IDFC First Bank conducted a concall on 27 April 2024 to discuss the financial results for the quarter ended March 2024  and prospects of the bank. V. Vaidyanathan, MD&CEO of the bank addressed the call:

Highlights:

The bank has build a strong brand which attract deposits

The bank has substantially grown its retail deposits from Rs 10400 crore end December 2018 to Rs 151000 crore by March 2024.

The bank is very optimistic about the deposit growth over the next 5 years. 

The overall deposit base stands at Rs 2 lakh crore which is expected to increase to Rs 6 lakh crore in next 5 years. 

The bank is expecting healthy growth in its current account deposit base. 

Over past 5 years, the bank has recorded 10 times growth in the wealth management business to Rs 15000 crore. 

Being universal bank, the bank is able to offer multiple services and grow fee income. About 93% of the fee income is retail. 

The bank is making great stride In the NRI banking business. 

The bank had significant shortfall of priority sector loans five years ago and it had to invest Rs 3500 crore into RIDF bonds at a very low interest rate of 3.5%. However, over the last 5 years the bank as significantly improved its PSL lending and currently it''s able to sale excess PSL loans. With achievements of PSL target, the bank has reduced RIDF bond holding to Rs 926 crore. 

The bank has good product on the asset side which can give good margins with low credit cost. 

The bank has reduced high cost borrowings of Rs 6000 crore in FY2024 and another Rs 7000 crore are scheduled to mature in FY2025. 

An incremental credit deposit ratio stands at 76% on account of strong inflow of deposits. 

The cost of fund was stable at 6.23% as the bank received benefit of reduction of the high cost borrowings. 

The infrastructure book which is a run down book, has reduced to below 1.5% of the loan book at Rs 2800 crore. 

The credit card loan book which is a new has touched Rs 5500 crore and the bank has issued 2.5 million credit cards. The card spends growth is very strong at 58% for the bank. 

The fresh slippage of loans stood at Rs 1347 crore in Q4 FY 2024.

The profit of the bank has increased by 21% in FY2024 despite the bank had some treasury gains in FY2023. Excluding the treasury gains first FY2023, the profit has increased by 28% in FY 2024.

The operating expenses growth was driven by the technology spends, employee addition, distribution expansion and high business volumes. 

The credit cost stood at 1.32% for FY2024 and 1.5% per Q4FY 2024.

The bank expect credit cost at 1.65% for FY 2025 which would be front loaded for the year so that the credit cost for H2FY2025 will be low. 

The capital adequacy ratio is healthy at 16.1 1% and the bank had a impact of 100 bps on capital adequacy ratio and 82 bps on CET on account of RBI raising risk weights for certain segments. 

The bank expect its cost income ratio to be flattish for Q1 and Q2FY2025 and start moderating from Q3 and Q4 with the credit card business turning profitable. 

The bank expect to maintain LCR at 115%.

Bank is comfortable at maintaining incremental CD ratio at below 80% for FY 2025

Earning performance is expected to remain moderate in Q1 and improve moving forward to strong performance in H2FY2025. 

The bank is targeting loan growth of 20-23% for FY2025.