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Shares of IDFC First Bank today fell as much as 5% to ₹41.85 on BSE after the lender reported a net loss of ₹1,639 crore for the third quarter ended December 31, hurt by one-time provisions to telecom and infrastructure sector loans. During the quarter, IDFC First Bank, which came into existence after the merger of IDFC Bank and Capital First, took 50% provision cover of ₹1,622 crore towards exposure of Rs. 3,245 crore to legacy stressed telecom account and ₹110 crore towards one legacy infrastructure account.
IFDC First Bank however clarified that there has been no payment default so far from this telecom company. However, considering the financial stress in the telecom companies related to payments (AGR) due to the government, the bank has taken provisioning of 50% of total exposure towards this identified telecom company which is in financial stress, IDFC Bank said.
Pre-provisioning profit of the lender increased to Rs. 682 crore in Q3 FY20 compared to Rs. 264 crore during the same period of the previous year.
On the operational front some analysts say that the earnings were strong. In Q3 net interest income grew 34% year-on-year to Rs. 1,534 crore, up from Rs. 1,145 crores in Q3 FY19. The net interest margin rose sharply to 3.86% in Q3 FY 20 from 2.89% in Q3 FY19.
Both gross NPA and net NPA ratios however showed an uptick quarter on quarter. Gross NPA was 2.83% of total advances as of December 31, 2019, as compared to 2.62% as of September 30, 2019 while net NPA was 1.23% as of December 31, 2019, as compared to 1.17% as of September 30, 2019.
Retail CASA and retail term deposits (core retail deposits) as percentage of the overall liability book stood at 21.78% as compared to 8.04% as on December 31, 2018 at merger.
The retail loan book stood at Rs. 51,506 crore and contributed 49% to the gross loan book as of December 31, 2019, increasing from 13% pre-merger.
Commenting on Q3 results, V Vaidyanathan, managing director and CEO of IDFC First Bank, said: “The bank has provided 50% for the legacy stressed telecom account, and it is now time to look ahead for growth."
IDFC First Bank's Tier 1 Capital Adequacy was at 13.28% as of 31st December 2019. The lender said it has has headroom to raise it to beyond 18% through T1/ T2 bonds.
However, at 9:20 am, IDFC First Bank shares pared some losses and traded 2.7% lower at ₹42.80.