IDFC First Bank Q3 Results Review - Earnings Momentum On Track; RoA Improves Further: Motilal Oswal

Motilal Oswal Report

IDFC First Bank Ltd. reported a stable performance in Q3 FY23. Profit after tax rose 115% YoY to Rs 6.0 billion, driven by higher net interest income, healthy retail deposit growth and higher fee income.

Business growth remained robust as the loan book grew 26% YoY, led by 37% YoY growth in retail loans. The wholesale book was flat. The growth in deposits was encouraging at 8% QoQ.

Current account and savings account deposits too saw a healthy growth of 5% QoQ. Thus, the CASA ratio was strong at 50%.

IDFC First Bank is entering a phase of strong loan growth as the drag from the wholesale book moderates. This will be aided by a strong pickup in profitability due to the replacement of high-cost borrowings, better cost trends and controlled credit costs.

We estimate IDFC First Bank to deliver FY25 return on asset/return on equity of 1.3%/15.1%.

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