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Informist, Saturday, Apr. 26, 2025

 

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--IDFC FIRST Bank Jan-Mar net profit INR 3.04 bln 
--Analysts saw IDFC FIRST Bank's Jan-Mar net profit at INR 3.85 bln 
--IDFC FIRST Bank Jan-Mar net profit INR 3.04 bln vs INR 7.24 bln year ago 
--IDFC FIRST Bank Jan-Mar total income INR 113.08 bln vs INR 98.61 bln yr ago 
--IDFC FIRST Bank: Gross NPAs 1.87% as on Mar 31 vs 1.94% qtr ago 
--IDFC FIRST Bank Jan-Mar provisions INR 14.50 bln vs INR 7.22 bln year ago 
--IDFC FIRST Bank: Net NPA ratio 0.53% as on Mar 31 vs 0.52% qtr ago 
--IDFC FIRST Bank FY25 net profit INR 15.25 bln vs INR 29.57 bln year ago 
--IDFC FIRST Bank Basel-III capital adequacy ratio 15.48% as on Mar 31
--IDFC FIRST Bk FY25 total income INR 435.23 bln vs INR 363.25 bln yr ago 
--IDFC FIRST Bank Jan-Mar NII INR 49.07 bln vs INR 44.69 bln year ago 
--IDFC FIRST Bank Jan-Mar NIM at 5.95% vs 6.04% in Oct-Dec 
--IDFC FIRST Bk to pay INR 0.25 per share dividend for FY25 
--IDFC FIRST Bank: CASA ratio at 46.9% as on Mar 31 
--IDFC FIRST Bank provision coverage ratio at 72.3% as on Mar 31 
--IDFC FIRST Bk:Microfinance at 4% of total book on Mar 31 vs 6.6% year ago

 

By Aaryan Khanna

 

NEW DELHI – IDFC FIRST Bank Ltd.'s net profit slumped nearly 60% on year in Jan-Mar, a representative quarter for 2024-25 (Apr-Mar), as the bank's bottomline halved from the previous financial year. The bank attributed its struggles to its microfinance business, with margins shrinking for the fifth straight quarter.

 

The lender reported a net profit of INR 3.04 billion for Jan-Mar, against INR 7.22 billion a year ago; it fell more than 10% sequentially. Even though analysts' expectations were already modest, the bottomline was below the average estimate of INR 3.85 billion by eight brokerages.

 

Net provisions doubled from the year-ago period to INR 14.50 billion in Jan-Mar. The bank's net interest margin was 5.95% in the March quarter, down 9 basis points from a quarter ago, and down from the high of 6.42% in Oct-Dec 2023.

 

"NIM declined largely due to decline in the microfinance business," the bank said in its investor presentation. "Provisions for FY25 stood at INR 55.15 (2.46% of loan book) primarily driven because of the higher provisioning in the microfinance book."

 

The pace of core operating income and operating expenses growth was nearly the same, at around 17% FY25, which helped the bank maintain an operating profit of INR 18.12 billion in the March quarter. The operating profit, before provisions and taxes, was up 8.9% on year in Jan-Mar.

 

In a post-earnings analyst call in January, Managing Director and Chief Executive Officer V. Vaidyanathan had warned the credit cost of the microfinance book would peak in the final quarter of 2024-25 (Apr-Mar) after the bank's Oct-Dec bottom line had missed analysts' estimates. In the post-earnings analyst call on Saturday, the management said its provisions might have peaked in the March quarter.

 

In Jul-Sept, IDFC FIRST Bank's net profit had crashed 73% on a rise in provisions, with the bank setting aside INR 2.53 billion as prudent provisioning buffer for a legacy account related to a Mumbai toll road and another INR 3.15 billion for its microfinance book following massive floods in Tamil Nadu that brought down collection efficiency to 98.6%. On Saturday, the bank said that excluding the microfinance portfolio, the Oct-Dec credit cost was 1.73%, against 1.82% in Oct-Dec. It continued to hold the latter as a contingency provision buffer on a prudent basis.

 

In terms of ratios, the gross non-performing assets ratio fell 9 basis points sequentially to 1.87% as on Mar. 31 and was nearly unchanged from a year ago. The net bad loan ratio was up 1 basis point on quarter at 0.53%, but down from 0.60% a year ago. If the microfinance business was excluded, IDFC FIRST Bank said its gross NPA ratio would have been 1.40% as of Dec. 31.

 

Noting the continued pain on the microfinance front, the bank continued to trim the portfolio and it accounted for 4.0% of the overall loan book as on Mar. 31, down from 4.8% at the end of December and 6.6% a year ago. The provision coverage and capital adequacy ratios of the bank stood at 72.3% and 15.48%, respectively, at the end of March.

 

Meanwhile, loans and advances were up 20.4% as on Mar. 31 at INR 2.42 trillion, with the retail book growing 18.7% and the corporate non-infrastructure portfolio by 33.8%. Net interest income for the March quarter was INR 49.07 billion, missing the average of analysts' estimates of INR 51.08 billion. This took the total income for the quarter to INR 113.08 billion, up 14.7% on year, and to INR 435.23 billion for the financial year. The net profit for FY25 was INR 15.25 billion, down over 48% on year.

 

On the deposit side, customer deposits were up 25.5% at INR 2.43 trillion as on Mar. 31, although the current account, savings account ratio slipped to 46.9% from 47.7% as on Dec. 31. While the cost of deposits was stable at 6.38% in Jan-Mar, the cost of funds inched up to 6.51% in the March quarter from 6.49% a quarter ago.  End

 

Edited by Avishek Dutta

 

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