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HDFC Securities Retail Research
The retailisation strategy of IDFC First Bank Ltd. is playing out well with retail funded assets increasing to ~66% of total funded assets from ~30% at the end of FY19.
On the liability side also, current account and savings account ratio has also grown significantly from 13% in FY19 to over 50% currently driven by higher interest rates offered by the bank on savings accounts.
All legacy stressed assets have been identified and provided for and incremental provisioning is likely to reduce going forward. IDFC First Bank is gradually replacing its term borrowings with low cost deposits which would reduce cost of funds and aid in profit growth.
New products launched are highly profitable resulting in strong improvement in operating leverage. We expect this phenomenon to continue to play out over the next few years, which will result in increase in overall profitability and return on equity/return on asset.
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