IDFC FIRST Bank Q3 Results: Profit Plunges As Stress In Microfinance Book Lifts Provisions

IDFC FIRST Bank Ltd. on Saturday said that the lender reported a fall of 53% in its profit on a yearly basis to Rs 716 crore during the three months ended December due to a sharp rise in provisions especially made for the microfinance institutions segment.

However, on a sequential basis, the bank's bottom line jumped 69%.

This rise in provisions has come as the MFI segment has been witnessing stress, leading to a slowdown in loan disbursals.

Provisions and contingencies for the third quarter doubled to Rs 1,338 crore from the year-ago period. This was largely driven by higher slippages in the MFI loan book. Excluding microfinance, provisions were stable for the bank's non-microfinance book.

On a sequential basis, the bank delivered a better performance with provisions falling nearly 28%, aiding net profit.

While net interest income of the bank rose 14% on the year to Rs 4,902 crore, net interest margin fell to 6.04%, lower than 6.18% reported a quarter ago.

"NIM declined during the quarter largely due to a decline in the microfinance business and an increase in the composition of wholesale banking business," the press release said.

Asset quality of the private sector bank worsened during the quarter ended December. Gross non-performing assets ratio of the bank rose to 1.94% as against 1.92% a quarter ago. Net NPA ratio also increased to 0.52% from 0.48% a quarter ago.

Gross slippages for the bank were Rs 2,192 crore, higher than Rs 2,031 crore a quarter ago. Microfinance business constituted Rs 143 crores out of the total rise in slippages this quarter.

However, gross slippages in retail, micro, small, and medium enterprises, agriculture, and corporate loans were stable, which accounts for 95% of the bank's total loan book.

The bank's advances rose 22% on the year to Rs 2.31 lakh crore. Retail book of the bank grew over 21% on the year, and the non-infrastructure corporate book rose nearly 29%. The microfinance portfolio as a percentage of the overall loan book reduced to 4.8% at the end of December from 5.6% a quarter ago.

Customer deposits rose by 29% on the year to Rs 2.27 lakh crore. The current account and savings account ratio of the bank was 47.7% as of the end of December.