IDFC First Bank has come up with Quarterly Results for the quarter ended 30th June 2021. The Bank has announced its Q1FY22 results on Saturday 31st July 2021 and has posted some good figures and concerns related to the Bank. Know more about this quarterly result in brief.
Introduction: IDFC Fundamental Analysis
IDFC First Bank has announced its Quarterly Result for Q1FY22 on Saturday 31st July 2021. The Stock of IDFC First Bank noted a minor fall of 0.29% on Monday Trading Session. The stock closed at Rs. 51.85 on Monday 2nd August 2021.
Q1FY22 Result: IDFC First Bank Analysis
The bank has been heavily focused on the retail portion since the merger. The Retail Loan book which was 35% at the time of the merger has not crossed the mark of 60% and is at 64%.
Around Rs. 72,766 Cr. The loans of the bank are retail loans. But quarterly, this retail loan has come down by Rs. 1,000 Cr.
Wholesale Funded Assets which are the major concern of the bank is at around Rs. 32,000 Cr. Out of which, Rs. 10,346 Cr. The loan book is Infrastructural Loans.
In this loan amount of Rs. 10,346 Cr., an asset of Rs. 854 Cr. which was a Stressed Asset has now turned into Non-Performing Asset (NPA) which is not a positive sign for the bank.
IDFC First Bank did provisioning of Rs. 1,800 in the first quarter of the Financial Year 2021-22 which has majorly affected the profitability of the company and the bank has witnessed loss in the Q1FY22.
The Gross NPAs of the bank is 4.61% in Q1FY22 and Net NPA is 2.32% for the same period.
The Bank is confident about the recovery of these NPAs. If this happens, the Gross NPAs could have come down to 3.77% and Net NPA would have been at 1.61% in Q1FY22.
The Provision Coverage Ratio (PCR) has also gone down to 51% in Q1FY22 against 55% in the previous quarter.
The Cost to Income Ratio is at 77.16% as of 30th June 2021. The same is 35% for HDFC Bank.
IDFC First Bank needs to also look to increase cost-efficiency.
The Bank is currently facing legacy loans.
The Net Interest Margin (NIM) of the Bank has reached up to 5.51% in Q1FY22 which is better than even Kotak Mahindra Bank. NIM was 4.98% in the quarter ended 31st March 2021.
The rise in NIM of the bank is due to the appreciable development of its CASA Book. Also, the bank has decreased its interest on Saving Account which led to a reduction in the Interest Expenditure.
The CASA Book of the bank is at around Rs. 46,000 Cr. as of the quarter ended 30th June 2021 which has improved by around Rs. 600 Cr. QoQ.
CASA Deposits as a % of Total Deposits is at 50.86%. Core Deposits as a % of Total Deposits & Borrowings is at around 47%.
IDFC First Bank has a branch network of 601 branches as of Q1FY22. The Bank takes the branch's figures to 900 in the coming 3-4 years.
Customer Deposits which are less than 5 Cr. as a % of Total Deposits is 82% as of 30th June 2021.
The concentration of Top-20 Depositors is around 9% which they aim to take this to at the level of 5%.
The Bank has a Certificate of Deposits (CD) worth Rs. 6,400 Cr. Here the bank is efficiently able to keep the % of the CD below 10% of the total liability of the bank.
The liquidity Coverage Ratio of IDFC First Bank is 166% much above the required level of 100% by the RBI.
Conclusion: IDFC Bank Analysis
The Bank has posted poor results and witnessed loss in the first quarter of the Financial Year 2021-22 on account of high provisioning and conversion of a bit asset to NPAs which has significantly hit the profitability of the bank and reported a loss of around Rs. 630 Cr. in the quarter ended 30th June 2021.
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