IDFC First Bank

Builds strong liability franchise, margins improve sharply

Nov 02, 2020 04:11 IST capital market

IDFC First Bank has posted strong turnaround reporting net profit of Rs 101 crore in Q2FY2021 compared with net loss of Rs 680 crore in Q2FY2020. The bank has recorded strong performance on various parameters with 142% surge in CASA deposits and improvement in CASA deposits ratio to 40.4% end September 2020 from 18.7% end September 2019.

The retail advances have increased at strong pace of 25%, while bank has substantially improved NIM to 4.57% in Q2FY2021 from 3.43% in Q2FY2020. With the surge in net interest margin, the bank has posted the robust 22% growth in net interest income to Rs 1660 crore in Q2FY21.

Overall deposits of the bank have increased 35% to Rs 69368 crore end September 2020. Overall funded asset de-grew 1% to Rs 106828 crore, while retail loan assets have increased 25% to Rs 59860 crore.

Asset quality stable

The Gross NPA of the Bank reduced to 1.62% and Net NPA to 0.43% end September 2020. GNPA would have been higher 1.87% and NNPA 0.60%, including the account not classified as NPAs due to Supreme Court Order.

Gross NPA ratio of the retail loan book was at 0.41% and Net NPA ratio at 0.17%. Including unclassified accounts, GNPA rises to 0.79% and NNPA to 0.41%. 

The Provision coverage ratio on NPA accounts improved to 74% end September 2020 from 56% end September 2019 and 75% end June 30 2020.

The identified stressed asset pool of the Bank, reduced by Rs 827 crore during the last one year. This stressed pool stood at Rs 3717 crore end September 2020, against which the Bank has done provisioning of Rs 1303 crore, 48% of the pool. 

The Bank completely exited from its exposure towards a large HFC during the quarter at its carrying value in books.

The Bank reversed Rs 811 crore provision out of existing provision of Rs 1622 crore on exposure to a large telecom player, based on improved prospects of the company, and used it for creating provisions for additional COVID-19 contingency of Rs 1400 crore; thus making the total COVID-19 contingency provision of 2.21% of the standard advances end September 2020. The bank carried Rs 1622 crore of provisions against a large telecom exposure of Rs 3244 crore (Rs. 3000 crore funded exposure through NCDs.

Capital Adequacy of the Bank was strong at 14.73% with CET-1 Ratio at 14.33% end September 2020 as compared to Capital Adequacy Ratio of 15.03% and CET-1 Ratio of 14.58% as of June 30 2020.

Average LCR for the quarter was at 138% which is much higher than the mandated regulatory levels.

At end September 2020 the Bank has not received any sizeable request for restructuring.

Asset Quality Indicators: IDFC Bank
Sep-20 Jun-20 Mar-20 Dec-19 Sep-19 Variation
QoQ YTD YoY
Gross NPA (Rs Crore) 1486.11 1741.66 2279.56 2511.36 2306.26 -15 -35 -36
Net NPA (Rs Crore) 390.95 436.59 808.57 1071.63 1010.96 -10 -52 -61
% of GNPA 1.62 1.99 2.60 2.83 2.62 -37 -98 -100
% of NNPA 0.43 0.51 0.94 1.23 1.17 -8 -51 -74
PCR % 74.00 74.93 64.53 57.34 75.00 -93 947 -100
% CRAR - Basel III 14.73 15.03 13.38 13.29 14.65 -30 135 8
% CRAR - Basel III - Tier I 14.33 14.58 13.30 13.28 14.51 -25 103 -18
Variation in basis points for figures given in percentages and in % for figures in Rs crore

Business highlights:

Total Funded Loan Assets eased to Rs 106828 crore end September 2020 compared to Rs 107656 crore end September 2019, while rose from Rs 104050 crore as on June 30 2020. As per the stated strategy, the Bank focused on growing the retail loan book and decreased the wholesale loan book, primarily the infrastructure loans to reduce concentration risk on the portfolio.

Retail Loan Book, increased 25% to Rs 59860 crore end September 2020 from Rs 48069 crore end September 2019.

The bank also has inorganic portfolio buyouts, primarily to cater to the PSL requirements where the underlying assets are retail loans. Retail loans including such inorganic portfolio constitute 63% of the overall loan assets.

Wholesale loan book, including security receipts and loans converted to equity reduced by 20% from Rs 49269 crore end September 2019 and from Rs 40275 crore end June 2020 to Rs 39286 crore end September 2020.

Within the wholesale segment, the Infrastructure loan book reduced by 27% to Rs 13502 crore end September 2020 from Rs 17211 crore end September 2019 and Rs 13416 crore end June 30 2020.

The loan disbursal levels across the product categories have improved every month and at a gross level the retail disbursals have reached 74% of the disbursal levels for the same quarter last year with the urban consumption-based retail products touching around 90% of the disbursal levels for same quarter last year.

CASA Deposits posted strong growth, rising 142% yoy to Rs 30181 crore end September 2020 as compared to Rs 13473 crore end September 2019. CASA Ratio improved to 40.4% end September 2020 from 18.70% end September 2019 and 33.74% end June 30 2020.

Core Deposits (Retail CASA and Retail Term Deposits) increased 119% to Rs 49610 crore end September 2020 from Rs 23629 crore in September 30 2019. 

The Bank has reduced its dependence on the wholesale and market borrowings which have been suitably replaced by the growth of core Retail Deposits. The borrowing through Certificate of Deposits (CD) of the Bank has reduced by 65% on yoy basis to Rs 5399 crore end September 2020 from Rs 15283 crore end September 2019.

The Bank has 523 branches and 509 ATMs across the country end September 2020.

Fee and other Income (without trading gains) fell 19% to Rs 291 Crore in Q2 FY21 as compared to Rs 359 crore in Q2-FY20 due to lower loan originations and reduced banking activity on account of COVID-19 pandemic. However, sequentially, the fee Income has shown significant improvement, up by 97%, as the economic activities are coming back on track post the phased unlock throughout the country. The trading gain for Q2FY21 was at Rs 337 crore.

Book value per share was at Rs 30.9 end September 2020. The adjusted book value (net of net NPA) stood at Rs 30.2 per share end September 2020.

IDFC Bank: Results

 

Particulars 2009 (3) 1909 (3) Var % 2009 (6) 1909 (6) Var % 2003 (12)$ 1903 (12) Var %
Interest Earned 3800.68 4018.17 -5 7632.07 7811.27 -2 15867.30 11948.17
Interest Expended 2140.95 2655.09 -19 4346.44 5273.74 -18 10232.00 8749.08
Net Interest Income 1659.73 1363.08 22 3285.63 2537.53 29 5635.30 3199.09
Other Income 168.44 348.96 -52 653.30 659.41 -1 1722.16 852.08
Net Total Income 1828.17 1712.04 7 3938.93 3196.94 23 7357.46 4051.17
Operating Expenses 1485.91 1294.51 15 2705.04 2461.69 10 5420.73 3287.38
Operating Profits 342.26 417.53 -18 1233.89 735.25 68 1936.73 763.79
Provisions & Contingencies 215.85 317.36 -32 979.93 1598.11 -39 4315.25 1459.63
PBT Before EO 126.41 100.17 26 253.96 -862.86 -129 -2378.52 -695.84
Exceptional Items 0.00 0.00 - 0.00 0.00 - 0.00 2599.35
PBT after EO 126.41 100.17 26 253.96 -862.86 -129 -2378.52 -3295.19
Provision for Tax 25.00 779.66 -97 59.00 434.00 -86 485.69 -1351.01
PAT 101.41 -679.50 -115 194.96 -1296.86 -115 -2864.21 -1944.18
EPS*(Rs) 0.7 -4.8 0.7 -4.6 -6.0 -0.9
* Annualized on current equity of Rs 5672.35 crore. Face Value: Rs 10, Figures in Rs crore
$ figures post 2003 (12) relates to merged entity and not comparable with earlier periods
Source: Capitaline Corporate Database

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