IDFC First Bank gains 14% in two days post June quarter results

The stock rose 10 per cent to Rs 43 on Friday, gaining 14 per cent in the past two trading days on the BSE.

Shares of IDFC First Bank gained 10 per cent to Rs 43 apiece on Friday, gaining 14 per cent in the past two trading days on the BSE, despite a net loss of Rs 617 crore in June quarter (Q1FY20). The loss was due to higher provisioning for stressed assets, financial data of the bank showed. The private lender had posted a net profit of Rs 181 crore in the year-ago quarter.

"The performance during the quarter was impacted primarily because of the additional provisioning taken during Q1FY20 towards two identified financial services (one housing finance company and one financial company) loan accounts to the extent of 75 per cent of the total exposure of Rs 1,461 crore," IDFC Bank said post result announcment.

These financial services companies have been recently downgraded by the credit rating agencies. With provision cover of 75 per cent, the management believes the bank has adequately provided for these accounts and no incremental provisions are now expected on account of these in the near future, it added.

The bank, the management said, plans to expand the net interest margin (NIM) from 3.1 per cent to about 5.0 - 5.5 per cent in the next 5 years based on better cost of funds and carefully selecting the product segments where they have strong proven capabilities over the years.

The bank also upgraded guidance and project of the gross yield of the bank’s loan book to be at 13.5 per cent in the next five years from 9.2 per cent earlier.

At 02:55 pm, IDFC First Bank was up 8 per cent at Rs 42 on the BSE, as compared to a 0.05 per cent rise in the S&P BSE Sensex. The trading volumes on the counter more than doubled with a combined 41 million shares changing hands on the NSE and BSE so far.