A jump in provisions against bad loans has led IDFC First Bank to report a standalone net profit of Rs 463 crore, down by 32% on year. This is largely impacted by the microfinance business and interest rate movements.
Increased Provisions and Contingencies
Provisions and contingencies of the bank jumped 67% on year to Rs 1,659 crore. This increase was influenced by slippages in the bank’s microfinance book, the press release mentioned.
Impact on Asset Quality
Due to the rise in provisions, the bank’s gross non-performing assets ratio stood at 1.97% compared to 1.87% in the previous quarter. Net NPA also saw a slight increase at 0.55% from 0.53% in the prior quarter.
Financial Performance
On the profitability side, the bank’s net interest income increased by 5.1% year-on-year to Rs 4,933 crore. However, the net interest margin decreased to 5.71%, down by 24 basis points from the previous quarter.
Loan Portfolio Growth
The bank’s advances grew by 21% year-on-year to Rs 2.53 lakh crore, driven by mortgage loans, vehicle loans, business banking, MSME loans, and wholesale loans, contributing 82% to the total growth.
Changes in Portfolio Composition
The microfinance portfolio decreased by 37% year-on-year, with its share in the overall loan book dropping to 3.3% from 6.3% a year ago. Conversely, the wholesale book expanded by 39% to Rs 49,279 crore. Deposits also saw a 26% increase year-on-year to reach Rs 2.56 lakh crore.
