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ICICI Securities Report
IDFC FIRST Bank Ltd.'s Q1 FY23 earnings were much ahead of our and consensus expectations with profit after tax growth of 38% QoQ to Rs 4.7 billion.
Core operating profit trajectory at Rs 10 billion (up 18% QoQ/64% YoY) gives confidence of targeted return on asset/return on equity, after having delivered RoA of 0.97%/RoE of 9% in Q1 FY23.
Containment of credit cost at 90 basis points and retail asset growth of 10% QoQ/30% YoY were encouraging. This was offset by higher opex, net interest margin trajectory at 5.9%, and mark-to-market loss of Rs 440 million.
Overall slippages were elevated at 3.5% due to slippage of one legacy retail chain account. Recoveries and aggressive write-offs reduced grsoo non-performing assets QoQ by 33 bps to 3.36%.
IDFC First Bank is confident of its guidance of less than 2% retail GNPA and less than 1.5% credit cost in FY23.
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