Mumbai, January 25,
2025: IDFC FIRST Bank has reported a
strong financial performance for Q3 FY25, with a Profit After Tax (PAT) of Rs.
339 crore and a 15% YoY increase in core operating profit. The bank saw
significant growth in key areas, including a 28.8% rise in customer deposits
and a 22% increase in loans and advances. Despite challenges in the
microfinance sector, the bank’s asset quality remains stable, supported by a
solid capital position following its recent merger.
Financial
results
IDFC FIRST
Bank today announced the unaudited financial results for the quarter and nine
months ended December 31, 2024.
Deposits & Borrowings
- Customer Deposits
increased 28.8% YOY from Rs. 1,76,481 crore as of December
31, 2023 to Rs. 2,27,316 crore as of December 31, 2024.
- Retail Deposits grew by 29.6% YOY from Rs. 1,39,431
crore as of December 31, 2023 to Rs. 1,80,752 crore as
of December 31, 2024.
- CASA Deposits
grew by 32.3% YOY from Rs. 85,492 crore as of December
31, 2023 to Rs. 1,13,078 crore as of December 31, 2024.
- CASA Ratio stood
at 47.7% as of December 31, 2024.
- Retail Deposits constitute ~80% of total customer deposits
as of December 31, 2024.
- Cost of Funds for
the Bank was 6.49% in Q3-FY25. Excluding the high-cost legacy
borrowings, the cost of funds was 6.43% in Q3-FY25. The cost of
deposits remained stable at 6.38% over Q2 FY 25.
Other Businesses
- Credit cards
issued by the Bank crosses 3.2 million mark during last quarter.
- Wealth Management
AUM (including deposit balances) grew 53% YoY to touch Rs.
42,778 crore
- Fastag:
Bank remains the largest issuer bank with 22 million FASTag issued.
- Tax collections: Bank has been empaneled to collect Direct Taxes on
behalf of Central Board of Direct Taxes (CBDT) and GST collections on
behalf of Central Board of Indirect Taxes and Customs (CBIC), Govt. of
India. Bank has completed technical integration and started collecting
taxes.
Loans and Advances
- Loans and Advances (including credit substitutes) increased by 22.0%
YOY from Rs. 1,89,475 crore as of December 31, 2023 to Rs.
2,31,074 crore as of December 31, 2024.
- The retail book of the bank grew by 21.3% YoY
while the corporate (non-infrastructure) loans grew by 28.9% YoY at
December 31, 2004.
- The Bank’s legacy infrastructure book reduced by 15%
YoY to Rs. 2,546 crore as of December 31, 2024,
constitutes 1.1% of the total funded assets of the Bank.
- Microfinance portfolio as % of overall loan book
reduced from 5.6% in Sep-2024 to 4.8% in Dec-2024.
Assets Quality
Considering the increase in delinquency of the
micro finance business across the industry, the bank is tracking the
microfinance business closely. The asset quality indicators, including gross
NPA, net NPA, SMA, and Provisions of the Non-microfinance business, which is
~95% of the total loan book, is stable.
- NPA Details
- Gross NPA was 1.94%
as of December 31, 2024, against 2.04% as of December 31, 2023.
- Net NPA was 0.52%
as of December 31, 2024, against 0.68% as of December 31, 2023.
- Excluding micro-finance business, the GNPA was at 1.81% as
of December 31, 2024 as compared to 1.88% as of September 30, 2024
- Gross NPA of the Retail,
Rural and MSME Finance stood at 1.63% as of December 31, 2024
as compared to 1.45% as of December 31, 2023.
- Net NPA of the Retail,
Rural and MSME Finance was 0.59% as of December 31, 2024 and 0.51%
as of December 31, 2023.
- PCR of the
bank stood at 73.6% as of December 31, 2024 as compared to 66.9% as
of December 31, 2023.
- The gross slippage for Q3-FY25 was Rs. 2,192 crore
as compared to Rs. 2,031 crores in Q2 FY 2025, an increase of Rs.
162 crores. Majority of the increase in slippage during Q3FY 25 was
from the micro-finance business which constituted Rs. 143 crores out of
the said Rs. 162 crores. Hence, gross slippage on the Retail, MSME, Agri
and Corporate Loans, i.e the non-microfinance business was stable. These
businesses constituted ~95% of the total book of the Bank.
- SMA Positions:
- SMA-1+2 in
Retail, Rural and MSME Finance portfolio excluding the micro-finance book
improved by 3 bps on QoQ basis from 0.85% as of September 30, 2024
to 0.82% as of December 31, 2024.
- SMA-1+2 in
all the key products including Mortgages, Vehicle Loans, Personal Loans
and Credit Cards remained stable as compared to Q2 FY25.
- The SMA-1+2 in the micro-finance business
increased to 4.56% as of December 31, 2024 from 2.54% as of
September 30, 2024.
- Provisions:
- Provisions for Q3 FY25 stood at Rs. 1,338 crore,
driven by the higher slippages in in the Micro-Finance book. Excluding
micro-finance, the provisions were stable for the Non-microfinance
book.
- The Bank has not utilized any micro-finance provision
buffers in Q3-FY25 during the quarter on a prudent basis.
- The annualized provision for Q3-FY25 including
micro-finance stood at 2.31% of the total funded assets.
- Excluding the micro-finance portfolio, the quarterly
annualized credit cost for the loan book for Q3-FY25 was stable at 1.8%.
- The incremental disbursals in micro-finance are
insured by CGFMU. The insurance coverage of the overall
portfolio has increased from 0% to 58% in one year.
Profitability
- Net Interest Income (NII) grew 14% YOY from Rs. 4,287 crore
in Q3 FY24 to Rs. 4,902 crore in Q3 FY25. For the 9M-FY25,
the growth of NII was 20.1% on YoY basis.
- Net Interest Margin (NIM) of the Bank was at 6.04% for Q3-FY25 as
compared to 6.18% in Q2-FY25. NIM declined during the quarter
largely due to decline in the micro-finance business and increase in
composition of Wholesale Banking business.
- Fee and Other Income grew by 20% YOY from Rs. 1,469 crore
in Q3 FY24 to Rs. 1,757 crore in Q3 FY25. For the 9M-FY25,
the growth of Fee and Other Income was 18.9% on YoY basis.
- Operating income grew 15% from Rs. 5,803 crore in
Q3 FY24 to Rs. 6,682 crore in Q3 FY25. For the 9M-FY25, the
growth of Operating Income was 19.4% on YoY basis.
- Operating Expense grew by 16% YOY from Rs. 4,241
crore in Q3 FY24 to Rs. 4,923 crore in Q3 FY25. For the 9M-FY25,
the growth of Operating Expenses was 18.2% on YoY basis.
- Core Operating Profit (excluding trading gain) grew by 15% YOY from Rs.
1,515 crore in Q3 FY24 to Rs. 1,736 crore for Q3 FY25, impacted
by micro-finance business.
- Including trading gains, operating profit increased
by 13% YOY. For the 9M-FY25. The Core Operating Profit
(excluding trading gains) was 23.9% on YoY basis.
- Net Profit
de-grew by 53% from Rs.716 crore in Q3 FY24 to Rs.
339 Crore in Q3 FY25, sequentially it grew by 69% QoQ from
Rs. 201 crore in Q2 FY25. For the 9M-FY25, the Net
profit decreased by 45.3% on YoY basis. The profit was largely
impacted by reduced income from slowing down disbursal of micro-finance
loans, increase in provisions on micro-finance and normalization of credit
costs of non-microfinance business.
Capital
Position
- The Bank successfully completed merger with IDFC Ltd
in October 2024 through which Rs. 618 crore of capital
have been added to the net-worth whereas, the outstanding share count has
reduced by 16.64 crore shares.
- Including profits for 9M-FY25 and post the impact of
merger as mentioned above, total CRAR as on December 31, 2024 would have
been 16.11% with CET-1 ratio of 13.68%.
Comments from Managing Director & CEO
Mr. V Vaidyanathan, Managing Director and CEO,
IDFC FIRST Bank, said,
“Our bank continues to
grow well on loans and deposits. Our customer deposits is growing strongly at
29% YoY to reach Rs. 2,27,316 crores, with the CASA ratio sustaining at 48%.
The loans & advances grew steadily by 22% YoY to reach Rs. 2,31,074
Crores.”
We are specifically
tracking Micro-finance loan book closely considering the industry situation.
The asset quality of the overall Bank’s loan book is stable with Gross NPA at
1.94% and Net NPA at 0.52%. Excluding the micro-finance loan book, the GNPA and
NNPA of the book of the bank is even lower 1.81% and 0.49%.
The credit issues in
Microfinance segment as a transitionary issue which is likely to be resolved
within a few quarters. The Bank built this business because it was important
from priority sector lending norms point of view, particularly meeting PSL
norms for Weaker Sections and Small and marginal farmers PSL categories.
All other businesses
being built as part of universal banking, including deposits, loans, Credit
Cards, Wealth, Cash Management, Corporate Banking, Fastag, Gold Loans are doing
well. Over the next few years, the C:I will come down because of operating leverage,
as we scale up. As mentioned earlier, the bank is growing steadily in scale.”
About IDFC FIRST
Bank
Vision: IDFC
FIRST Bank is building a world-class bank in India, guided by four core
principles: Ethical Banking, Customer-Friendly Banking, Digital Banking, and
Social Good Banking.
IDFC FIRST Bank was
created by the merger of infrastructure financing Giant IDFC Bank and retail
financing specialist Capital First in December 2018. Earlier, IDFC Bank
launched commercial Banking operations in 2016.
“Universal” Bank: IDFC FIRST Bank offers products and services across all
segments including Retail, MSME, Rural, startups, Corporate Banking, Cash
Management, Wealth Management, Retail Deposits, Government Banking, Working
Capital, Trade Finance, and Treasury solutions.
Ethical
Banking: The
Bank follows a "Near and Dear" test to ensure that all products are
so friendly that the employees can confidently recommend to their loved ones.
The Bank holds the belief that income earned unethically is not worth earning.
The bank is committed to doing right by customers, even when no one is
watching.
In line with the above, the Bank has simplified
descriptions, calculations, and legal jargon to avoid confusing customers. The
Bank offers zero fees on most services in savings accounts, such as SMS alerts,
IMPS, RTGS, NEFT, cash deposits, non-home branch access, ATM and branch cash
withdrawals, third-party transactions, cheque books, demand drafts, pay orders,
duplicate statements, and other commonly charged services. It is the first and
only bank in India till date to do so.
Customer Friendly Banking: IDFC FIRST Bank
provides monthly interest credit on savings accounts. In credit cards, the Bank
offers lifetime free cards without minimum spend conditions, rewards points
that do not expire, zero interest on cash withdrawal at ATMs and dynamic low
APR. Fees, if applicable are transparent and clearly described for easy
understanding. We love making great products that customer love to have.
Technology led banking: The Bank has built a modern technology stack which has
enabled the Bank to offer our customers an advanced mobile banking app with 250
features. It has a high rating of 4.8 on Google Playstore and Appstore.
FORRESTER the internationally renowned rating entity has rated the app the best
in India and among the top 20 apps in the world for two years in a row.
The advanced technology
stack has also enabled us to offer high quality service across all channels
including mobile banking, branch, internet banking, Call Centre, Relationship
Managers, and all other channels.
Social Good Banking: The Bank’s business is inherently designed to promote
financial inclusion while maintaining consistently high asset quality. The Bank
has financed over 40 million customers, including 16 million lifestyle
improvement loans for laptops, washing machines and such purposes, 15 million
loans to 4.3 million women entrepreneurs, 6.5 million loans for two-wheelers
and cars, 1 million sanitation loans for toilets, water fittings etc., 1
million livelihood loans for cattle, 3,00,000 SME loans and 1,00,000 Home
loans.
ESG Goals: The
Bank is incorporating ESG in every aspect of working and has high ESG
scores. The Bank believes that to get an opportunity to create a new age,
ethical and world class Bank for India is a great privilege for its employees.