Indian rupee banknotes of various denominations. (Photographer: Dhiraj Singh/Bloomberg)

Q4 Results: IDFC First Promises Steady Growth In Next Five Years

IDFC First Bank Ltd. is confident that its growth in the next five years won’t disappoint investors, its chief executive officer said, despite its earnings for the quarter ended March not meeting estimates.

The lender’s Managing Director and Chief Executive Officer V Vaidyanathan told BloombergQuint in an interaction that he expects CASA, or current account savings account, to grow at 30 percent in the next five years, and at 40-50 percent after that. He also expected the bank’s loan book to rise to Rs 1 lakh crore by FY24. “The only way to increase the CASA percentage is to have a CASA growth significantly faster than the growth of the loan book.”

CASA growth was 12.9 percent year-on-year in the reported period, and 42 percent on a sequential basis. Retail CASA grew faster, boosting the bank’s CASA growth, Vaidyanathan said.

IDFC First, Vaidyanathan said, won’t lend to the infrastructure sector in the future, and will focus only on retail and non-industrial loans.

Asset Quality In Question

The bank reported an exposure worth Rs 1,186 crore to two large financial groups and a Rs 598-crore exposure to a housing finance company.

Vaidyanathan, however, shrugged off the negative sentiment surrounding the three identified accounts, saying that they will be resolved soon. He said the two financial accounts are performing and servicing interest in time, and the investment account, though delayed, hasn’t been declared a non-performing asset yet. The investment account, Vaidyanathan, said has adequate security of over two times.

IDFC First set aside Rs 420 crore in provisions for these three accounts in the January-March period. The bank isn’t expecting incremental provisions for the same, he said.

Q4 Earnings Highlights (YoY):

  • Net interest income rises 7 percent to Rs 1,112 crore.
  • Reports loss of Rs 218 crore, compared with a profit of Rs 137 crore.
  • CASA growth rose to 12.9 percent versus 11.85 percent.

Shares of the lender tanked about 5.6 percent today to hit an intraday low of Rs 40.55.

Watch the full interview here: