India Ratings & Research (Ind-Ra) has revised the Outlook of the Senior Debt Instruments of IDFC First Bank Ltd to Negative and has affirmed its Credit Rating to 'IND AA+'.
The Outlook revision reflects Ind-Ra's expectation that IDFCFB could be adversely affected by the rise in credit costs (provision requirement) from the recent sharp downgrades of certain exposures in its credit substitute book (investments) and incremental provision from the legacy stressed book, as the provision coverage on the legacy stressed portfolio has moved lower. The rating action also reflects the subdued profitability on account of higher-than-envisaged operating expense, primarily resulting from investments in the branch network, thereby reducing the availability of operating buffers to absorb volatility in credit costs. The bank's build-up of retail CASA and retail deposit franchise, the diversification of the retail asset franchise away from wholesale assets, and the ability to remain profitable after factoring in provision on stressed assets would be key monitorables for the rating agency.
The ratings, however, are supported by the bank's stable capital buffers, comfortable liquidity position, and the increased portion of the retail book post the merger, thereby leading to a rise in net interest margins. Additionally, the strong experience of the management in the retail lending space would support the bank in the expansion of its retail franchise.
Shares of IDFC First Bank Ltd was last trading in BSE at Rs.43.1 as compared to the previous close of Rs. 42.05. The total number of shares traded during the day was 536851 in over 1096 trades.
The stock hit an intraday high of Rs. 43.35 and intraday low of 42. The net turnover during the day was Rs. 23001901.