IDFC First Bank Limited Q4 FY22 Earnings Conference Call Insights

Key highlights from IDFC First Bank Limited (IDFCFIRSTB) Q4 FY22 Earnings Concall

Q&A Highlights:

• Ushmunka asked about the top and mid-level management attrition rate for FY22. V. Vaidyanathan MD replied that the company doesn’t reveal exact numbers but attrition at senior management is very low. However, attrition is more in the bottom of the pyramid.

• Lalit Deo of Equirus Securities asked about the margin trajectory of 6.27% in 4Q22 and if there was any one-offs. V. Vaidyanathan MD replied that there were no one-offs during the quarter. It’s a steady increase that has happened on a QonQ basis.

• Lalit Deo of Equirus Securities also enquired about the gross slippages and the net slippages during 4Q. V. Vaidyanathan MD answered that gross slippages for 4Q22 was about INR1,400 crores and net slippages were about INR700 crores.

• Ishan Agarwal from Erevna Capital asked about the opex guidance for FY23, if it will be in line with the overall loan growth or lower. Vaidyanathan MD answered that it will be lower because that’s where the operating leverage comes in.

• Ishan Agarwal from Erevna Capital asked that on profitability, when does the bank see reporting double digit ROE. Vaidyanathan MD replied that it should be soon. According to the bank’s internal estimates, by 4Q23 IDFCFIRSTB should be getting there.

• Ishan Agarwal from Erevna Capital also enquired if the bank has any Tier 1 capital raise plans for FY23. Vaidyanathan MD answered that the bank does not have any plans to raise capital in FY23.

• Bhavin Gala of Marine Capital asked about the turnaround of retail banking operations, if there was a one-off or it was a contribution of recurring activities. Vaidyanathan MD said the bank saw lower provisions during the quarter and therefore, there is a profit of INR430 crores in retail banking. There is no one-offs, but is due to lower provision and robust growth in the retail book.

• Bhavin Gala of Marine Capital queried about the blended growth for the asset book for FY23. Vaidyanathan MD said it’s in the vicinity of 20-25%. It’s not only the retail book, but 25% of asset book is on the blended book.

• Sahil Sharma with SS Capital asked what kind of initiatives the bank is taking to grow the current account book and if there’s an opportunity to cross-sell the current accounts to the MSME retail borrowers.  Vaidyanathan MD replied that the bank’s current account as a proportion of CASA is not good enough. And the proportion of SA in the overall CASA has improved from 11% to 18% and the endeavor will be to take it to 30% in due course.

• Asutosh Mishra with Ashika Stock Broking asked if the bank expects growth of core fee income to remain in line with the growth of the retail loan book. Vaidyanathan MD answered that the bank’s fee income to total income is about 22% as a ratio. The bank feels there is lot of opportunity to increase there and expects to register strong growth going forward.

• Asutosh Mishra with Ashika Stock Broking enquired about the opex front, if the bank has any internal cost to CI ratio target. Vaidyanathan MD replied that cots to income will begin to come down by scale and operating leverage.