The earnings were impacted by what the company referred to as “prudent provisions” of Rs 568 crore including Rs 315 crore in MFI business (stress in MFI industry) and Rs 253 crore in one Maharashtra based toll account.

Deposits & borrowings

IDFC First Bank’s customer deposits increased by 32.4% YoY from Rs 1,64,726 crore as of September 30, 2023 to Rs 2,18,026 crore as of September 30, 2024.The retail deposits grew by 37.4% YoY from Rs 1,27,595 crore as of September 30, 2023 to Rs 1,75,300 crore as of September 30, 2024.

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The CASA deposits grew by 37.5% YoY from Rs 79,468 crore as of September 30, 2023 to Rs. 1,09,292 crore as of September 30, 2024.The CASA Ratio stood at 48.9% as of September 30, 2024. The retail deposits constitutes 80.4% of total customer deposits as of September 30, 2024. The cost of funds for the bank was 6.46% in Q2-FY25, which improved marginally from last quarter. Excluding the high-cost legacy borrowings, the cost of funds was 6.37% in Q2-FY25.Loans & advances

The loans & advances including credit substitutes increased by 21.5% YoY from Rs 1,83,236 crore as of September 30, 2023 to Rs 2,22,613 crore as of September 30, 2024. The retail book of the bank grew by 25% YoY while the corporate (non-infrastructure) loans grew by 20% YoY during the quarter.

The bank’s legacy infrastructure book reduced by 21% YoY to Rs 2,654 crore as of September 30, 2024, 1.2% of the total funded assets of the bank.
Microfinance portfolio as percentage of overall loan book reduced from 6.3% in June-2024 to 5.6% in Sep-2024.

Assets Quality

Gross NPA was reported at 1.92% as of September 30, 2024, against 2.11% as of September 30, 2023. Meanwhile, net NPA stood at 0.48% as of September 30, 2024, against 0.68% as of September 30, 2023.

PCR of the bank increased to 75.27% as of September 30, 2024 from 68.18% as of September 30, 2023 and 69.38% as of June 30, 2024.

Fee and other income grew by 18% YoY from Rs 1,376 crore in Q2FY24 to Rs 1,622 crore in Q2 FY25. The operating income grew 21% from Rs 5,380 crore in Q2FY24 to Rs 6,515 crore in Q2 FY25. Operating expense grew by 18% YoY from Rs 3,870 crore in Q2 FY24 to Rs 4,553 crore in Q2 FY25.

Capital Position

• The bank successfully raised Rs. 3,200 crore of fresh equity capital from marquee domestic institutional investors in July 2024.
• The bank also 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 Q2-FY25 and post the impact of merger as mentioned above, total CRAR as on September 30, 2024 would have been 16.60% with CET-1 ratio of 14.08%.

Commenting on the earnings, V Vaidyanathan, MD & CEO said that comany’s core drivers remain strong while the brand, technology and high service levels are enabling strong growth in deposits. “Ability to grow deposits is a key strategic strength of the Bank. Deposits grew healthily at 32% YoY. Our overall Loan growth is stable at 21.5% on YoY basis. We saw impact on microfinance business as is seen in rest of industry. Since January 2024, the MFI disbursals are insured with CGFMU. 50% of the book is now insured and expected to reach 75% by end March 2025,” Vaidyanathan said.

“We have created additional provisioning buffer of Rs 315 crore for microfinance segment as a prudent measure. Bank has taken additional provision of Rs 253 crore for one toll road related to Mumbai’s entry point which was affected because of the State government waiving toll on LMV. Bank will recognize this back as profits depending on toll collections and the government’s compensation to the client,” he said, further.

“Our core operating performance is strong, we are confident to revive our profitability going forward,” the MD & CEO opined.