IDFC First Bank reports Q3 PAT at Rs 130 cr

IDFC First Bank reported a net profit of Rs 130 crore in Q3 FY21 as compared to a net loss of Rs 1,639 crore in Q3 FY20.

Total income during the quarter improved by 0.7% year-on-year (YoY) to Rs 4711.72 crore.

Net Interest Income (NII) grew by 14% YoY to Rs 1,744 crore, up from Rs. 1,534 crore in Q3 FY20. Despite the COVID-19 pandemic impact, the sequential quarter-on-quarter (QoQ) NII grew by 5%. The NII for the quarter takes into account provision for interest reversal on proforma NPA cases at 31 December 2020.

Net Interest Margin (NIM) rose to 4.65%in Q3 FY21 from 3.86% in Q3 FY20 and 4.57% in Q2 FY21.

 

The bank's operating profit declined by 3% to Rs 660.94 crore in Q3 December 2020 from Rs 681.70 crore in Q3 December 2019.

The provision for Q3 FY21 was at Rs 595 crore as compared to Rs 2,305 crore for Q3 FY20 and as compared to Rs 676 crore in Q2 FY21. This includes additional COVID provisions of Rs 390 crore during Q3 FY21.

On the asset quality side, gross non-performing assets (NPAs) stood at Rs 1,289.24 crore as on 31 December 2020 as against Rs 1,486.11 crore as on 30 September 2020 and Rs 2,511.36 crore as on 31 December 2019.

The ratio of gross NPAs to gross advances stood at 1.33% as on 31 December 2020 as against 1.62% as on 30 September 2020 and 2.83% as on 31 December 2019.

The ratio of net NPAs to net advances stood at 0.33% as on 31 December 2020 as against 0.43% as on 30 September 2020 and 1.23% as on 31 December 2019.

As on 31 December 2020, the pro forma GNPA would have been 4.18% and the NNPA would have been 2.04%.

Management guidance is that the Gross NPA and the Net NPA will come down to the Pre-COVID levels of 2.3% and 1.2% within the next 2-3 quarters based on the strong collection efficiency witnessed recently on a monthly basis.

The provision coverage ratio on reported NPA accounts improved to 75% at 31 December 2020 as compared to 57% at 31 December 2019 and 74% at 30 September 2020.

The bank's total restructured book including retail and wholesale loans stood at 0.80% of the total funded assets. Considering the loans where restructuring has been invoked and awaiting approval / implementation, it may go up to 1.8% - 2.0% of the total funded assets by the end of next quarter.

CASA deposits posted strong growth, rising 150% YoY to Rs. 40,563 crore as on 31 December 2020 as compared to Rs 16,204 crore as on 31 December 2019.

CASA Ratio improved to 48.31% as on 31 December 2020 as compared to 24.06% as on 31 December 2019 and 40.37% at 30 September 2020.

Total Funded Loan Assets stood at Rs 1,10,469 crore as on 31 December 2020, compared to Rs 1,09,698 crore as on 31 December 2019, and as compared to Rs 1,06,828 crore as on 30 September 2020. As per the stated strategy, the bank focused on growing the retail loan book and decreased the wholesale loan book, primarily the infrastructure loans to reduce concentration risk on the portfolio.

Capital Adequacy of the bank was strong at 14.33% with CET-1 Ratio at 13.82% as of 31 December 2020 as compared to regulatory requirement for the Capital Adequacy Ratio of 10.875% and for CET-1 Ratio of 7.375%.

Average liquidity coverage ratio (LCR) for the quarter was at 132% which is much higher than the mandated regulatory levels.

V. Vaidyanathan, managing director and CEO, IDFC FIRST Bank, said, "During the last 7 quarters post-merger, the bank restricted the growth in the loan book in order to first build the foundation on the deposit side. I am happy to say that with a strong deposit franchise with CASA of 48%, we will now begin to grow the loan book consistently from here on in a steady manner.

The bank Is getting deposits beyond our own quarterly loan growth requirements and has excess liquidity as of today of Rs. 17,000 crores. Thus, the bank is reducing interest rates on savings accounts from 7% to 6% for deposits upto Rs. 1 crore. We are hoping to drain out certain excess liquidity during this quarter in order to save on negative drag on margins because of excess liquidity.

The collections are improving strongly every month since July 2020 and has already reached 98% of Pre COVID collections."

IDFC FIRST Bank was founded by the merger of IDFC Bank and Capital First in December 2018.The bank provides a range of financial solutions to individuals, small businesses and corporates. As of 31 December 2020, the bank has 576 branches and 541 ATMs across the country.

The scrip slumped 6.04% to Rs 44.35. It traded in the range of 44.30 and 46.50 so far during the day.

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