IDFC First Bank’s net profit rose 61.3% to Rs 765.16 crore in the fiscal first quarter ended June compared to Rs 474 crore a year before.

This came on the back of a higher growth in net interest income (NII) and improved asset quality.

The private sector lender’s total income from operations grew 43.3% year-on-year to Rs 8,282 crore in the April-June quarter.

NII and NIM

NII, the difference between interest earned and interest expended, rose 36% to Rs 3,745 crore in Q1FY24 from Rs 2,751 crore in Q1FY23.

Net interest margin improved to 6.33% from 5.77% a year ago but declined marginally from 6.41% in the preceding quarter.

Operating profit, before provisions and contingencies, surged 59% YoY to Rs 1,500 crore.

Asset quality

Gross non-performing assets (NPAs) improved to 2.17% as of 30 June 2023, compared to 3.36% a year ago and 2.51% a quarter ago.

Net NPA ratio improved to 0.70% as of 30 June 2023 compared to 1.30% a year ago and 0.86% a quarter ago.

In absolute terms, gross NPAs improved to Rs 3,603.38 crore from Rs 3,884.45 crore in the March quarter and Rs 4,354.75 crore in the year-ago period, the bank said.

The amount of net NPAs stood at Rs 1,149.03 crore, down from Rs 1,653.82 crore a year before.

Gross NPAs in retail, rural and SME business improved to 1.53% from 2.12% in the year-ago quarter and 1.65% in the preceding quarter. Net NPAs were at 0.52%, down from 0.93% in the year-ago period and 0.55% in the preceding quarter. 

On the asset side, IDFC First Bank particularly specialises in retail, rural and SME business.

Excluding infrastructure financing book, which the bank is running down, gross NPA and net NPA would have been at 1.71% and 0.44% in the quarter ended June 2023. Since FY 2018, the bank has been reducing its exposure to the infrastructure sector.

The Mumbai-based bank said it continues to wind down infrastructure financing as per stated strategy and now constitutes only 2.2% of total funded assets as of 30 June 2023.

The lender’s exposure to top 20 single borrowers reduced to 7% as of 30 June 2023, from 9% a year ago.

Collection efficiency for urban retail business continues to remain high at 99.5%, the lender said.

Provisions

Provisions and contingencies stood at Rs 476 crore in the June quarter compared to Rs 308 crore a year ago.

The provision coverage ratio increased to 83.12% from 73.13%.

Fee and other income

Fee and other income grew 49% YoY to Rs 1,341 crore in Q1FY24. Retail fees constituted 91% of the overall fees for the quarter. 

Operating expense grew by 37% YoY to Rs 3,659 crore in the quarter, primarily on account of employee increments, branch expansion and increase in business volumes.

The credit cost as a percentage of average funded assets for the quarter was 1.16% versus 1.26% a quarter ago.

Deposits

Customer deposits grew 44% YoY to Rs 1.49 lakh crore as of 30 June 2023. 

Retail deposits constituted 77% of the total customer deposits, growing 51% year-on-year to Rs 1.14 lakh crore. 

CASA deposits grew 27% YoY to Rs 71,765 crore. The CASA ratio stood at 46.5%, down from 50.0% in the year-ago period. This was on the back of a shift from savings accounts to term deposits due to prevailing interest rates. 

“We continue to build a strong franchise with a high CASA ratio. Our retail deposits are growing well, based on our strong positive brand, ethics, customer-friendly products, and digital innovations,” said IDFC First Bank managing director and CEO V Vaidyanathan.

Capital adequacy

The capital adequacy ratio was 16.96% as of June end, compared to 15.42% a year ago.

Fundraise

The board approved raising funds up to Rs 3,000 crore during the one-year period.