IDFC First Bank on July 30 announced its highest-ever standalone profit of Rs 474.33 crore for the quarter ended June 2022, against a loss of Rs 630 crore in corresponding period of the previous fiscal. The increase in core operating income and fall in provisions aided the profitability, with the sequential growth in profit at 38 percent.
Net interest income, the difference between interest earned and interest expended, grew by 26 percent to Rs 2,751.1 crore for the June FY23 quarter, against Rs 2,184.8 crore recorded in year-ago period, with 39 bps YoY improvement in net interest margin at 5.89 percent for the quarter, the bank said in its BSE filing. But there was 38 bps decline in net interest margin on a sequential basis.
"We have seen a steady growth of over 20 percent YoY, both on the lending side as well as the deposits side in Q1FY23. Our return on assets has nearly touched 1 percent and we expect it to rise from here," said V Vaidyanathan, Managing Director and CEO.
The bank reported provisions and contingencies for the quarter at Rs 308 crore, declining 83.55 percent year-on-year and the sequential fall in the same was 16.6 percent.
IDFC First Bank said it is well on track to meet the asset quality and credit cost guidance. Based on the improved portfolio performance indicators, the bank is confident to achieve its credit cost guidance for FY23 at around 1.5 percent on funded assets.
On the asset quality front, gross non-performing assets as a percentage of gross advances improved to 3.36 percent, down by 34 bps sequentially and net NPAs declined to 1.3 percent in Q1FY23, from 1.53 percent in Q4FY22.
Excluding legacy infrastructure loans (which will be run down in due course), the gross and net NPA would have been 2.39 percent and 0.80 percent respectively, said the bank, adding the overall restructured book reduced to 1.3 percent as on June 2022 of the funded assets, as against 1.8 percent as on March 2022.
Other income (non-interest income) increased by 1.56 percent YoY to Rs 855.67 crore for the quarter ended June 2022.
The bank said it had treasury loss of Rs 44 crore in Q1FY23 on account of increase in market yields. The bank conservatively manages its treasury positions as a result of which the treasury losses were minimal despite sharp increase in bond yields during the quarter.
Pre-provision operating profit fell by 5.13 percent YoY to Rs 943.82 crore during the quarter as operating expenses grew by 31 percent to Rs 2,663 crore during the same period.
Core operating profit (excluding trading gains) rose by 64 percent YoY to Rs 987 crore for the quarter Q1FY23, and sequentially, it grew by 18 percent, IDFC First Bank said.The bank further said core operating income (NII + fee and other income excluding trading gains) increased by 39 percent YoY to Rs 3,650 crore in June FY23 quarter aided by strong NII and fee income growth. Sequentially, the growth was 4 percent.