IDFC FIRST Bank reports net loss of Rs1,639cr in Q3; stock slips 4%

IDFC FIRST Bank reports net loss of Rs1,639cr in Q3; stock slips 4%
IDFC FIRST Bank, founded by the merger of IDFC Bank and Capital First recently, the bank reported a net loss of Rs1,639cr for the quarter ended December 31, 2019, as compared to a loss of Rs2,504cr as on December 31, 2018. This was on account of a one-time provision towards an identified legacy telecom exposure, totalling Rs1,622cr for which the Bank provided 50% of its exposure and provisions of Rs110cr towards one legacy infrastructure account.

The Bank has a legacy exposure of Rs3,244cr to this identified telecom company as of December 31, 2019, of which Rs2,000cr are in the form of non-convertible debentures and Rs1,244cr are in the form of non-funded exposure (Bank Guarantees) for spectrum. There has been no payment default so far from this telecom company. However, considering the financial stress in the telecom companies related to payments due to the Government, the bank has taken provisioning of 50% of total exposure towards this identified telecom company which is in financial stress, during the quarter ended on December 31, 2019. 

Total Income (Net Interest Income plus fees and other income) for the quarter was up 50% to Rs2,113cr.

Net Interest Income (NII) for Q3FY20 was strong at Rs1,534cr, up 34% yoy, primarily driven by steady growth in retail loans. NII grew 13% qoq.  

The Net Interest Margin for the Bank grew to 3.86% for the quarter, from 1.56% pre-merger, in a span of just one year since the merger. 

Fee and Other Income was Rs413cr in Q3FY20 as compared to Rs257cr in the corresponding period last year and grew 23% sequentially.

The Pre-Provisioning Operating Profit of the Bank has increased to Rs682cr for the quarter ended December 31, 2019, up 158% yoy from Rs264cr in the corresponding period last year, and by 63% sequentially. 

Treasury gains during the quarter accounted for Rs166cr. Given that this income is not predictable, the bank does not consider this as core income. Net of such income, the core Pre Provisioning Profit would have been Rs516cr for Q3FY20 as compared to Rs261cr for Q3FY19. PPOP is up 97% yoy. 

IDFC First Bank Ltd is currently trading at Rs42.25, down by Rs1.75 or 3.98% from its previous closing of Rs44 on the BSE. The scrip opened at Rs42.50 and has touched a high and low of Rs43 and Rs41.85 respectively

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