Q1 Results: IDFC First Bank Reports Rs 611-Crore Loss On Higher Provisions
The bank’s provisions have nearly doubled compared with the previous quarter.
IDFC First Bank Ltd. reported a loss in the quarter ended June due to higher provisions.
The lender’s net loss stood at Rs 611.6 crore in the three-month period compared with a profit of Rs 198.9 crore in the same quarter last year, according to its stock exchange filing. Net interest income, the core income of the bank, grew twofold over last year to Rs 1,248.3 crore.
Asset quality, however, worsened slightly. Bad loans as a percentage of total advances increased by 33 basis points sequentially to 2.66 percent. Net non-performing assets also increased by 8 basis points to 1.35 percent.
The bank bumped up its provisioning by nearly 50 times to Rs 1,280.8 crore on a yearly basis. Provisions have also nearly doubled compared to the previous quarter.
This sharp increase was mainly due to the bank providing up to 75 percent coverage for two identified corporate loans as a prudent measure. “Bank believes the provision is adequate and does not expect to take any more provisions on these accounts in the near future,” IDFC First Bank said in its statement.
Net interest margin for the bank stood at 3.01 percent for the quarter. The margin was at 1.56 percent before the merger of IDFC Bank and Capital First came in effect. “The increase in NIM is sustainable as the mix of the loan book is changing towards retail.”
The bank is starting on a small base on the retail front and will continue to dedicate 25-30 percent of its loan book to the segment as consumption numbers are tepid in India, the lender’s Chief Executive Officer V Vaidyanathan told BloombergQuint in an interview. “However, there are a lot of things that are going right in the country at this point of time because collection capabilities have substantially improved.”
Watch the interaction here: