InvestorQ : What explains the 5-fold jump in the profits of IDFC Bank in the September 2022 quarter?
Sam Eswaran made post

What explains the 5-fold jump in the profits of IDFC Bank in the September 2022 quarter?

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Moii Chavate answered.
1 month ago
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Before we go into the profit story of IDFC First Bank, let us first look at the top line performance of the bank. IDFC First Bank reported 35.2% growth in revenues for the September 2022 quarter at Rs6,531 crore a group consolidated basis. The net interest income (NII) grew by 32% for the quarter to Rs3,002 crore yoy. The net interest margin (NIM) expanded to a record breaking 5.98% for the quarter, which was a major trigger for the profit growth. Core operating income was up 35% at Rs3,947 crore while core operating profits grew 84% at Rs1,052 crore. CASA (current and savings accounts) low cost deposits grew 37% yoy and they now constitute for 51.28% of total deposits.

IDFC First Bank

Rs in Crore

Sep-22

Sep-21

YOY

Jun-22

QOQ

Total Income (Rs cr)

₹ 6,531.16

₹ 4,830.14

35.22%

₹ 5,777.37

13.05%

Net Profit (Rs cr)

₹ 567.19

₹ 110.95

411.21%

₹ 485.01

16.94%

Diluted EPS (Rs)

₹ 0.90

₹ 0.18

₹ 0.77

Net Margins

8.68%

2.30%

8.39%

Let me now turn to the profit performance of IDFC Bank. Net profits for the quarter were up 411% at Rs567 crore and the growth was on a relatively smaller base, so it looks magnified. Profits grew by 16.9% on sequential basis. The profit growth can be attributed to the sharp surge in NIMs or net interest margins which also ensured healthy ROA of 1.07%. The ROE stood at 10.13% on annualized basis. Gross NPAs tapered to 3.18% and net NPAs to 1.09% as the provision coverage ratio (PCR) improved to 83% in Q2FY23. Capital adequacy ratio is above requirements at 15.35% as is the Tier-1 capital levels. PAT margins at 8.68% were flat sequentially but up almost 4-fold on a comparable yoy basis.

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