IDFC First Bank reports Q3 loss at Rs 1,639 crore due to stressed telecom account

IDFC First Bank has reported a net loss of Rs 1,639 crore for the quarter ended December 31, 2019 as compared to a loss of Rs 2,504 crore in the corresponding period of previous financial year.

This was on account of a one-time provision towards a legacy telecom exposure, totalling Rs 1,622 crores for which the bank provided 50 per cent of its exposure and provisions of Rs 110 crore towards one legacy infrastructure account.

The lender has a legacy exposure of Rs 3,244 crore to the telecom company of which Rs 2,000 crore is in the form of non-convertible debentures and Rs 1,244 crore is in the form of non-funded exposure (bank guarantees) for spectrum.

IDFC First said its total income (net interest income plus fees and other income) for the October to December quarter was up 50 per cent to Rs 2,113 crore.

Net interest income for Q3 FY20 was strong at Rs 1,534 crore, up 34 per cent year-on-year, primarily driven by steady growth in retail loans.

The net interest margin grew to 3.86 per cent for the quarter from 1.56 per cent pre-merger, in a span of just one year.

Fee and other income was Rs 413 crore in Q3 FY20 as compared to Rs 257 crore in the corresponding period last year and grew 23 per cent sequentially.

The pre-provisioning operating profit of the bank has increased to Rs 682 crore for the quarter ended December 31 last year, up 158 per cent year-on-year from Rs 264 crore in the corresponding period last year and by 63 per cent sequentially.

The total balance sheet size of the bank was Rs 1.6 lakh crore.

Managing Director and CEO V Vaidyanathan said the bank raised Rs 6,638 crore in Q3, including retail term deposits and retail CASA, leading to surplus liquidity which was used to run down wholesale deposits like corporate deposits, bonds and certificate of deposits.

"With every passing quarter, the bank is bolstering its business fundamentals on the stated strategy. The bank has provided 50 per cent for the legacy stressed telecom account, and it is now time to look ahead for growth," he said in a statement.