Deposit traction healthy; retail loan growth stands strong

IDFC First Bank released its quarterly business update highlighting the trends for 3QFY21. The following are the key highlights:

* Overall Funded Assets grew 0.7% YoY (3.4% QoQ) to INR1.1t, within which retail assets grew 24% YoY (11% QoQ) to INR666.4b. Retail Funded Assets, including the PSL Buyouts, thus constitute 64% of overall Funded Assets. We believe the strong traction in retail loans was aided by festive demand and an improved economic outlook.

* IDFCFB continues to show strong momentum in deposits. Customer deposits grew 41% YoY (11% QoQ) to INR772.9b, within which retail deposits (CASA + Term Deposits) grew 100% YoY (18% QoQ) to INR584.4b.

* Thus, the average CASA ratio for 3QFY21 stood at 44.6% v/s 36.5% in 2QFY21. The CASA ratio on outstanding deposits stood at 48.4%.

* On the other hand, wholesale deposits continued to decline and de-grew 26% YoY (5% QoQ decline) to INR188.5b. Thus, the concentration of the Top 20 depositors declined to 9.7% from 12.4% in 2QFY21 and 23% in 3QFY20.

* Valuation and view: We believe the bank is progressing well in its endeavor to become a retail lender and showing strong traction in growing its retail franchise in terms of both loans and deposits.

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