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IDFC First Bank Q4 - Superior NIMs, Modest Credit Cost; Cost Efficiency To Drive Up RoAs: ICICI Securities

IDFC First Bank Q4 Review - Superior NIMs, Modest Credit Cost; Cost Efficiency Key To Further Drive Up RoAs: ICICI Securities

<div class="paragraphs"><p>An IDFC First Bank branch in Nerul, Navi Mumbai. (Source: BloombergQuint)</p></div>
An IDFC First Bank branch in Nerul, Navi Mumbai. (Source: BloombergQuint)

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ICICI Securities Report

IDFC First Bank Ltd.’s Q4 FY22 earnings were on expected lines with profit after tax growth of 22% QoQ/1.7 times YoY and net interest income growth of 3% QoQ/36% YoY.

Containment of credit cost at 120 basis points, superior net interest margin trajectory, and retail asset growth of 11% QoQ/28% YoY were encouraging.

This was offset by higher opex (cost to income at 77%) and mark to margin loss of Rs 90 million. Core operating profit trajectory at Rs 8.4 billion (up 12% QoQ/two times YoY) gives some confidence.

Overall slippages were elevated at 4.4% and retail slippages at more than 5%. Recoveries and aggressive write-offs reduced gross non-performing assets QoQ by 26 bps to 3.7%.

Drawing comfort from gradual and consistent improvement in cheque bounce trends, collection efficiency, customer credit profile, etc., IDFC First Bank now guides less than 2% retail GNPA and less than 1.5% credit cost in FY23.

Click on the attachment to read the full report:

ICICI Securities IDFC FIRST Bank Q4FY22 Results Update.pdf

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