In This Article:
Release Date: January 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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IDFC First Bank Ltd (BOM:539437) reported a 24% year-over-year expansion in its balance sheet, reaching approximately 3.3 lakh crores.
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CASA deposits grew by 35% year-over-year, indicating strong growth in low-cost deposits.
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Retail term deposits increased by 30% during the quarter, showcasing robust retail banking growth.
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The credit deposit ratio improved to 95.7%, reflecting a healthy balance between deposits and advances.
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The bank's core operating profit, excluding trading gains, grew by 15% year-over-year, demonstrating strong underlying business performance.
Negative Points
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The CASA ratio slightly decreased from 48.9% to 47.4%, indicating a minor decline in the proportion of low-cost deposits.
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Operating expenses have grown sequentially, which could impact profitability if not managed effectively.
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The bank is still in the process of winding down a significant investment of 2,000 crores in setting up its branch network, which affects current profitability.
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The microfinance business has faced challenges, impacting both credit costs and income.
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The bank's cost-to-income ratio in the credit card segment remains high, although it has been decreasing over time.
Q & A Highlights
Q: Can you provide an overview of the bank's financial performance for the quarter? A: Sudhanshu Jain, CFO, highlighted that the balance sheet expanded by 24% year-over-year, reaching approximately 3.3 lakh crores. CASA deposits grew by 35% year-over-year, while the CASA ratio slightly decreased from 48.9% to 47.4%. Retail term deposits grew at a faster pace of 30%. The credit deposit ratio improved to 95.7%, indicating stable growth in deposits over advances.
Q: How has the bank's asset quality and provisioning evolved? A: Sudhanshu Jain noted that the gross NPA ratio improved by 7 basis points to 1.81% sequentially. The standard restructured book reduced to 0.2% of funded assets, with 97% of the book secured. The bank holds about 18% provisions, reflecting a strong asset quality position.
Q: What are the key drivers behind the bank's profitability? A: The CFO mentioned that net interest income (NII) increased by 14% year-over-year, driven by higher disbursements and festive season activities. Core operating profit, excluding trading gains, grew by 15% year-over-year to 1,736 crores. The bank anticipates normalization of credit costs in the coming year.