IDFC FIRST Bank - Positives: Superior NIMs, modest credit cost; cost efficiency key to further drive up RoAs - ICICI Securities

IDFC FIRST Bank's (IDFCFB) Q4FY22 earnings were on expected lines with PAT growth of 22% QoQ/1.7x YoY and NII growth of 3% QoQ/36% YoY. Containment of credit cost at 120bps, superior NIM trajectory (at 6.27%, up QoQ even on elevated base of Q3), and retail asset growth of 11% QoQ/28% YoY were encouraging. This was offset by higher opex (cost to income at 77%) and MTM loss of Rs90mn. Core operating profit trajectory at Rs8.4bn (up 12% QoQ/2x YoY) gives some confidence. Overall slippages were elevated at 4.4% and retail slippages at >5%. Recoveries and aggressive write-offs reduced GNPAs QoQ by 26bps to 3.7%. Drawing comfort from gradual and consistent improvement in cheque bounce trends, collection efficiency, customer credit profile, etc., IDFCFB now guides <2% retail GNPA and <1.5% credit cost in FY23. Current RoE profile is also burdened by high cost structure, loss in retail liabilities and credit card business. Maintain BUY with revised target price of Rs59 (assigning 1.5x FY24E book, earlier Rs70). Key risk: Elevated cost structure.

Shares of IDFC First Bank Limited was last trading in BSE at Rs. 38.80 as compared to the previous close of Rs. 39.55. The total number of shares traded during the day was 5417869 in over 17420 trades.

The stock hit an intraday high of Rs. 40.65 and intraday low of 38.30. The net turnover during the day was Rs. 212681731.00.

Source : Equity Bulls

Keywords

IDFCFirstBank INE092T01019 Q4FY22 FY2022 ResultUpdate ICICISecurities