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The IDFC First Bank is targeting to bring its gross NPA level down to 2 per cent and net NPA level to 1 per cent.

Bank Managing Director and CEO V. Vaidyanathan, in his message to the shareholders in the annual report, said: "We will be targeting a 2-1-2 formula, i.e. Gross NPA of 2 per cent, Net NPA of per cent and provisions of 2 per cent on funded assets on a steady state basis."

In FY21, its gross NPA stood at 4.15 per cent, against 2.60 per cent in FY20.

He said the bank's provisions for FY 21-22 is expected to be only 2.5 per cent of the average loan book which is quite reasonable by industry standards, of which a substantial portion has already been taken in Q1 FY22 and it can be expected that the provisions will be successively reduced provisions in Q2, Q3 and Q4 FY 22.

"Going forward we expect to keep our provisions at below 2 per cent of the average loan book," Vaidyanathan said.

He also said that the bank is expected to grow its retail book by 25 per cent on a compounded basis for a long period of time.

This is already playing out over the last two and a half years, as the NIM has already expanded from 1.84 per cent pre-merger to 5.09 per cent in Q4 FY 21 and further to 5.51 per cent in Q1 FY 22.

"We expect profitability to increase as we expand the loan book," he told the shareholders.