IDFC Bank logs 6.6% rise in net on Rs 4000cr NPA sale to ARCs

Private sector IDFC Bank today reported a 6.6 per cent growth in its March quarter net at Rs 176 crore, helped by a sale of a huge dud assets pile to ARCs which lowered its provisioning burden.

The newest private sector lender sold Rs 4,000 crore of bad loans to asset reconstruction companies (ARCs) during the quarter that helped it reduce the gross NPA ratio to 2.99 per cent as against 7.03 per cent as of December 2016.

The provisions also came down to Rs 4.79 crore as against Rs 231.75 crore in the preceding quarter.

Bank officials said security receipts -- which are issued in an ARC sale -- now account for 3.3 per cent of the asset book.
 

The core net interest income grew to Rs 515.6 crore from Rs 403.8 crore in the year-ago period, while the non- interest income crashed to Rs 42.7 crore from Rs 150.7 crore.

Chief financial officer Sudhir Kakkar said the fall in non-interest income was largely due to a reduction in the G- sec portfolio, which came down to Rs 17,000 crore from Rs 30,000 crore due to an adverse outlook on interest rates, that limited the trading gains.

Net interest margin continued to be under pressure and came down to 2 per cent from 2.2 per cent in the year-ago period and the management said a focus on retail will help in growing them.

The ratio of the low cost Casa deposits stood at a low 5.4 per cent.

Managing director and chief executive Rajiv Lall said retail will be the focus of the bank going forward and through various means including the acquisition of a microlender, its overall retail book now stands at 25 per cent of the book.

The legacy infrastructure segment's part has now come down to 50 per cent and will decrease further, he said.

The lender is targeting to double its share to 50 per cent in the next three years, which should also see a jump in the number of customers to 10 million from present 1.4 million.

However, rather than the older system of branches, the bank will depend on partners to grow its network, he said, adding the points of presence are targeted to grow to 1 lakh from 8,000 at present. The branches will grow to 200 from the present 74, he said.

The IDFC Bank scrip gained 1.02 per cent to close at Rs 59.45 a piece on the BSE, whose benchmark index Sensex rose 0.97 per cent.