IDFC First Bank's Q1 net profit soars by 61.3% to Rs 765.16 crore

IDFC First Bank reported its financial performance in the first quarter of the current financial year on Saturday. The bank recorded a remarkable 61.3 per cent surge in net profit, reaching an impressive Rs 765.16 crore. Comparatively, during the same period last year, the net profit stood at Rs 474.33 crore, indicating substantial growth and improved profitability for the institution.

One crucial aspect that contributed to IDFC First Bank's positive financial performance was its ability to manage and control its non-performing assets (NPA). The gross NPA ratio for the first quarter was reported at 2.17 per cent, which was a significant reduction from the previous quarter's 2.51 per cent and a substantial improvement from the year-ago period's 3.36 per cent. This decrease in the NPA ratio reflects the bank's effective measures in containing and resolving bad loans, thus enhancing its asset quality and overall financial health.

Furthermore, IDFC First Bank also managed to reduce its net NPA ratio, which indicates the proportion of bad loans after factoring in provisions and write-offs. The net NPA ratio for the first quarter was an impressive 0.70 per cent, down from 0.86 per cent in the fourth quarter of the previous financial year (FY23) and significantly lower than the 1.3 per cent recorded in the same quarter of the preceding year. The bank's efforts in strengthening its risk management and recovery mechanisms have clearly yielded positive results, resulting in a healthier loan portfolio.

As of June 30, the Gross Non-Performing Assets (NPAs) of Retail, Rural, and SME Finance have shown improvement, decreasing to 1.53 per cent from 2.12 per cent as of June 30, 2022, and 1.65 per cent as of March 31, 2023.

The Net NPAs of Retail, Rural, and SME Finance have also improved, reducing to 0.52 per cent as of June 30, 2023, compared to 0.93 per cent on June 30, 2022, and 0.55 per cent as of March 31, 2023.

Excluding the infrastructure financing book, which the Bank is phasing out, the Gross NPA and Net NPA of the bank would have been 1.71 per cent and 0.44 per cent, respectively, as of June 30, 2023, according to the press release.

The SMA-1 and SMA-2 in the Retail, Rural, and SME Finance portfolio have decreased to 1.25 per cent in the reporting quarter, compared to 0.85 per cent in the same period a year ago.

In the urban retail business, the collection efficiency (excluding prepayments and EMI arrears) has remained high at 99.5 per cent, according to the bank's release.

The Provision Coverage Ratio of the bank has increased to 83.12 per cent as of June 30, 2023, up from 73.13 per cent as of June 30, 2022.

The Net Interest Income (NII) has grown by 36 per cent year-on-year to Rs 3,745 crore in Q1FY24, compared to around Rs 2,751 crore in the corresponding period last year.

The Net Interest Margin (gross of IBPC and selldown) for Q1FY24 was 6.33 per cent, an increase from 5.77 per cent in Q1FY23 and 6.41 per cent in Q4FY23.

The Fee and Other Income have seen significant growth, increasing by 49 per cent year-on-year from Rs 899 crore in Q1FY23 to Rs 1,341 crore in Q1FY24. Retail fees constitute 91 per cent of the overall fees for Q1FY24.

The Core Operating Income (NII plus Fees, excluding trading gains) has grown by 39 per cent, reaching Rs 5,086 crore in Q1FY24 from Rs 3,650 crore in Q1FY23.

Customer deposits have witnessed a notable 44 per cent year-on-year increase to Rs 1.49 lakh crore as of June 30.

Retail deposits account for 77 per cent of total customer deposits as of June 30, growing by 51 per cent year-on-year to Rs 1.14 lakh crore at the end of June.

CASA (Current Account and Savings Account) Deposits have grown by 27 per cent year-on-year to Rs 71,765 crore as of June 30.

The CASA Ratio has reduced to 46.5 per cent as of June 30, compared to 50.0 per cent in the same period a year ago, mainly due to a shift from savings accounts to term deposits influenced by prevailing interest rates.

The Board of Directors of the bank has approved the reappointment of Vishal Mahadevia as a Non-Executive Non-Independent Director of the Bank. He will be liable to retire by rotation for a further period of three consecutive years, with the tenure commencing from December 18, 2023, up to December 17, 2026. His current term as Director will end on December 17, 2023.

Market sentiment and investor confidence in IDFC First Bank remained robust, as evidenced by the share price movement on July 28. The bank's share closed at Rs 83.94, registering a notable increase of 1.66 per cent from the previous day's closing price.

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