IDFC First Bank posts Rs 1,538 crore loss in Q3; gross NPAs at 1.77%

Private sector lender IDFC First Bank has posted a net loss of Rs 1,538 crore for the third quarter ended December 2018 (QFy19) due to accelerated amortisation of intangible assets (goodwill). 

This was the first result of private banking entity after finance company Capital First with IDFC Bank in December 2018. 

Bank in filing with BSE said Under section 15 of the Banking Regulation Act 1949, banks are restricted from declaring dividend if a bank carries intangible assets such as goodwill on its Balance Sheet. Hence, as a prudent measure, intangible assets (goodwill) acquired or arising on amalgamation have been fully amortised through profit and loss account In the quarter and nine months ended December 31, 2018. 

The accelerated amortisation charge of Rs 2,599.35 crore to profit and loss account is exceptional in nature and resulted in loss for the quarter ended December 31, 2018. 

Bank in a statement said its Net Interest Income (NII), interest earned less interest expended, was Rs 1,145 crore in the reporting quarter. The Net Interest Margin (NIM-Net Interest Income as % of Interest Earning Assets) was 3.27 per cent in Q3 FY 19 (post merger) as compared to sequential quarter 1.7 per cent in Q2 FY 19 (pre- merger). 

V Vaidyanathan, Managing Director & Chief Executive Officer (CEO) said the expansion of the Net Interest Margin (NIM) was primarily due to the addition of the retail book through its merger with Capital First.

Bank will like to see NIM move up to 5-5.5 per cent and for this it plans to work to increase the share of retail loans in total book from 35 per cent to 70 per cent in five years. The retail loan including SME credit was over Rs 36,000 crore.

The total deposits of the Bank stood at Rs. 61,914 crore. Out of total deposits, low cost Current Account Savings Accounts Deposits (CASA) were at Rs 6,421 Cr, contributing 10.37 per cent to the total deposits. Bank would like to increase share of CASA to 30-33 per cent in five to six years, Vaidyanathan said.

Bank is offering seven per cent interest rate on balances in savings bank of Rs two lakh and above.

Its Gross non-performing assets (NPAs) stood at 1.97 per cent at end of December 2018. Its Capital Adequacy Ratio (CAR) 16.51 per cent.