IDFC First Bank reported a net profit of Rs 474 crore for the quarter ended June 2022, its highest-ever in a quarter. The profit was driven mainly by lower provisioning and higher income.

The private sector lender had posted a net loss of Rs 630 crore in the year-ago quarter. Sequentially, the net profit rose by 38.2% from Rs 343 crore in the March 2022 quarter. 

"We have posted the highest ever profit after tax of Rs 474 crore in Q1FY23. Our return on assets has nearly touched 1% and we expect it to rise from here," IDFC First Bank managing director and CEO V Vaidyanathan said.

The bank's total income during the April-June period of 2022-23 rose to Rs 5,777.35 crore versus Rs 4,931.76 crore in the year-ago quarter.

The core interest income grew 20.4% to Rs 4,921.68 crore compared to Rs 4,089.29 crore a year ago. Income from other sources was marginally up 1.6% at Rs 855.67 crore from Rs 842.47 crore.

“The operating parameters gives me the confidence in the business model we are building. Our operating profit has risen by 44%. We are feeling within us that this number should rise by another 45% in FY23, and our internal modeling says that in FY24 this should rise by another 45%. If the core operating profit starts compounding like this, then it augurs well for the bank,” Vaidyanathan said.

The bank’s asset quality improved with the gross non-performing assets (NPAs) falling to 3.36% of the gross advances in the June quarter versus 4.61% a year ago.

In value terms, the gross NPAs declined to Rs 4,354.75 crore from Rs 4,669.13 crore.

The net NPA ratio fell to 1.30% (value terms Rs 1,653.82 crore) from 2.32% (Rs 2,292.18 crore).

Provisions and contingencies set aside stood at Rs 307.99 crore for the June quarter versus Rs 1,872.31 crore in the year-ago quarter.

Core operating profit (excluding trading gains) rose 64% to Rs 987 crore in the June 2022 quarter, the bank said.

Net interest income, the interest earned minus interest expended, grew 26% to Rs 2,751 crore in Q1FY23. Net interest margin improved to 5.89% from 5.50%.

The bank said its corporate book (non-infrastructure) grew 12% to Rs 23,970 crore in the June 2022 quarter, while infrastructure financing declined 35% to Rs 6,739 crore.

Capital adequacy ratio stood at 15.77% as of 30 June 2022. The average liquidity coverage ratio (LCR) was 128%.

Vaidyanathan said the bank has built a strong foundation on the basis of which it can grow the loan book, deposits and profits comfortably from here on in a steady manner.

"We have seen a steady growth of over 20% year-on-year, both on the lending side as well as the deposits side in Q1FY23. Our ex-treasury core operating profit has grown by 64% to touch nearly Rs 1,000 crore, which is a key landmark for us," he said.