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<\/p>\nIDFC First Bank delivered good results in the first quarter of this financial year (Q1FY24), but some analysts are concerned the bank is fully-valued.<\/p>\n
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So, there has been profit-booking after a price rise.<\/p>\n
Growth went side-by-side with a focus on cutting interest costs and exposure to high non-performing infrastructure loans.<\/p>\n
The mortgage book is 28 per cent, of which 24 per cent is home loans and loans against property.<\/p>\n
In total, loans saw a growth of 25 per cent year-on-year (Y-o-Y) and 7 per cent quarter-on-quarter (Q-o-Q), to Rs 171,600 crore.<\/p>\n
It was driven by growth in consumer finance of 27 per cent Y-o-Y (7 per cent Q-o-Q).<\/p>\n
Home loans rose 31 per cent Y-o-Y (3 per cent Q-o-Q) to Rs 20,100 crore, while consumer loans were up 15 per cent Y-o-Y (12 per cent Q-o-Q) to Rs 22,300 crore.<\/p>\n
The education loan book saw sequential increase from Rs 930 crore to Rs 1,290 crore.<\/p>\n
Vehicle financing grew 10 per cent Q-o-Q (up 45 per cent Y-o-Y) to Rs 16,400 crore.<\/p>\n
The bank is focussed on reducing Infrastructure exposure, which is at 2.2 per cent of loans.<\/p>\n
It fell 44 per cent Y-o-Y (down 19 per cent Q-o-Q) to Rs 3,800 crore.<\/p>\n
The small and medium enterprises and corporate segments posted healthy performance, up 23 per cent Y-o-Y (9 per cent Q-o-Q) to Rs 49,700 crore.<\/p>\n
The total deposits rose 44 per cent Y-o-Y (9 per cent Q-o-Q) to Rs 1,48,500 crore.<\/p>\n
The term deposits grew 66 per cent Y-o-Y (18 per cent Q-o-Q) to Rs 76,700 crore, while CASA deposits were up 27 per cent Y-o-Y (flat Q-o-Q) to Rs 71,800 crore.<\/p>\n
CASA ratio remains high at 46.5 per cent, but fell by 330 bps Q-o-Q.<\/p>\n
Certificate of deposits dropped 43 per cent Y-o-Y (down 24 per cent Q-o-Q) to Rs 6,000 crore reducing dependence on high interest deposits.<\/p>\n
The bank added 15 branches and operating expenses rose 37 per cent Y-o-Y (plus 6 per cent Q-o-Q) to Rs 3,700 crore.<\/p>\n
Core pre provision operating profit stood at Rs 1,500 crore, up 59 per cent Y-o-Y (down 4 per cent Q-o-Q).<\/p>\n
The bank posted net interest income of Rs 3,700 crore, up 36 per cent Y-o-Y (up 4 per cent Q-o-Q).<\/p>\n
Return on equity was at 11.8 per cent, down 52 basis points (bps) Q-o-Q due to capital raised in late March 2023, but up +282 bps Y-o-Y.<\/p>\n
Return on assets improved to 1.3 per cent up 29 bps Y-o-Y (up 3 bps Q-o-Q).<\/p>\n
Growth in interest expenses was 44 per cent Y-o-Y (up 10 per cent Q-o-Q).<\/p>\n
The net interest margin was at 6.3 per cent, up 56 bps Y-o-Y. but down 8 bps Q-o-Q, owing to rise in cost of funds.<\/p>\n
The guidance is that the cost of funds will improve given focus on reducing high cost borrowings.<\/p>\n
Fee and other income was up 65 per cent Y-o-Y but flat sequentially at Rs 14,100 crore, with a stable contribution of 91 per cent from retail fees.<\/p>\n
Provisions were flat sequentially (up 55 per cent Y-o-Y) at Rs 480 crore and net profit was at Rs 770 crore (up 61 per cent Y-o-Y and down 5 per cent Q-o-Q).<\/p>\n
The overall gross non-performing assets (GNPA) was at 2.2 per cent, down 119 bps Y-o-Y (down 34 bps Q-o-Q), while NNPA stood at 0.7 per cent, down 60 bps Y-o-Y (16 bps Q-o-Q lower).<\/p>\n
Further reduction of the infrastructure book would lead to better asset quality.<\/p>\n
There’s a coherent strategy here in quest for growth without increase of risk.<\/p>\n
Most analysts are positive but high valuations could limit the upside.<\/p>\n