IDFC First Bank retail deposits grow 16%

The private sector lender IDFC First Bank has said its retail deposits grew 16% sequentially during the quarter ended March to Rs 33,898 crore.
The growth in retail deposits on a yea basis was 157%. The bank did not share the value of its institutional deposit base.
A closer look at the numbers shows that IDFC First Bank’s total deposit base declined sequentially during the March quarter.

The lenders retail deposit ratio improved to 52.3% as on March 31, 2020, from 43.45% as on December 31, 2019. This puts the total size of its deposit base at Rs 64,814 crore at the end of March 2020, down 3.8% from Rs 67,358 crore at the end of December 2019.
During Q4FY20, the lenders current account savings account (CASA) deposits grew 28% sequentially to Rs 20,758 crore, as on March 31.

On a year basis, the growth in CASA deposits was 163%.
The CASA ratio improved to 32.03% as on March 31, 2020 from 24.06% as on December 31, 2019, and 11.4% as on March 31, 2019.
Certificates of deposit (CDs) outstanding fell 75% year ago to Rs 7,111 crore as on March 31, 2020.

As part of the stated strategy of the bank, the bank continued to reduce large wholesale loans and increase the retail loan book as per trend of the earlier quarters.
Its retail assets grew 32.4% on year to Rs 54,027 crore as on March 31, 2020.
Wholesale funded assets, including stressed equity and security receipts, fell 29% on year to Rs 40,415 crore at March end.

The priority-sector limit (PSL) buyouts fell to Rs 5,312 crore, excluding rural infrastructure development fund (RIDF) of Rs 2,735 crore from the year-ago figure of Rs 9,468 crore, excluding RIDF of Rs 3,456 crore. The underlying assets of these PSL buyouts are retail loans.
Retail loans as a proportion of total funded assets improved to 60% as on March 31, 2020, from 47% a year ago, on including these PSL buyouts in the retail funded assets.
The liquidity coverage ratio (LCR) of IDFC First Bank increased to 140% as on March 31, 2020, from 114% a quarter ago.

IDFC First continues to remain well-capitalised with common equity ratio (CET1) estimated to be around 13% at 31st March, 2020.
The lender maintains comfortable liquidity levels with the bank’s liquidity coverage ratio (LCR) at 119% as on December 31, 2019.

Additionally, it also maintains excess statutory liquidity ratio (SLR) and has tied up refinance limits from sources such as Small Industries Development Bank of India and National Bank for Agriculture and Rural Development.
Crisil has assigned FAAA/stable rating to the Rs 50,000 crore fixed deposits of IDFC First Bank Ltd while the ratings on existing debt instruments have been reaffirmed at AA/stable and A1-plus.
The lenders ability to maintain good asset quality in the growing retail portfolio over a longer period and on a larger scale will be a key monitorable.

Going ahead however if the lockdown continues for a longer time, this is bound to impact MSMEs and SMEs in a big way were the bank has large exposure.
However the bank has built a good retail portfolio for its consumer durable and two wheeler businesses but considering the slowdown expected ahead here for the next 2 quarters it remains to be seen how the bank gets back growth and manages to its asset quality intact ahead.

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