IDFC Bank De­cem­ber quar­ter profit up

The Pak Banker - - COMPANIES/BOSS -

IDFC Bank Ltd re­ported on Wed­nes­day a net profit of Rs.242.2 crore for the three months ended De­cem­ber, its maiden quar­ter af­ter it be­gan op­er­a­tions in Oc­to­ber 2015. Earn­ings for the same pe­riod last year as re­ported by IDFC Ltd are not com­pa­ra­ble. The bank in­di­cated that about 15% of its loan book could fall in the stressed cat­e­gory, which could mean a rise in non-per­form­ing loans in the com­ing quar­ters. The bank's net in­ter­est in­come (NII), the dif­fer­ence be­tween in­ter­est earned on loans and paid on de­posits, was Rs.404.2 crore for the third quar­ter of the cur­rent fis­cal. Net in­ter­est mar­gin, a mea­sure of the bank's prof­itabil­ity, was at 2%.

Other in­come, mainly in­come from fees and com­mis­sions, was at Rs.200 crore. Go­ing for­ward, the bank will fo­cus on boost­ing its fee-based in­come from its tra­di­tional cor­po­rate loan book, which it in­her­ited from IDFC, said Ra­jiv Lall, vice-chair­man and man­ag­ing di­rec­tor at the bank. "We will build up the earn­ing power of our cor­po­rate book by chang­ing the mix of in­ter­est ver­sus non-in­ter­est earn­ings," said Lall in an in­ter­ac­tion with the me­dia. IDFC Ltd, an in­fra­struc­ture fi­nance in­sti­tu­tion, re­ceived a bank­ing li­cence from the Re­serve Bank of In­dia in July 2015, fol­low­ing which the as­sets and li­a­bil­i­ties of the fi­nance com­pany were trans­ferred to the bank as per reg­u­la­tions.

IDFC Bank be­gan op­er­a­tions in Oc­to­ber 2015 with a loan book of about Rs.41,000 crore and has set up 24 branches across ur­ban and ru­ral cen­tres. In its first quar­ter as a bank, the len­der's out­stand­ing ad­vances stood at Rs.42,995, a growth of 3% since its in­cep­tion. The bank has lent close to Rs.54 crore un­der its ru­ral bank­ing ver­ti­cal la­belled "Bharat Bank­ing", said Su­nil Kakar, group chief fi­nan­cial of­fi­cer. "Ru­ral bank­ing is cer­tainly our fo­cus but it is not our prime fo­cus. It is one of the three pil­lars, the oth­ers be­ing whole­sale and con­sumer bank­ing," said Lall.

The bank's gross non-per­form­ing as­sets (NPA) were 3.1% of loans on a gross ba­sis and 1% on a net ba­sis. The bank ex­pects its gross NPAs to in­crease in the com­ing quar­ters through slip­pages in its re­struc­tured loans. Re­struc­tured loans along with gross NPAs formed 7-8% of to­tal ad­vances, said Kakar, adding that the bank has proac­tively iden­ti­fied loans that may face trou­ble even though they don't fall un­der the reg­u­la­tory def­i­ni­tion of stressed as­sets. IDFC Bank has close to Rs.8,800 crore worth of loans un­der stress, which is about 15% of to­tal ad­vances, Lall said. "When we say that our as­set qual­ity is sta­ble, what we are say­ing is that the over­all stressed book has not grown and the pro­vi­sions that we have made are ad­e­quate," he said. The bank would not need to make pro­vi­sions in the com­ing quar­ter even if its gross NPAs grow in ab­so­lute terms, Lall said. The bank has proac­tively iden­ti­fied stressed loans and pro­vided for the same, he added. RBI has asked banks to iden­tify vis­i­bly stressed loans and make pro­vi­sions against th­ese by March 2016 in a move di­rected at clean­ing up bank books by March 2017.

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