IDFC FIRST Bank reported a 196.5 per cent annual increase in profit after tax for its second fiscal quarter, reaching 1,045 crore rupees. Deposits and lending both grew, while foreign-currency deposits brought a large additional funding inflow. Management said the associated balance-sheet expansion diluted its reported interest margin. Gross non-performing loans stood at 1.32 per cent at September’s end.
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Quarterly profit rises 196.5 per cent
IDFC FIRST Bank, an Indian lender, reported a sharp annual increase in profit after tax for its second fiscal quarter ended September 30. The unaudited results were released on October 24. Profit rose 196.5 per cent to 1,045 crore rupees, taking it above 1,000 crore rupees for a second consecutive quarter.[1], [2]
First-half profit reached 2,120 crore rupees. Return on assets, a measure of earnings relative to the bank’s asset base, was 0.99 per cent for the first half and 0.93 per cent for the second quarter. Core operating profit excluding trading gains increased 38.5 per cent annually to 2,527 crore rupees. On the same exclusion, the cost-to-income ratio improved to 70.16 per cent from 70.73 per cent in the preceding quarter.[1]
Foreign-currency deposits expand the balance sheet
Total deposits grew 25.9 per cent annually and 11.8 per cent from the preceding quarter to 348,583 crore rupees. Loans and advances, including credit substitutes and lending backed by foreign-currency deposits, increased 30.1 per cent to 346,913 crore rupees. Excluding lending secured by those deposits, loan growth was 22.2 per cent, measured before interbank participation certificates.[1]
The bank mobilised 34,390 crore rupees, approximately 3.6 billion dollars, through the Foreign Currency Non-Resident Bank deposit programme, known as FCNR(B). It has no branch, subsidiary or representative office outside India. Management said most of the deposits mature in 3–5 years. Their fully loaded cost, including priority-sector lending benefits, was approximately 1 per cent below comparable domestic fixed deposits.[1]
Management describes a margin effect from deposit-backed lending
Loans made against these deposits by the international banking unit increased the balance sheet by 24,885 crore rupees. Management said this diluted the reported net interest margin while it expected benefits to net interest income and profit. The average current and savings account ratio fell from 50.1 per cent to 48.4 per cent, mainly reflecting the foreign-currency inflow according to the bank. Gross non-performing loans stood at 1.32 per cent, with the net ratio at 0.40 per cent.[1]
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