IDFC First Bank - Q2FY21 First Cut - ICICI Securities

(CMP- Rs. 30.6; MCap Rs. 17385 crore)

IDFC First has posted decent set of numbers for Q2FY21 considering current environment with improvement on most operating parameters.

Q2FY21 Earnings Summary

- On the asset quality front, IDFC First Banks performance was positive as GNPA and NNPA reduced by ~37 bps and ~8 bps sequentially to 1.62% and 0.43% respectively. On a standstill asset classification basis, GNPA and NNPA stood at 1.87% and 0.60% as on September 2020. Within the retail segment, GNPA and NNPA stood at 0.41% and 0.17% as compared to 0.87% and 0.24% in the previous quarter, this segment benefitted due to moratorium extended to eligible customers. The bank has some accounts that are standard but in stress worth Rs. 2717 crore, for which the bank has taken provision worth Rs. 1303 crore.

- The net interest income increased by 21.8% YoY and 2.1% QoQ to Rs. 1660 crore. Despite a tepid loan trajectory, healthy NII growth was achieved mainly on account of expansion in the margin. NIMs for the quarter increased by ~4 bps sequentially and ~114 bps on yearly basis to 4.57%. Other income for Q2FY21 declined by 51.7% YoY, attributed to 19% decline in fee income due to lower loan origination as a result of low business activity due to pandemic. Net profit for the quarter stood at Rs. 101 crore as compared to Rs. 94 crore QoQ and a loss of Rs. 680 crore YoY.

- Funded assets declined by 1% YoY but increased by 3% QoQ to Rs. 106828 crore. Retail book grew 25% YoY and 7% sequentially and stood at Rs. 59860 crore, driven by 30% YoY uptick in mortgage book, 26% rise in MSME loans and 26% increase in Rural Micro finance and KCC portfolio. Wholesale funded assets declined by 20% YoY to Rs. 36987 crore, in-line with earlier stated strategy. On the liabilities side, total deposits increased by 9% YoY to Rs. 75800 crore. The bank continues to focus on increasing contribution from retail segment on deposits and thus adding granularity, as a result retail deposit showed a strong growth of 119% YoY and 24% QoQ to Rs. 49610 crore, while wholesale deposits declined by 44% YoY to Rs. 26190 crore. CASA deposits saw a strong growth of 142% YoY to Rs. 30181 crore, due to which CASA ratio increased to 40.37% from 33.74% in Q1FY21 and 18.7% a year ago.

- The bank has made additional provisions related to Covid-19 amounting to Rs. 1400 crore, during the quarter to strengthen its balance sheet. As a result the bank now has total Covid-provisions of Rs. 2000 crore, which is 2.2% of its standard advances. During the quarter, the bank reversed provisions worth Rs. 811 crore of total Rs. 1622 crore on a telecom exposure (due to improving company prospects) and used it to create additional Covid-19 provisions. The banks PCR as on September 2020 is at 73.69% versus 56.12% YoY and 74.93% in the previous quarter

- The bank's CRAR stands at 14.73%, while CET1 ratio at 14.33%

We will be coming out with a detailed report soon.

Shares of IDFC First Bank Ltd was last trading in BSE at Rs.30.65 as compared to the previous close of Rs. 30.6. The total number of shares traded during the day was 1398701 in over 26840 trades.

The stock hit an intraday high of Rs. 31.3 and intraday low of 30.25. The net turnover during the day was Rs. 42896533.

Source : Equity Bulls

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