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IDFC Ltd.

BSE: 532659 Sector: Financials
NSE: IDFC ISIN Code: INE043D01016
BSE 00:00 | 23 Aug 33.55 0.35
(1.05%)
OPEN

34.00

HIGH

34.00

LOW

32.45

NSE 00:00 | 23 Aug 33.55 0.35
(1.05%)
OPEN

33.50

HIGH

33.90

LOW

32.40

OPEN 34.00
PREVIOUS CLOSE 33.20
VOLUME 85538
52-Week high 53.45
52-Week low 31.75
P/E 35.69
Mkt Cap.(Rs cr) 5,356
Buy Price 33.20
Buy Qty 2.00
Sell Price 33.80
Sell Qty 10.00
OPEN 34.00
CLOSE 33.20
VOLUME 85538
52-Week high 53.45
52-Week low 31.75
P/E 35.69
Mkt Cap.(Rs cr) 5,356
Buy Price 33.20
Buy Qty 2.00
Sell Price 33.80
Sell Qty 10.00

IDFC Ltd. (IDFC) - Chairman Speech

Company chairman speech

Dear Shareholders

The last financial year has been an eventful year for the economy with the roll-out ofGST the residual impact of demonetisation the introduction of Indian Bankruptcy Code(IBC) and the NPA problem in the banking sector. However towards the end of the yeargreen shoots in the economy were visible and the economy seemed poised for stable growth.The Indian economy expanded by 7.7 percent in the last quarter of FY18 the fastest in thelast eight quarters although rising crude prices and macro headwinds both global anddomestic could prolong the journey to stable growth.

Against this macro-economic backdrop I am pleased to inform you that our businesseshave delivered a healthy performance in FY18 and thereby building a foundation for futuregrowth.

Balancing near-term profitability and long-term growth has been the guiding philosophyin our strategy for capital deployment.

Strong domestic consumption growth and flow of savings into the financial system fromreal assets (property and gold) are two pillars on which future growth of our businessesis predicated on. Our strategy is to steadily invest in our businesses to take advantageof these tailwinds.

The consolidated Balance Sheet of IDFC Limited ("IDFC") as of March31 2018 was B 133852 crore and the consolidated Profit After Tax was B 590 crore. Theconsolidated Net Worth as of March 31 2018 was B 11323 crore. IDFC Bank Limited ("IDFCBank or "Bank") our largest subsidiary posted a Profit After Tax ofB 859 crore in FY18.

The strategic transition of IDFC Bank from a mono-line infrastructure lender to auniversal bank is progressing rapidly. The Bank now has a well-diversified assetsportfolio of

~ B 71000 crore with retail assets and non-infrastructure wholesale assetscontributing close to 50 percent. Similarly on the liability side our focus is ongathering low-cost CASA deposits by leveraging technology and expanding our physicalfootprint. I am pleased to note that this strategy is now seeing strong traction.

The Bank’s organic retail assets have tripled from ~ B 2600 crore as on March31 2017 to ~ B 8000 crore as on March 31 2018. Likewise corporate banking assetswithin the wholesale bank grew 38 percent year-on-year to

~ B 26000 crore as of March 2018 from

~ B 19000 crore as of March 2017. Liabilities have also witnessed strong momentum withCASA increasing 2.7 times to B 5710 crore as of March 2018 from B 2094 crore as of March2017. Government business contributed B 2763 crore to the CASA franchise. The Bank’sCASA to deposit ratio now stands close to 12 percent which is impressive for a Bank thathas been in business for a little over two years. Our CASA and retail term deposits havedoubled from ~ B 4900 crore to ~ B 10000 crore as of March 31 2018 and now contributeover 20 percent to our total deposits.

The Bank’s customer base is now at 2.7 million from 1.4 million a year ago. Toaccelerate this pace of growth we will continue to judiciously invest in the expansion ofour retail franchise. We now have 150 branches 387 corporate BC outlets 85 ATMs and17474 customer access points. Of these 150 branches 50 are in top 35 cities in India. Wewill continue to expand our physical footprint to be able to serve a larger number ofcustomers.

The Bank has made great strides in building a fee-income franchise which has resultedin a significant contribution of fees and commissions to our revenues. Total commissionincome grew by 44 percent to B 431 crore in FY18 from B 299 crore in the previous year.

On the asset quality front it is heartening to note that the Bank’s legacystressed asset book has been stable for the last 10 quarters i.e. since the inception ofthe Bank. The recent RBI inspection also validates our prudent approach to provisioning.The Bank’s provision coverage ratio against the stressed book is now over 75 percent.

IDFC Bank’s proposed merger with Capital First will add an additional 2.5 - 3million customers to the already large and rapidly growing customer base of the Bank andcomplement it with customer segments and products that IDFC Bank does not cover currently.

Coming to our asset management business we ended the year strong with a fourthquarter average AUM of about B 70000 crore up from around B 60600 crore in the previousyear’s corresponding quarter. During the year we strengthened our core capabilitiesand significantly expanded our retail distribution network. The number of investor foliosadded increased 4X in FY18 while addition of the sticky "Systematic InvestmentPlans" (SIPs) grew 2X.

I am pleased to place on record our improved fund performance during the year. Theproportion of equity funds as a part of AUM rose to 29 percent from 22 percent in theprevious year driven by a significant increase in our gross equity fund sales. We nowhave seventeen funds with AUM of over B 1000 crore as against thirteen funds in theprevious fiscal. The profits of our AMC business were lower at B 54 crore in FY18 as wemade substantial investments in expanding our retail distribution network.

Our other subsidiary IDFC

Infrastructure Finance Limited ended the year with a loan book of B 4220 croreacross a well-diversified portfolio of roads renewables education healthcare telecomSEZ and transmission among others. The asset quality continues to be pristine and thepipeline for disbursements remains healthy.

In our Securities business notwithstanding the structural issues faced by theindustry we continued to do well. We strengthened our institutional sales and research toservice domestic institutional investors and FIIs. This resulted in a well-diversifiedrevenue mix across geographies and customer segments. In FY18 this business delivered arevenue of B 105 crore and a net profit of B 23 crore.

IDFC Alternatives has entered into a definitive agreement with Global InfrastructurePartners India for the sale of its infrastructure asset management business. Allnecessary regulatory approvals for the sale have been received. The Company is alsoevaluating divestiture of the Private Equity and Real Estate platforms.

To sum up FY18 has been a landmark year for us. I am proud of our employees whodespite the challenges faced have worked hard to create consistent value for the company.I take this opportunity to thank each one of them for their sincere efforts.

I also thank you - our valued

Shareholders for placing your confidence in us. I look forward to your continuedsupport.

Vinod Rai

Independent Non-Executive Chairman