IDFC First Bank Limited Q3 FY24 Earnings Conference Call Insights

Key highlights from IDFC First Bank Limited (IDFCFIRSTB) Q3 FY24 Earnings Concall

• Deposit Growth
  • Retail deposits grew from INR10,400 crores to INR1,39,431 crores in 5 years.
  • Total deposits grew 4.5X from INR39,602 crores to INR1,76,481 crores.
  • Strong growth despite dropping interest rates.
  • Shows strength of retail franchise and funding.
  • Assumes deposit growth of 24.8% over next five years versus current growth of over 40%.
  • Expects assets to be INR500,000 crores in 2029.
• Loan Growth and Asset Quality
  • Loan book grew from INR1,05,000 crores to INR1,89,435 crores.
  • Slower loan growth intentional to fix credit-deposit ratio.
  • Focused on reducing risk profile of loans.
  • Targeting loan book of INR5,00,000 crores by 2029.
  • Assumption of 20.3% growth versus current 24.5%
  • Along with other assets, targeting total assets of INR7,00,000 crores.
  • Retail, MSME, rural GNPA now at 1.45% and NNPA at 0.5%.
  • Targeting gross NPA of 1.5% and net NPA of 0.4% in 2029.
• Profitability Growth
  • Net interest income grew 30% in Q3 FY24.
  • Profit after tax grew 37% to INR2,232 crores in 9M FY24.
  • Core operating profit grew 35% in 9M FY24.
  • Growth driven by strong business volumes.
  • Targeting Return on Assets of 1.9-2.0%.
• Capital and Liquidity
  • Maintaining capital adequacy at 16.73% with CET1 at 13.95%.
  • Average liquidity coverage ratio at 121% showing healthy liquidity.
• Credit Costs
  • Provisions up 45% YoY versus 24% loan growth.
  • Some tailwinds in base year from COVID provisions and recoveries.
  • Now at more normalized levels.
  • Underlying portfolio metrics remain strong.
• Digital Lending Partnerships
  • Working with fintechs to expand reach.
  • Ensure full access to customers for cross-sell.
• Vehicle Finance Portfolio
  • Higher share of used cars given better yields.
  • Very limited new car loans only to existing customers.
  • Credit quality in vehicle finance solid.
• Credit-Deposit Ratio Trends
  • Brought down ratio from 137% at merger to 101% now.
  • Incremental CD ratio around 65-80% showing faster deposit growth.
  • Expect to bring it below 100% by FY23 end on rapid deposit momentum.
• Collections Process
  • Increasingly digital and automated.
  • Use of bots for calling and payment links for customers.
  • Still some physical collections where needed.
  • However, direction is towards more direct-to-consumer