IDFC First Bank posted a net profit of ₹474 crore for Q1FY23 as against a loss of ₹630 crore a year ago, on the back of a significant fall in provisions and strong growth in net interest income. Sequentially, the net profit was higher than ₹343 crore in the preceding quarter.

“We have posted the highest ever PAT of ₹474 crore. Our RoA has nearly touched 1 per cent and we expect it to rise from here,” MD and CEO V Vaidyanathan said. “Our retail gross NPA and net NPA have reverted to 2.1 per cent and 0.9 per cent respectively, which is our long-term experience. More importantly, the retail asset quality has normalised sooner than our earlier guidance of March 2023,” he added

Balance sheet growth

Funded assets of the bank rose 21 per cent y-o-y to ₹1.4-lakh crore, led by 61 per cent growth in home loans and 12 per cent in non-infrastructure corporate loans.The infrastructure financing book was reduced by 35 per cent y-o-y to ₹6,739 crore as of June 30.

Net Interest Income (NII) of the bank rose 26 per cent y-o-y to ₹2,751 crore, and the Net Interest Margin (NIM) for the quarter improved to 5.89 per cent from 5.50 per cent.

The lender’s fee and other Income increased 100 per cent y-o-y to ₹899 crore, largely on account of the low base effect in Q1FY22 owing to lower business volumes caused by the Covid-19 impact, the bank said in a release. The bank incurred a treasury loss of 44 crore during the quarter due to an increase in market yields.

IDFC Bank’s deposits were up 21 per cent y-o-y at ₹1-lakh crore, with the share of low-cost CASA deposits at 50 per cent at the end of June.

Asset quality

IDFC First Bank saw an improvement in its asset quality, with the gross NPA ratio falling 125 bps on year to 3.36 per cent, and the net NPA ratio falling 102 bps to 1.30 per cent at the end of June. Accordingly, provisions were lower by 84 per cent y-o-y at ₹308 crore. The annualised credit cost for Q1 was 0.9 percent.

IDFC First Bank said it is “well on track” to meet the credit cost guidance of around 1.5 per cent for FY23. “Excluding legacy infrastructure loans (which will be run down in due course), the Gross and Net NPA of the Bank would have been 2.39 per cent and 0.80 per cent, respectively,” the release said.

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