The bank said it is seeing the impact of the second wave of COVID-19 gradually fading and that improvement is reflected in improving asset quality
The bank said it is seeing the impact of the second wave of COVID-19 gradually fading and that improvement is reflected in improving asset quality
IDFC First Bank on Saturday reported a more than two-fold increase in net income to ₹343 crore in the March quarter, driven by strong core operating results and lower provisions for bad loans.
The private sector lender had reported net income of ₹128 crore in the same quarter of the previous fiscal year.
Total revenue for the January-March quarter of 2021-22 increased to £5,384.88 billion from £4,811.18 billion in the same period of FY21, IDFC First Bank said in a regulatory filing.
“Net income for Q4-FY22 increased 168% to ₹343 crore from ₹128 crore in Q4 FY21, driven by strong core operating income growth and lower provisions,” the bank said.
Net interest income (NII) increased 36% to ₹2.669 billion during the quarter, while fees and other income increased 40% to ₹8.41 billion.
Provisions other than tax fell 36% to £3.69 billion in the March 2022 quarter, the lender said, with gross and net asset quality up 45 and 33 basis points, to 3.40% and 1.53% respectively has been reduced.
“Our core operating profit for Q422 more than doubled (up 106%) to £8.36 billion compared to £4.05 billion in Q4 FY21. This shows the strength of the business model, that we build. Our PAT is up 168%. year-on-year from ₹1.28 billion to ₹.343 billion,” said V. Vaidyanathan, Managing Director and CEO, IDFC FIRST Bank.
However, net income for 2021-22 fell 68% to ₹145 billion from ₹452 billion in 2020-21, due to higher provisions in the first quarter of fiscal 22 to absorb the impact of the second wave of COVID-19 19 on its assets, IDFC First, to deal with Bank said.
Total revenue for the year increased to ₹20,394.72 billion from ₹18,179.19 billion.
NII for FY22 increased by 32% to £9,706 billion, from £7,380 billion in FY21. Fees and other revenue increased by 66% to ₹2,691 crore from ₹1,622 crore.
The lender said it did not draw down the Covid provision during the quarter and has £1.65 billion in Covid provisions as at 31 March 2022.
“The bank is broadly on track to meet asset quality and credit cost guidance. Based on the portfolio’s improving performance indicators, the bank is confident of meeting its FY23 borrowing cost guidance of nearly 1.5% of assets funded,” she said.
The bank said it is seeing the impact of the second wave of Covid starting to wear off and that improvement is showing in improving asset quality.
An infrastructure loan (Mumbai Toll Road account) which became an NPA in Q1 FY22 continued to partially pay its fees and the outstanding principal increased by £25 billion during the quarter to £794 billion as at 31 March 2022 reduced, the lender said.
Gradually, this account’s cash flows are likely to return to normal as traffic levels on the road in Mumbai return to normal.
“Although the account is NPA as of now, we expect to collect our fees and expect that any losses on this account when the time comes will not be material,” it noted.
“At the overall bank level, but for this one infrastructure account that we hope to recoup in due course without economic loss, the bank’s GNPA (gross non-performing assets) and NNPA (net NPAs) would have been 3.04%. and 1.02% as of March 31, 2022, and the bank’s provision coverage ratio (PCR) would have been 77%, including technical write-downs,” the bank added.
Among others, the bank’s CASA (Current Savings Account) deposits grew 11%, reaching ₹51,170 billion as of March 31, 2022, compared to ₹45,896 billion in the same period last year.
Current account deposits now contribute 18.29% of total CASA, compared to 11.80% by the end of March 2021, it said.
Vaidyanathan said in the retail business, which is one of the key growth drivers, NPA has continued to decline over the past four quarters.
“Our retail gross NPA fell sharply from 4.01% in FY21 to 2.63% in FY22 and net NPA fell from 1.90% to 1.15%. Based on internal analysis, we are on track to reduce retail GNPA and NNPA to 2%, less than 1% as previously stated,” he added.