Stock Report

CRISIL updates on ratings of IDFC First Bank Ltd

Posted On : 2022-06-30 22:08:09( TIMEZONE : IST )

CRISIL updates on ratings of IDFC First Bank Ltd

CRISIL Ratings ("CRISIL") have re-affirmed its 'CRISIL AA / Stable' rating on the existing Tier II Bonds (Under Basel III) of IDFC FIRST Bank Limited ("Bank") amounting to Rs. 5,000 crore, and have also re-affirmed 'CRISIL A1+' rating on the Bank's existing Certificate of Deposits amounting to Rs. 45,000 crore. CRISIL has also re-affirmed and withdrawn its 'FAAA/Stable' rating on the fixed deposit programme of the Bank at the request of the Bank.

The ratings continue to reflect the bank's healthy capitalisation, strengthened liability franchise and, increased retailisation of the asset base, supporting improvement in asset quality after the pandemic impact. However, these strengths are partially offset by relatively low profitability due to early-stage build-up of the bank and high-cost legacy liabilities. The bank's ability to improve its profitability and asset quality on a sustained basis as its scales its retail portfolio over time are key monitorables.

The bank has continued to show good momentum in deposit mobilisation with overall deposit base growing by 19% in fiscal 2022 to Rs 1,05,634 crore as of March 31, 2022, on the back of a 36% growth in fiscal 2021. Mobilisation of current account and savings account (CASA) deposits has seen good traction at the bank, whereby on a daily average basis, the CASA ratio was higher at 49.88% for fiscal 2022 as against 41.50% in the previous fiscal despite reduction in savings account interest rates during fiscal 2022. On an absolute basis, CASA deposits increased to Rs 51,170 crore as on March 31, 2022, from Rs 45,896 crore as on March 31, 2021.

On the asset quality front, gross non-performing assets (GNPAs) stood at 3.7% (Rs 4,469 crore) as on March 31, 2022, down from 4.15% (Rs 4,303 crore) as on March 31, 2021; however, it remains higher than the 2.6% (Rs 2,280 crore) level as on March 31, 2020. GNPAs in the retail and commercial portfolio, which comprised 72% of total funded assets as on March 31, 2022, reduced substantially to 2.63% as on March 31, 2022, from 4.01% as of March 31, 2021. The standard restructured book stood at Rs 2,712 crore (2.06% of total funded assets) as on March 31, 2022. The retail and commercial finance asset quality has near normalised with net NPA of 1.15% as of March 31, 2022, as compared to 1.06% as of December 31, 2019 (pre-Covid). However, given the challenging macro environment, there were some high-ticket slippages in the legacy wholesale book, leading to gross NPA in the wholesale business increasing to 7.16% as of March 31, 2022, from 3.63% as of December 31, 2019 (pre-Covid); net NPA in the wholesale book rose to 2.80% from 1.46% over the same period.

That said, sizeable provisions strengthen the bank's balance sheet against potential credit losses. As on March 31, 2022, the bank's provision coverage ratio (PCR) improved to 70.29% (excluding one active toll account, PCR was 77%), from 63.57% as of March 31, 2021, besides 21% provision on the restructured book and additional Covid-19 provisions of Rs 165 crore (0.13% of the total funded assets). Moreover, Rs 2,000 crore and Rs 3,000 crore capital raised in the first quarters of fiscals 2021 and 2022, respectively, along with the Rs 1,500 crore Tier II bonds raised in the fourth quarter of fiscal 2022, support the capital metrics.

Shares of IDFC First Bank Limited was last trading in BSE at Rs. 31.45 as compared to the previous close of Rs. 31.60. The total number of shares traded during the day was 2376099 in over 2469 trades.

The stock hit an intraday high of Rs. 31.95 and intraday low of 30.95. The net turnover during the day was Rs. 74816565.00.

Source : Equity Bulls


IDFCFirstBank INE092T01019 RatingUpdate