IDFC First Bank - Q4FY21 First Cut - ICICI Direct

(CMP- Rs. 57; MCap Rs. 35152 crore)

IDFC First Bank has posted decent set of numbers for Q4FY21 with largely stable asset quality and healthy business traction.

Q4FY21 Earnings Summary

- For IDFC First Bank, the net interest income was up at a decent pace of 15.3% YoY to Rs. 1960 crore, despite Rs. 55 crore worth interest on interest reversals. Net interest margins (revised calc. by the bank) were up 4 bps sequentially to 5.09%. Other income was up 74% YoY mainly on account of trading gains, though other income witnessed a healthy growth of 39% YoY to Rs. 600 crore. Operating expense were higher by 11% QoQ to Rs. 2156 crore, this rise can be attributed to increased business activity. Cost-to-income ratio (calculated) was up from 75.1% to 76.9% on a sequential basis. Provisions remained at elevated levels and stood at Rs. 602 crore, up 25% QoQ, this was mainly due to additional provisions of Rs. 375 crore for Covid-19 risks, this additional provisioning was done from release of Rs. 324 crore worth provisions on its telecom exposure. The bank had tax write-back of Rs. 84 crore during the quarter, as a result of which PAT came in at Rs. 127 crore

- Asset quality showed spike on reported basis as GNPA increased form 1.33% to 4.15% as standstill asset classification norms are quashed, however, on proforma basis asset quality was stable. GNPA on proforma level was at 4.15% in Q4FY21 vs 4.18% in the previous quarter. GNPA in the retail segment increased by 13 bps from 3.88% to 4.01% sequentially. Total restructured book now stands at 0.9% of funded assets versus 0.8% QoQ. Collection efficiency for early buckets had reached pre-covid levels, however, impact of second wave of pandemic needs to be monitored

- Credit growth trajectory for the bank improved on a sequential basis as funded assets were up by 6% QoQ and 9.5% YoY to Rs. 117127 crore, as against a flattish growth 0.7% in the previous quarter. Growth in loans was driven by retail assets which were up by 26% YoY to Rs. 71987 crore and they now form 61% of total book. ECLGS portfolio for the banks stands at Rs. 1687 crore. Wholesale book continued its downward trajectory with 14% YoY decline to Rs. 33920 crore, which is in-line with the management's strategy

- On the liabilities side, total deposits increased by 36% YoY to Rs. 88688 crore. The bank continues to focus on increasing contribution from retail segment on deposits and thus adding granularity, as a result retail deposit showed a strong growth of 88% YoY to Rs. 49610 crore, while wholesale deposits declined by 20% YoY to Rs. 24795 crore. CASA deposits saw a strong growth of 122% YoY as a result of which CASA ratio jumped to 51.7% versus 48.1% QoQ and 31.7% YoY

- The bank's CRAR is at 16.32% (incl. capital raise in April 2021), while CET1 ratio accordingly is at 15.62%

We will be coming out with a detailed report soon.

Shares of IDFC First Bank Ltd was last trading in BSE at Rs.56.7 as compared to the previous close of Rs. 56.85. The total number of shares traded during the day was 2415687 in over 8600 trades.

The stock hit an intraday high of Rs. 57.5 and intraday low of 56.45. The net turnover during the day was Rs. 137490952.

Source : Equity Bulls

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