During Monday’s trading session, the shares of a company engaged in the business of Banking Services slumped nearly 9.6 percent to Rs. 59.24 on BSE, after the company reported Q2 FY25 financial results with a net profit declined by 67 percent QoQ and nearly 72 percent YoY.
With a market cap of Rs. 46,765.6 crores, at 12:00 p.m., the shares of IDFC First Bank Ltd (NS:IDFB) were trading in the red at Rs. 63.92, down by nearly 2.5 percent, compared to its previous closing price of Rs. 65.53.
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What’s the news:
The fluctuations in the share prices were observed after IDFC First Bank Limited announced the financial results for Q2 FY25, through the latest filings with the stock exchanges on Saturday.
For Q2 FY25, IDFC First Bank reported a consolidated net interest income (NII) of Rs. 4,788.3 crores, reflecting a growth of around 2 percent QoQ from Rs. 4,695.4 crores in Q1 FY25, but a decline of about 21.2 percent YoY from Rs. 3,950.7 crores in Q2 FY24.
The bank’s net profit for Q2 FY25 fell to Rs. 212 crores, representing a significant decline of around 67 percent QoQ from Rs. 642.6 crores in Q1 FY25 and a year-on-year decrease of nearly 71.6 percent from Rs. 746.8 crores in Q2 FY24.
Additionally, the bank reported a high CASA ratio of 48.9 percent in Q2 FY25, compared to 46.4 percent in Q2 FY24.
Operating income experienced a year-over-year increase of 21 percent, rising from Rs. 5,380 crores in Q2 FY24 to Rs. 6,515 crores in Q2 FY25, while operating expenses rose by 18 percent year-on-year, from Rs. 3,870 crores in Q2 FY24 to Rs. 4,553 crores in Q2 FY25.
As of 30th September 2024, the gross NPA stood at 1.92 percent, down from 2.11 percent as of September 30, 2023, while the net NPA stood at 0.48 percent as of September 30, 2024, compared to 0.68 percent as of 30th September 2023.
Segment Performance:
In Q2 FY25, customer deposits exhibited strong year-on-year growth of 32.4 percent, reaching Rs. 2,18,026 crores, driven by a significant 37 percent increase in retail deposits to Rs. 1,75,300 crores and a notable 37.5 percent rise in CASA deposits, totalling Rs. 1,09,292 crores.
Earnings were impacted by prudent provisioning of Rs. 568 crores, which included Rs. 315 crores related to the microfinance institution (MFI) sector due to industry stress, and Rs. 253 crores linked to a Maharashtra-based toll account following recent toll fee waivers at Mumbai entry points.
As of September 30, 2024, retail deposits accounted for 80.4 percent of total customer deposits.
The bank’s Cost of Funds for Q2 FY25 was 6.46 percent, showing a slight improvement from the previous quarter. When excluding high-cost legacy borrowings, the Cost of Funds decreased to 6.37 percent in Q2 FY25.
The total number of credit cards issued surpassed the 3 million mark during the last quarter. With business expansion, the cost-to-income ratio for the credit card segment continued to improve, recorded at 99.8 percent in Q2 FY25 compared to 104.1 percent in Q1 FY25.
In the FASTag segment, the Bank maintains its position as the leading issuer, having distributed 20 million FASTags.
Loans and Advances (including credit equivalents) rose by 21.5 percent year-over-year, increasing from Rs. 1,83,236 crore as of September 30, 2023, to Rs. 2,22,613 crore as of September 30, 2024.
The retail book of the bank expanded by 25 percent YoY, while the corporate (non-infrastructure) loans grew by 20 percent YoY during the quarter.
In July 2024, the Bank raised Rs. 3,200 crore of fresh equity capital from prominent domestic institutional investors.
Additionally, the Bank completed a merger with IDFC Ltd in October 2024, contributing Rs. 618 crore to net worth and resulting in a reduction of 16.64 crore shares in the outstanding share count.
Stock Performance:
The stock has delivered negative returns of nearly 23 percent in one year, as well as around 21.4 percent returns in the last six months. So far in 2024, the shares of IDFC First Bank have given negative returns of about 27 percent.
About the company:
IDFC FIRST Bank Limited, engaged in the business of banking services, was created by the merger of the former IDFC Bank and former Capital First (NS:CAPF) on December 18, 2018. The former IDFC Bank commenced operations as a Bank after demerger from IDFC Ltd, an infrastructure financing domestic financial institution.
The loan assets and borrowings of IDFC Limited were transferred to IDFC Bank at the inception of IDFC Bank in 2015.
The former Capital First had been a prominent player in consumer and MSME financing since 2012, with a strong track record of growth, profitability, and asset quality. Following the merger, the Bank was renamed as IDFC FIRST Bank.
Written by Shivani Singh
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