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