IDFC First Bank Q2 Results: Mandiri net profit falls 73% YoY to Rs 201 crore on provisions, NII jumps 21%

Robert Novoski

IDFC First Bank reported a 73% fall in standalone net profit for the September quarter to Rs 201 crore as against Rs 751 crore reported in the year-ago period. However, Net Interest Income (NII) grew 21% to Rs 4,788 crore in Q2FY25 as against Rs 3,950 crore in the year-ago period.

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

Deposits & loans

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

IDF First Bank Q2 ResultsETMarkets.com

CASA deposits grew by 37.5% YoY from Rs 79,468 crore as on September 30, 2023 to Rs. 1,09,292 crore as on September 30, 2024. CASA ratio stood at 48.9% as on September 30, 2024. Retail deposits constituted 80.4% of total customer deposits as on September 30, 2024. Bank cost of funds was 6.46% in Q2-FY25, increased slightly compared to the previous quarter. Excluding high-cost legacy loans, cost of funds was 6.37% in Q2-FY25.Loans & advances

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

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

Asset Quality

Gross NPA was reported at 1.92% on 30 September 2024, compared to 2.11% on 30 September 2023. Meanwhile, net NPA was 0.48% on 30 September 2024, compared to 0.68% on 30 September 2023.

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

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

Capital Position

• Bank managed to collect Rs. 3,200 crore fresh equity capital from domestic institutional investors by July 2024.
• The bank also successfully completed the merger with IDFC Ltd in October 2024 resulting in capital addition of Rs 618 crore to the net worth, while the number of outstanding shares reduced by 16.64 crore shares.
• Including Q2-FY25 profit and post-merger impact as mentioned above, total CRAR as of September 30 2024 is 16.60% with a CET-1 ratio of 14.08%.

Commenting on the earnings, V Vaidyanathan, MD & CEO said that the company’s key drivers remain strong while the brand, technology and high service levels are enabling strong deposit growth. “The ability to grow deposits is the Bank’s main strategic strength. Deposits grew healthily by 32% YoY. Our overall loan growth was stable at 21.5% YoY. We see the impact on microfinance businesses as seen in other industries. January 2024, MFI disbursement is insured with CGFMU. 50% of the book is now insured and it is expected to reach 75% by the end of March 2025,” said Vaidyanathan.

“We have created an additional provisioning reserve of Rs 315 crore for the microfinance segment as a prudent measure. The bank has taken additional provision of Rs 253 crore for one toll road related to the affected Mumbai entry point as the state government waived toll on LMV. “The bank will recognize it back as profit depending on toll collection and government compensation to clients,” he said further.

“Our core operating performance is strong, we are confident of reviving our profitability in the future,” opined the MD & CEO.

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