IDFC First Bank is on the rise, Retail deposit increased to 76%

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IDFC First Bank’s stock witnessed a 3% surge, reaching a six-year high of Rs 79.20 on the BSE during Thursday’s trading session, buoyed by robust trading volumes. This marked the stock’s highest level since October 2016, when it achieved a record high of Rs 83.45 on September 28, 2016.

IDFC First Bank Growth

Following its merger, IDFC First Bank successfully transitioned from an infrastructure-focused institution to a retail banking entity within four years. This transformation led to significant improvements, including an increase in the CASA ratio from 8.6% to 49.77% (as of March 31, 2023), a rise in retail deposits from 27% to 76% of total deposits, and the establishment of 809 branches and 925 ATMs.

In the financial year 2022-23 (FY23), the bank recorded a profit after tax (PAT) of Rs 2,437 crore, accompanied by a robust Capital Adequacy ratio of 16.82%.

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IDFC First Bank boasts strong asset quality, with Gross NPA for retail loans at 1.65% and Net NPA at 0.55% as of March 31, 2023. The overall Gross NPA, including infrastructure, stands at 2.51%, while the Net NPA is 0.86%.

On June 2, CRISIL Ratings upgraded IDFC First Bank’s tier II Bonds (under Basel III) worth Rs 5,000 crore from ‘CRISIL AA/Positive’ to ‘CRISIL AA+/Stable.’ Additionally, it re-affirmed a CRISIL A1+ rating on the bank’s existing Certificate of Deposits valued at Rs 45,000 crore.

The rating upgrade was driven by the bank’s consistent business growth, supported by the strengthening of both the retail asset and liability side franchise, improved asset quality, and the expectation of ongoing enhancements in operating and overall profitability. CRISIL also noted the bank’s healthy level of capitalization.

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CRISIL stated, “In the medium term, the bank’s capital position is expected to remain strong as its earnings profile continues to improve. The asset quality is also anticipated to remain stable. However, as the business expands with a greater focus on the retail segment, the bank’s ability to sustain asset quality, profitability, and growth will be crucial factors to monitor.”

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