IDFC FIRST Bank Q1 FY24 Profit After Tax up 61% YoY at Rs. 765 Crore

The Board of Directors of IDFC FIRST Bank, in its meeting held today, approved the unaudited financial results for the quarter ended June 30, 2023.

Profitability
Net Profit for Q1-FY24 grew 61% YOY from Rs. 474 crore in Q1-FY23 to Rs. 765 crore in Q1-FY24 driven by strong growth in core operating income.
Core Operating Profit (pre provision operating profit excluding trading gains) grew strongly by 45% YOY from Rs. 987 crore in Q1-FY23 to Rs. 1,427 crore for the quarter Q1-FY24.
Net Interest Income (NII) grew 36% YOY from Rs. 2,751 crore in Q1-FY23 to Rs. 3,745 crore in Q1- FY24.

Net interest Margin (gross of IBPC and selldown) was 6.33% in Q1-FY24 as compared to 5.77% in Q1- FY23 and 6.41% in Q4-FY23.
Fee and Other Income grew by 49% YoY from Rs. 899 crore in Q1-FY23 to Rs. 1,341 crore in Q1-FY24. Retail fees constitute 91% of the overall fees for the quarter Q1-FY24.
Core Operating income (NII plus Fees, excluding trading gains) grew 39% from Rs. 3,650 crore in Q1- FY23 to Rs. 5,086 crore in Q1-FY24.
Operating Expense grew by 37% YoY from Rs. 2,663 crore in Q1-FY23 to Rs. 3,659 crore in Q1-FY24, primarily on account of employee increments, branch expansion and increase in business volumes.

Provisions increased 55% YOY from Rs. 308 crore in Q1-FY23 to Rs. 476 crore in Q1-FY24. The credit cost (quarterly annualized) as % of average funded assets for Q1-FY24 was 1.16% as against 1.26% in Q4-FY23.
RoA (annualized) improved from 0.97% in Q1-FY23 to 1.26% in Q1-FY24.
RoE (annualized) improved from 8.96% in Q1-FY23 to 11.78% in Q1-FY24, including the impact of about 60 bps due to equity capital raise in March 2023.
Deposits & Borrowings
Customer Deposits increased by 44% YoY from Rs. 1,02,868 crore as of June 30, 2022 to Rs. 1,48,474 crore as of June 30, 2023.
CASA Deposits grew by 27% YoY from Rs. 56,720 crore as of June 30, 2022 to Rs. 71,765 crore as of June 30, 2023.
CASA Ratio reduced from 50.0% as of June 30, 2022 to 46.5% as of June 30, 2023, because of shift from savings accounts to term deposits due to prevailing interest rates.
Retail deposits grew by 51% YoY from Rs. 75,800 crore as of June 30, 2022 to Rs. 1,14,272 crore as of June 30, 2023.
Retail deposits constitutes 77% of total customer deposits as of June 30, 2023.
Legacy High Cost Borrowings reduced from Rs. 22,406 crore as of June 30, 2022 to Rs. 16,055 crore as of June 30, 2023.

Funded Assets
Funded assets (including advances & credit substitutes) increased by 25% YoY from Rs. 1,37,663 crore as of 30 June 2022 to Rs. 1,71,578 crore as of June 30, 2023.
The Bank continues to wind down infrastructure financing as per stated strategy and now constitutes only 2.2% of total funded assets as of June 30, 2023.
Exposure to top 20 single borrowers reduced from 9% as of June 30, 2022 to 7% as of June 30, 2023.
Assets Quality
Gross NPA (GNPA) of the bank has improved to 2.17% as of 30 June 2023 from 3.36% of 30 June 2022 and 2.51% as of 31 March 2023.
Net NPA (NNPA) of the bank has improved to 0.70% as of 30 June 2023 from 1.30% of 30 June 2022 and 0.86% as of 31 March 2023.
GNPA of the Retail, Rural and SME Finance has improved to 1.53% as of 30 June 2023 from 2.12% of 30 June 2022 and 1.65% as of 31 March 2023.
NNPA of the Retail, Rural and SME Finance has improved to 0.52% as of 30 June 2023 from 0.93% of 30 June 2022 and 0.55% as of 31 March 2023.
Excluding the infrastructure financing book which the Bank is running down, the GNPA and NNPA of the Bank would have been 1.71% and 0.44% respectively as of June 30, 2023.
SMA-1 and SMA-2 (31-90 DPD which is the pre-NPA stage) in Retail, Rural and SME Finance portfolio has reduced from 1.25% as of June 30, 2022 to 0.85% as of June 30, 2023.
Collection efficiency for urban retail business (excluding prepayments and EMI arrears) in current bucket continues to remain high at 99.5%.
Provision coverage ratio of the bank has increased to 83.12% as of June 30, 2023 from 73.13% as of June 30, 2022.
Standard restructured book stood at 0.47% of the funded asset book as against 1.27% at June 30, 2022 and 0.59% at March 31, 2023.
Capital Position & Liquidity
Capital Adequacy of the Bank was strong at 16.96% with CET-1 Ratio at 13.70% as on June 30, 2023.
Average LCR was strong at 125% for the quarter ending on June 30, 2023.
Comments from Managing Director & CEO

Mr. V Vaidyanathan, Managing Director and CEO, IDFC FIRST Bank, said, “We continue to build a strong franchise with a high CASA Ratio of 46.5%. Our retail deposits are growing well, based on our strong positive brand, ethics, customer-friendly products and digital innovations.
We are happy to share that our asset quality continues to remain strong. On the Retail, Rural & SME business, where our Bank particularly specializes in, the Gross NPA has come down to as low as 1.53% and the Net NPA has come down to 0.52%.
We are happy to state that we have registered profit of Rs. 765 crore in Q1-FY24, representing a growth of 61% over PAT of Rs. 474 crore in Q1 FY 23.
During the last four years, we underwent some transformational changes at our Bank. During the period, we got terrific support from all of our shareholders and customers, and we thank you all for the same. We are confident of improving our performance from here on.”
About IDFC FIRST Bank

IDFC FIRST Bank’s vision is to build a world-class bank in India that’s guided by ethics, powered by technology, and a force for social good.

Philosophy: The Bank has a customer-first philosophy offering high-quality products including current accounts, savings accounts, fixed deposits, retail loans, business loans, corporate banking, cash management solutions, FASTag, wealth management, and 24/7 customer care services. IDFC FIRST bank is one of the select banks to work with the regulator for pilot projects for many banking technology initiatives for India like CBDC, UPI for foreigners etc.
Unique Benefits for customers: The Bank is the first and only bank in India that offers Zero fees for 28 essential services on savings accounts including for ATM cash withdrawals, IMPS, RTGS, NEFT, Cash Deposits and Cash withdrawals at branches, SMS Alerts, Cheque book, Demand Drafts, Pay-order, duplicate statements, etc. IDFC FIRST Bank is the first bank to offer monthly credit on savings accounts, so customers earn more with us. The bank’s credit cards have unique features such as lifetime free, never-expiring rewards points, zero interest on cash withdrawal at ATMs and low APR.

Ethics First: IDFC FIRST Bank prioritizes ethics in all our dealings and product design. We believe income earned unethically is not worth earning. The Bank applies a “Near and Dear” Test in all product design, so that the employees of the Bank serve only such products to customers that they’d want for their own loved ones.
Transformation: IDFC FIRST Bank has transformed from infrastructure to retail banking in four years since merger, increasing CASA ratio from 8.6% to 46.5% (June 30, 2023) and increased Retail Deposits as % of total deposits from 27% to 77%, and set up 824 branches and 1,069 ATMs.

Financial Performance: The Bank recorded a PAT of Rs. 765 crore (~US$ 93 million) in Q1-FY24, with strong Capital Adequacy of 16.96%. The Bank has high asset quality, with Retail, Rural & SME book having Gross NPA of 1.53% and Net NPA of 0.52% as of June 30, 2023. Overall Gross NPA including infrastructure is 2.17% and Net NPA is 0.70%.
ESG Goals: The Bank is highly committed to ESG. The Bank has high governance scores, the business lines naturally support social goals, and efforts are ongoing to achieve environmental goals.

Cautionary Statement: “Statements made in this release may contain certain forward-looking statements based on various assumptions on the Bank’s present and future business strategies and the environment in which it operates. Actual results may differ substantially or materially from those expressed or implied due to risk and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India and abroad, volatility in interest rates and in the securities market, new regulations and Government policies that may impact the Bank’s businesses as well as the ability to implement its strategies. The information contained herein is as of the date referenced and the Bank does not undertake any obligation to update these statements. The Bank has obtained all market data and other information from sources believed to be reliable or its internal estimates, although its accuracy or completeness cannot be guaranteed.”