as on Sept 30
--IDFC FIRST Bank: Unsecured retail credit forms 15% of total loan book
 

 

NEW DELHI - IDFC First Bank's net profit for the September quarter crashed 73% on year to INR 2.01 billion as provisions more than tripled on account of deteriorating asset quality in its microfinance book.

 

 

Analysts had expected the bank's bottom line to fall around 8% to INR 6.92 billion due to worsening asset quality.

 

However, IDFC First Bank informed exchanges on Saturday that its provisions and contingencies surged 228% year-on-year in Jul-Sept to INR 17.32 billion, mostly due to a "prudent provisioning buffer" of INR 3.15 billion for the microfinance business and INR 2.53 billion for a legacy toll account.

 

"We have created additional provisioning buffer...for microfinance segment as a prudent measure. Bank has taken additional provision...for one toll road related to Mumbai's entry point which was affected because of the state government waiving toll on LMV. Bank will recognise this back as profits depending on toll collections and the government's compensation to the client," Managing Director and Chief Executive Officer V. Vaidyanathan said in a press statement.

 

Earlier this month, the Maharashtra government had exempted light motor vehicles from paying toll at five entry points into Mumbai. The move came ahead of the busy festival season, as well as the state Assembly elections next month.

 

The microfinance books of most banks have been a concern in recent months. In Apr-Jun, IDFC First Bank's microfinance loans had weakened due to massive floods in Tamil Nadu. This seems to have continued in Jul-Sept, too, with the lender noting that collection efficiency for the microfinance business had deteriorated to 98.6% in the reporting quarter from 99.7% a year ago. It said the microfinance portfolio's share in the overall loan book had been reduced to 5.6% as at the end of September from 6.3% as on Jun. 30, with the exposure in Kerala down 30% on year.

 

On the whole, the gross non-performing assets ratio edged down to 1.92% as on Sept. 30 from 2.11% a year ago, but was slightly higher than 1.90% at the end of June. Meanwhile, net NPA ratio stood at 0.48%, down from 0.68% a year ago but up from 0.59% as on Jun. 30. The provision coverage ratio rose by 589 basis points from June-end to 75.27% as at the end of September.

 

ROBUST BUSINESS GROWTH

While provisions rose due to asset quality issues, IDFC First Bank continued to see robust growth in its business during Jul-Sept – advances were up 21.5% on year at INR 2.23 as on Sept. 30, with the retail loan book growing 25.1%. Within the retail book, the highest growth was seen in the case of gold loans, which almost tripled, albeit on a small base of just INR 5.63 billion. Credit card outstanding was 48% higher as at the end of September, while education loans were up 60%.

 

The bank said in its investor presentation that 15% of its total loan book was unsecured retail credit. This amounts to roughly INR 334 billion.

 

The healthy increase in loans helped raise the bank's net interest income during the quarter by 21% to INR 47.88 billion, slightly lower than analysts' expectation of INR 48.91 billion.

 

The deposit side, meanwhile, saw growth of 32.4% at INR 2.18 trillion as on Sept. 30, with retail deposits increasing 37.4%. The bank's current account, savings account ratio stood at 48.9% at the end of the quarter, up from 46.6% on Jun. 30 and 46.4% a year ago. The bank said retail deposits made up as much as 80.4% of its total customer deposits. The cost of deposits was 6.38% in Jul-Sept, unchanged from Apr-Jun, although the net interest margin declined 4 basis points to 6.18%.

 

Meanwhile, the cost of funds edged down slightly to 6.46% from 6.47% in Apr-Jun.

 

Shares of IDFC First Bank closed 3.8% lower at INR 65.50 on the National Stock Exchange on Friday.  End

 

Reported by Siddharth Upasani

Edited by Avishek Dutta

 

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