Private sector lender IDFC First Bank reported a near 50 per cent jump in its standalone net profit in the second quarter of this fiscal year, driven by growth in core operating income and lower net credit losses. The bank’s standalone net profit rose by 49.6 per cent to ₹152 crore in the second quarter of the fiscal from ₹101 crore in the second quarter of last fiscal.
Net interest income grew by 27 per cent year on year to ₹2,272 crore in the quarter ended September 30, up from ₹1,784 crore in the second quarter of last fiscal. Net interest margin improved to 5.76 per cent for the second quarter of the fiscal from 4.91 per cent as on September 30, 2020, and 5.51 per cent as on June 30, 2021.
“The NIM expansion was primarily driven by the gradual improvement in the cost of funds, mainly the cost of deposits,” IDFC First Bank said in a statement on Saturday.
Other income surged to ₹779.70 crore for the second quarter of the fiscal from ₹166 crore a year ago.
The bank said fee income growth was contributed to primarily by the fees related to retail loans, transaction fees, distribution and wealth management fees.
Provisions double
Provisions however, more than doubled and increased by 122.5 per cent to ₹474.94 crore in the July to September 2021 quarter from ₹213.4 crore a year ago. But on a sequential basis, they dropped sharply from ₹1872.3 crore in the firs quarter of the current fiscal.
“The bank utilised ₹560 crore of Covid provision in the second quarter of the fiscal and carrying forward ₹165 crore of provision for future. The bank expects the net credit loss for the retail loan segment to normalise from here on assuming there is no further disruption in the economy due to a new wave of Covid-19,” IDFC First Bank said.
Asset quality remained under pressure although non performing loans declined on a sequential basis.
NPAs fall sequentially
Gross non performing assets rose to ₹4,485.52 crore as on September 30, 2021, amounting to 4.27 per cent of gross advances. This was lower than 4.61 per cent as on June 30, 2021 but significantly higher than 1.62 per cent a year ago.
Net NPAs also rose to 2.09 per cent of net advances as on September 30, 2021 compared to 0.43 per cent a year ago. But it was lower than 2.32 per cent at the end of the first quarter.
The bank said the impact of the second wave of the pandemic is gradually diminishing and this improvement is showing in the improvement in asset quality.
One infrastructure loan (Mumbai Toll Road account) had become NPA during the last quarter.
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On the overall bank level but for this one infrastructure account, which it hopes to cure in due course, the GNPA and NNPA would have been 3.47 per cent and 1.42 per cent respectively as of September 30, 2021.
Restructuring for the overall portfolio stood at 2.9 per cent of the total funded assets as of September 30, 2021.
V Vaidyanathan, Managing Director and CEO, IDFC First Bank, said, “We are seeing strong revival of the economy and strong demand for home loans, loan against property, MSME and consumer loans. The retail loan book is now highly diversified across over 10 lines of business and millions of customers.”