MUMBAI: IDFC First Bank has delivered a stellar performance for the third quarter ended December 2023, reporting a significant 48.1% jump in net profit to Rs 503 crore. This marks a substantial increase from the Rs 339 crore recorded in the corresponding quarter of the previous financial year. The impressive bottom-line growth was primarily fueled by higher core income, sequentially lower provisions, and a notable improvement in asset quality, reflecting the bank's strengthening operational fundamentals.
Robust Business Expansion and Financial Metrics
The bank's business growth remained vigorous, with advances surging 21.4% year-on-year to reach Rs 2.8 lakh crore. This expansion was predominantly led by the retail and MSME segments, which together contributed a remarkable 89% of the incremental growth. On the liability side, deposits grew by 22.9% to Rs 2.82 lakh crore, underpinned by a robust 33% increase in CASA deposits, which stood at Rs 1,50,350 crore. Consequently, the CASA ratio improved to a healthy 51.6%, indicating a stable and low-cost funding base.
Income Growth and Expense Management
Net interest income (NII) witnessed a steady 12% year-on-year rise to Rs 5,492 crore, supported by balance-sheet expansion and stable net interest margins. Other income also saw an uptick, reaching Rs 2,125 crore, driven by a 15.5% increase in fee income and higher trading gains. Operating income grew by 14% to Rs 7,617 crore. However, operating expenses rose by 13.4% to Rs 5,584 crore, which included a one-time impact of Rs 65 crore due to the implementation of the new labour code. Excluding this exceptional item, the expense growth was more contained, showcasing effective cost management.
Asset Quality and Capital Position Strengthen
Asset quality showed marked improvement, with gross non-performing assets (NPAs) declining to 1.69% from 1.94% a year earlier. Provisions increased by 4.5% year-on-year to Rs 1,398 crore but fell by 3.7% sequentially, signaling stabilization in asset quality. The bank's capital adequacy ratio strengthened to 16.22%, bolstered by the conversion of Rs 7,500 crore of compulsorily convertible preference shares into equity, enhancing its capital buffer.
Nine-Month Performance and Outlook
For the first nine months of the financial year, the bank's cost-to-income ratio eased to 71.8%, while the return on equity stood at 4.11%. These metrics reflect the operating leverage benefits as the retail-led franchise continues to scale up. The overall performance underscores IDFC First Bank's strategic focus on sustainable growth, prudent risk management, and enhancing shareholder value in a competitive banking landscape.
