IDFC First Bank on Saturday posted net profit of Rs 474 crore the quarter ended June 30. The bank had incurred a loss of Rs630 crore in the previous year on account of sharp decline in provisions. It reported 84% year-on-year (y-o-y) fall to Rs 308 crore in Q1FY23.
“We have posted the highest ever profit after tax of Rs 474 crore in Q1FY23,” V Vaidyanathan, managing director and chief executive officer of the bank said.
The lender posted a decline of 5% y-o-y in its pre-provisioning operating profit (PPOP) to Rs944 crore despite an increase in net profit. The PPOP fell due to rise in operating expenses, which includes staff costs and other operating costs, to Rs2,663 crore, higher by 31% y-o-y.
The impact of operating costs on PPOP was contained due to an increase 1.6% rise in non-operating income to Rs 856 crore. Fee income rose by 100% y-o-y to Rs 899 crore in Q1 FY23, however, the bank posted treasury loss of Rs 44 crore on account of increase in bond yields.
The bank posted 26% y-o-y increase in net interest income (NII) to Rs2,751 crore in Q1FY23 led by loan growth. Net interest margin (NIM) improved by 39 basis points on y-o-y basis to 5.89% as on June 30.
The bank saw an improvement in asset quality, with gross non-performing asset (NPA) ratio as on June 30 at 3.36%, down 125 bps y-o-y and 33 bps, sequentially, and net NPA stood at 1.30% lower by 102 bps y-o-y and 22 bps, sequentially. The overall restructured book of the funded assets reduced to 1.3% as on June 30 as against 1.8% a quarter ago.
“Post the pandemic, our retail gross NPA and net NPA has reverted to 2.1% and 0.9%, respectively, which is our long-term experience. More importantly, the retail asset quality has normalised sooner than our earlier guidance of March 2023,” Vaidyanathan said.
The bank saw a loan growth of 21% y-o-y to Rs1.4 trillion, with retail and commercial loans at 1.01 trillion. Corporate loan book grew 12% on y-o-y to Rs23,970 crore while infrastructure financing declined 35% y-o-y to Rs6,739 crore, constituting 4.9% of all loans.
The bank’s customer deposits grew by 21% y-o-y to Rs1.02 trillion while current account, savings account (CASA) ratio at 50.04% compared to 50.86% the year before. The bank’s capital adequacy stood at 15.77% as on June 30.