Eyeing low risk ways to grow loan book; NIIs up 14%: IDFC

Despite the broader macroeconomic environment, IDFC has managed to deliver good set of results in the first quarter of FY14. Vikram Limaye, MD and CEO of IDFC, says loan book growth y-o-y is up 13 percent to Rs 57,600 crore, net interest income on loan book increased 14 percent, while net interest margin remained stable at 4.1 percent and the average loan spreads on a 12 months rolling basis was at 2.9 percent, which is stable with spreads seen historically.

IDFC reported after tax profits at Rs 557 crore, up 47 percent from Rs 380 crore. Return on assets, or RoA, on a 12-month rolling basis was 2.9 percent and return on equity, or RoE, was 14.9 percent. Profit after tax, or PAT, adjusted for principle gains has increased at 33 percent from Rs 378 crore to Rs 504 crore in Q1 FY14. Also Read: IDFC may slip below Rs 100: Sukhani
The first quarter is not an indication of the next three quarters and FY14, says Limaye. Credit growth has slowed down significantly in the recent past given increases in rates and tightening of short term liquidity by RBI. Limaye feels market and corporates are in wait and watch mode before credit offtake picks up. Hence visibility on growth is not clear.
IDFC has been talking about a 10 percent growth for this fiscal year. But for that to happen a few things need to fall into place, liquidity needs to return, rates need to fall, and the bank needs to figure out how to grow its loan book. IDFC plans to focus on quality given the risk in the environment. It plans to focus on larger, well-capitalized high quality corporates. This type of lending will come at much reduced spreads and margins. The bank plans to look into low risk ways of growing the loan book as pure project pipeline for core infrastructure sector has been exceedingly weak.