IDFC net profit nosedives on threefold rise in provisions

Group's consolidated net profit was Rs 525.70 crore in the January-March quarter of the 2012-13 fiscal

Hit by almost three-fold rise in provisions, IDFC Limited’s net profit for the fourth quarter, ended March 2014 (Q4), dipped by 51 per cent year-on-year to Rs 258 crore — much below market estimates.

IDFC, which has recently bagged licence to start a bank, had posted net profit of Rs 525 crore in the corresponding quarter last year. The average estimate of the net profit for the quarter by three brokerages – Kotak Securities, Edelweiss Financial Services and Deutsche Bank Securities – was Rs 399 crore.

The results came in after market hours on Friday. IDFC's stock closed at Rs 114.1 down by 2.23 per cent at the Bombay Stock Exchange versus a 0.8 per cent fall in the S&P BSE Sensex.

Its provision bill for stressed assets went up sharply to Rs 483 crore for the March quarter from Rs 164 crore in the corresponding period in 2012-13.

IDFC’s net profit for the year ended March 2014 was down by two per cent to Rs 1,803 crore from Rs 1,836 crore for 2012-13. The net interest margin for FY14 was almost flat at 4.1 per cent as against 4.1 per cent.

The board has recommended a dividend of Rs 2.60 per share of face value of Rs 10 each for FY14.

Although IDFC's net interest income (NII) of Rs 668 crore during the March 2014 quarter was higher than Rs 643 crore in the year-ago period, the same was below market estimate of Rs 748 crore. Total operating income during the quarter was down four per cent to Rs 972 crore as against Rs 1,009 crore in January-March 2013.

The weak performance can be attributed to slowdown in credit offtake in its bread and butter infrastructure sector, while other or non-core income was impacted by slow growth in brokerage, asset management and loan related fee-based businesses. In all, other income declined by 22 per cent to Rs 285 crore from Rs 363 crore last year.

The gross loan book increased by six per cent to Rs 59,829 crore at end of March 2014 from Rs 56,595 crore in March 2013. The restructured loans' share as on March 31, 2014 was 4.5 per cent of gross loans. The gross non-performing loans (NPL) stood at 0.6 per cent and net NPL at 0.4 per cent of outstanding loans.

The balance sheet increased by six per cent from Rs 71,059 crore to Rs 75,163 crore as on March 31, 2014, IDFC said. Gross loan approvals were down by one per cent from Rs 25,976 crore in FY13 to Rs 25,683 crore in FY14. Disbursements made in FY14 were also down by eight per cent from Rs 17,695 crore in FY13 to Rs 16,296 crore in FY14.

Its capital adequacy was robust at 22.3 per cent with tier I pegged at 20.1 per cent at end-March 2014.