IDFC First Bank's Sept quarter net up 50% on improved interest margins

Private lender IDFC First Bank’s net profit rose by 50 per cent on a year-on-year basis at Rs 152 crore for the second quarter ended September 2021 (Q2FY22) on improvement in interest margins and lower credit costs.

It had posted a net profit of Rs 101 crore in the second quarter of the last financial year (Q2FY21).

Its net interest income (NII), interest earnings minus expenses, grew by 27 per cent year-on-year basis to Rs 2,272 crore in Q2FY22, up from Rs 1,784 crore in Q2FY21. Its net interest margin (NIMs) improved to 5.76 per cent for Q2FY22 from 4.91 per cent in Q2FY21.

The NIM expansion was primarily driven by the gradual improvement in the cost of funds, mainly the cost of deposits, the bank said in a statement on Saturday.

Its provisions declined by 29 per cent at Rs 475 crore in Q2FY22 as compared with Rs 674 crore in Q2FY21. The bank used Rs 560 crore of Covid provision in Q2FY22 and carried forward Rs 165 crore of provision for the future. The bank expects the net credit loss for the retail loan segment to normalize from here on assuming there is no further disruption in the economy due to a new wave of Covid-19.

It has maintained its guidance of 2.50 per cent credit loss of total funded assets for the full year FY22.

Its gross non-performing assets (NPAs) were at 4.27 per cent in September 2021, up from 1.62 per cent a year ago. The net NPAs also moved up to 2.09 percent from 0.43 per cent a year ago, according to result filing with BSE. 

The impact of Covid second wave is gradually diminishing and this improvement is showing in the above improvement in asset quality, the bank said.

Its Loan Assets grew by 10 per cent YOY at Rs 1,17,270 crore at end of September 2021, compared to Rs 1,06,828 crore a year ago. The retail Loan Book, increased to Rs 78,048 crore at end of Q2FY22 from Rs 59,860 crore at end of Q2FY21. The year-on-year growth of the Retail Loan Book was 30 per cent including the Emergency Credit Guarantee Line loan book of Rs. 1,555 crore, it added.

 Its capital adequacy ratio stood at 15.6 per cent in September 2021 as against 14.73 per cent in September 2020.