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IDFC First Bank posts Rs 101 crore profit in September quarter on healthy interest income, fall in provisioning

On asset quality, the lender witnessed reduction of gross NPAs at 1.62 percent of the gross advances at end of September 2020 from 2.62 percent a year ago period.
Oct 31, 2020 / 10:44 PM IST

IDFC First Bank on Saturday reported a net profit of Rs 101 crore for the July-September quarter of the current fiscal year on healthy interest income and lower provisions.

The private sector lender had posted a net loss of Rs 680 crore in the same quarter a year ago.

The profit after tax for the half-year ended September 30, 2020, is reported at Rs 195 crore. Thus the bank reported three consecutive quarters of profitability, IDFC First Bank said in a release.

Bank's total income grew by 21 percent at Rs 2,288 crore in July-September period of 2020-21 from Rs 1,884 crore. Net interest income was up by 22 percent at Rs 1,660 crore.

Despite the COVID-19 pandemic impact, the quarter-on-quarter NII grew by 2 percent, the private sector lender added.

Net interest margin slightly improved to 4.57 percent during Q2FY21 from 4.53 percent in the year-ago quarter and 3.43 percent in the first quarter ended June of this fiscal.

However, there was a 19 percent fall in the bank's income from fee and other sources at Rs 359 crore due to lower loan originations and reduced banking activity on account of COVID-19 pandemic, IDFC First Bank said.

"However, sequentially, the fee income has shown significant improvement, up by 97 percent, as the economic activities are coming back on track post the phased unlock throughout the country. The trading gain for Q2-FY21 was at Rs 337 crore."

On asset quality, the lender witnessed reduction of gross NPAs at 1.62 percent of the gross advances at end of September 2020 from 2.62 percent a year ago period. Net NPAs or bad loans came down to 0.43 percent from 1.17 percent.

Provisions for bad loans and contingencies fell to Rs 215.85 crore from Rs 317.36 crore.

The provision coverage ratio on NPA accounts improved to 74 percent at September 30, 2020, as compared to 56 percent at September 30, 2019, and 75 percent at June 30, 2020.

Among others, the lender said it carried Rs 1,622 crore of provision at end of June 2020, which were done pro-actively in Q3FY20 against a large telecom exposure of Rs 3,244 crore, as there were adverse comments around the future of the company.

After the verdict of the Supreme Court related to AGR dues, IDFC First Bank said, "Considering the positive outcome of AGR verdict and moratorium...fund raising plan, repayment record and the recent trades (by the telecom player), the bank has released 50 percent provision out of Rs 1,622 crore held as of June 30, 2020.

"The bank continues to hold at Rs 811 crore of provisions for the total exposure of Rs 3,244 crore (25 percent PCR) on this telecom account as of ]eptember 30, 2020, as a prudent measure."

On current and savings accounts, IDFC First Bank it posted a strong 142 percent growth at Rs 30,181 crore by end of September quarter.

"Since day one of the merger (of Capital First), our first priority was to strengthen the deposit side of the bank with stable retail deposits. We were very clear that we don't want to grow the loan book until this is addressed."

"IDFC First Bank CASA ratio has reached industry best standards of over 40 percent. With the liability side firmly addressed, you will see growth in the total loan book from Q3 FY21 and onwards," V Vaidyanathan, managing director and chief executive officer, IDFC First Bank said.

The collection performance on retail loans have improved sharply after the lockdown has been lifted, and in fact are much stronger than earlier anticipated, he added.
PTI
first published: Oct 31, 2020 10:44 pm

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