IDFC First Bank’s June Quarter Net Up 50% Thanks to Improved Interest Margins

Private lender IDFC First Bank’s net profit increased 50% year-on-year to Rs 152 crore for the second quarter ended September 2021 (T2FY22) thanks to improved interest margins and lower costs of credit .

It had posted a net profit of Rs 101 crore in the second quarter of last fiscal year (T2FY21).

Its net interest income (NII), interest income less expenses, increased 27% year-on-year to Rs 2,272 crore in T2FY22, from Rs 1,784 crore in T2FY21. Its net interest margin (NIM) improved to 5.76% for T2FY22 from 4.91% for T2FY21.

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

Its provisions decreased by 29% to Rs 475 crore at T2FY22 from Rs 674 crore at Q2FY21. The bank used Rs 560 crore of Covid provision at T2FY22 and carried forward Rs 165 crore of provision for the future. The bank expects the net credit loss for the retail lending segment to normalize from now on assuming there are no more disruptions in the economy due to a new wave of Covid-19.

It maintained its target of 2.50 percent credit loss of total funded assets for the full year 22.

Its gross non-performing assets (APM) stood at 4.27% in September 2021, up from 1.62% a year ago. Net NPA also rose to 2.09% from 0.43% a year ago, according to the ranking of results with the ESB.

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

Its loan assets grew 10% year-on-year to Rs 1,17,270 crore at the end of September 2021, from Rs 1,068,828 crore a year ago. The retail loan book rose to Rs 78,048 crore at the end of T2FY22 against Rs 59,860 crore at the end of T2FY21. The year-over-year growth of the retail loan portfolio was 30%, including the emergency credit line of guarantee loan portfolio of Rs. 1,555 crore, he added. .

Its solvency ratio stood at 15.6% in September 2021 compared to 14.73% in September 2020.

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