IDFC First Bank on July 29 reported a 61.3 percent year-on-year (YoY) increase in net profit at Rs 765.16 crore for the first quarter of the current financial year, aided by healthy growth in the net interest income and improved asset quality.
The Mumbai-based private sector lender’s net interest income (NII), the difference between the interest earned from lending and paid to depositors, grew 36 percent on-year to Rs 3,745 crore.
Net interest margin, a key metric of profitability, was up 56 basis points at 6.33 percent from the year-ago period but was lower than 6.41 percent in the previous quarter, the bank said in a release.
Fee and other income grew 49 percent YoY to Rs 1,341 crore. Core operating income (NII plus fees excluding trading gains) grew 39 percent to Rs 5,086 crore.
Asset quality improves
Gross non-performing assets (GNPsA) as a percentage of the total loans were 2.17 percent, lower from 3.36 percent in the year-ago period and 2.51 percent in the previous quarter.
The net NPA ratio was 0.70 percent, down from 1.3 percent in the same quarter of the previous year and 0.86 percent in Q4FY23.
In absolute terms, gross NPAs improved to Rs 3,603.38 from Rs 3,884.45 crore in the March quarter and Rs 4,354.75 crore in the year-ago period, the bank said in a release.
The amount of net NPAs stood at Rs 1,149.03 crore, down from Rs 1,653.82 crore in the year-ago period.
Gross NPAs in retail, rural and SME finance improved to 1.53 percent from 2.12 percent in the year-ago quarter and 1.65 percent in the January-March period. Net NPAs were at 0.52 percent, down from 0.93 percent in the year-ago period and 0.55 percent in the previous quarter.
If the infrastructure financing book, which the bank is running down, was to be excluded, GNPA and NNPA would have been at 1.71 percent and 0.44 percent, the release said. Since FY 2018, the bank has been reducing its exposure to the infrastructure sector.
Collection efficiency for urban retail business continues to remain high at 99.5 percent.
The provision coverage ratio went up to 83.12 percent from 73.13 percent in the year-ago period.
The provision refers to the amount a bank needs to set aside to cover the losses from a loan account. When an account turns into an NPA, the provisions required will equal the full loan amount.
Also read: Lower bad loans, jump in interest income boost bank earnings in Q1FY24
Deposits
Customer deposits were up 44 percent on-year at Rs 1.49 lakh crore in the June quarter. Retail deposits constituted 77 percent of the total customer deposits, growing 51 percent on-year to Rs 1.14 lakh crore.
Current account saving accounts (CASA) deposits grew 27 percent on-year to Rs 71,765 crore. The CASA ratio was at 46.5 percent, down from 50 percent in the year-ago period. This was on the back of a shift from savings accounts to term deposits due to prevailing high interest rates.
Fundraise
The board approved raising funds up to Rs 3,000 crore during one year period.
The funds will be raised through the issuance of equity shares and/or other equity-linked securities, in one or more tranches, through one or more permissible modes, including but not limited to private placement, Qualified Institutions Placement or a combination of these, the bank said.
Also read: HDFC Bank Q1 Results: Net profit jumps 30% to Rs 11,951 cr, maintains healthy asset quality
Vishal Mahadevia re-appointed director
The board also approved the re-appointment of Vishal Mahadevia as a non-executive non-independent director of the bank for three years. The tenure commences December 18, 2023.
On July 28, the IDFC First Bank share ended at Rs 83.94, up 1.66 percent from its previous close.
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