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4
5 = Company History =
6
7 IDFC First Bank Ltd (NSE: IDFCFIRSTB) was form resulting the merger of IDFC Bank Ltd and Capital First Ltd on December 18, 2018.
8
9
10 **IDFC Limited**
11
12 IDFC Limited was set up in 1997 to finance infrastructure, focusing primarily on project finance and mobilization of capital for private sector infrastructure development. Whether it is financial intermediation for infrastructure projects and services, whether adding value through innovative products to the infrastructure value chain or asset maintenance of existing infrastructure projects, the company focused on supporting organisations to get the best return on investments. The Company’s ability to tap global as well as Indian financial resources made it the acknowledged experts in infrastructure finance. Dr. Rajiv Lall joined the company in 2005 and successfully expanded the business to Asset Management, Institutional Broking, and Infrastructure Debt Fund. He applied for a commercial banking license to the RBI in 2013. In 2014, the Reserve Bank of India (RBI) granted an in-principle approval to IDFC Limited to set up a new bank in the private sector. Following this, the IDFC Limited divested its infrastructure finance assets and liabilities to a new entity - IDFC Bank- through demerger. Thus, IDFC Bank was created by demerger of the infrastructure, lending business of IDFC to IDFC Bank in 2015. {{footnote}}https://www.idfcfirstbank.com/about-us/our-history{{/footnote}}
13
14 The bank was launched through this demerger from IDFC Limited in November 2015. During the subsequent three years, the bank developed a strong and robust framework including strong IT capabilities for scaling up the banking operations. The Bank designed efficient treasury management system for its own proprietary trading, as well as for managing client operations. The bank started building Corporate banking businesses. Recognizing the change in the Indian landscape, emerging risk in infrastructure financing, and the low margins in corporate banking, the bank launched retail business for assets and liabilities and put together a strategy to retailize its loan book to diversify and to increase margins. Since retail required specialized skills, seasoning, and scale, the Bank was looking for inorganic opportunities for merger with a retail lending partner who already had scale, profitability and specialized skills.
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16
17 [[image:IDFCFIRSTB0.jpg]]
18
19
20 == Product and services ==
21
22
23 **Bank Accounts**
24
25 Savings Account
26
27 Corporate Salary Account
28
29 Senior Citizen Savings Account
30
31 FIRST Power
32
33 Minor's Savings Account
34
35 NRI Savings Account
36
37 Health FIRST Savings Account
38
39 Future FIRST Savings Account
40
41 Vishesh Savings Account
42
43 Pratham Savings Account
44
45 Honour FIRST Defence Account
46
47
48 **Fixed Deposit**
49
50 Recurring Deposit
51
52 NRI Fixed Deposit
53
54
55 **Loan**
56
57 Personal Loan
58
59 Consumer Durable Loan
60
61 Home Loan
62
63 Two Wheeler Loan
64
65 Pre-owned Car Loan
66
67 Loan Against Property
68
69 Vyapaar Vriddhi - Micro Enterprise Loan
70
71 Sakhi Shakti - JLG Loan for Women
72
73 Suvidha Shakti
74
75 Car Loan
76
77 Easy Buy EMI Card
78
79
80 **Invest & Insure**
81
82 Mutual Funds
83
84 Sovereign Gold Bonds
85
86 IDFC FIRST Zerodha 3-in-1
87
88 Investment Linked Insurance
89
90 Term Insurance
91
92 Health Insurance
93
94 Motor Insurance
95
96 Home Insurance
97
98 Travel Insurance
99
100 Pradhan Mantri Insurance
101
102
103 **Payments**
104
105 IDFC FIRST Bank Credit Bill Payments
106
107 BHIM UPI
108
109 Funds Transfer
110
111 Bill Payments and Recharge
112
113 Online Shopping and Payments
114
115 NACH
116
117 Online Tax Payments
118
119 BHARAT QR
120
121 Point Of Sale
122
123
124 **Cards**
125
126 Credit Card
127
128 FIRST Millennia Credit Card
129
130 FIRST Classic Credit Card
131
132 FIRST Select Credit Card
133
134 FIRST Wealth Credit Card
135
136
137 [[image:IDFCFIRSTB1.png]]
138
139
140 = Business Overview =
141
142 == Retail Liabilities ==
143
144 During the year, the Bank’s CASA Deposits as well as Retail Term Deposits posted strong growth, as these Core Deposits (Retail CASA and Retail Term Deposits) increased to Rs 33,924 crore during the financial year FY20. This signifies the sticky and sustainable nature of the growing deposit balance. The Bank’s Fixed Deposits have been assigned the highest rating “FAAA/ Stable” by CRISIL. {{footnote}}https://www.idfcfirstbank.com/content/dam/idfcfirstbank/pdf/annual-report/IDFC-FIRST-Bank-Limited-Sixth-Annual-Report-FY-2019-20.pdf{{/footnote}}
145
146 FY20 stands as a testimony to Bank’s commitment to growth. The Bank serves its customers through 464 branches and 356 ATMs across 20 states and 66 districts.
147
148 The One IDFC FIRST App offers over 120+ business and personal services including UPI. The Bank recently launched watch banking, which enables customers to access their bank account and transact on their smart watch. The Bank’s digital platforms are easy to use and transact; 70% of the Bank’s active customer base is regularly transacting on various digital platforms.
149
150
151 == Retail Assets ==
152
153 The Bank’s retail lending business gained significant momentum as retail assets grew to ` 57,310 crore as on March 31, 2020, from ` 40,812 crore as on March 31, 2019, reflecting a year-onyear growth of 40%. Retail loans as a proportion of total funded assets improved to 54% as on March 31, 2020, from 37% as on March 31, 2019. This was in keeping with the Bank’s stated strategy of increasing the retail loan book vis-à-vis the large wholesale loans.
154
155 The Consumer Durable loans segment saw significant increase in breadth and scale, backed by automation for greater reach and faster decision-making. This gave its Bank the competitive advantage, enabling it to differentiate its offering in a fast evolving lending space. The Consumer Durable loan book grew by 21% during the year. This portfolio has almost 10 years’ vintage as it was grown since 2011 through Capital First business model.
156
157 In the Personal Loan business, the Bank spread its wings across 63 locations in India. The Bank enhanced its digital presence by launching a new customer facing mobile app - IDFC FIRST Loans App; customers can now apply for personal loans 24x7 through the app and get instant decision on their loan application. The Personal Loan book grew by 35% during the year. This portfolio has over nine years’ vintage as it was grown since 2011 through Capital First business model.
158
159 The Two-Wheeler loan book grew 28% despite industry degrowth and challenging market conditions. Demand from rural markets for the Bank’s Two-Wheeler loan offering grew significantly during the year. The Bank also grew its Used-Car financing book in a significant way through many ways including online portals and other channel partners. The Bank looks forward to continue its growth journey in this product segment going forward. This portfolio has over eight years’ vintage as it was grown since 2011 through Capital First business model.
160
161
162 == Wholesale banking ==
163
164 The current financial year was one of the most challenging one for the Indian Corporate sector and the Bank witnessed a number of large houses getting into financial trouble. its Bank has continued the strategy of transition its exposure from Infrastructure lending and large ticket lending to a more diversified and mid-sized lending. Even so, its Bank continues to be a full-service Corporate Bank with coverage across Large Corporates, Emerging Large Corporates, NBFCs and Financial Institutions. The company offer all products encompassing Lending, Transaction Banking, Financial Markets and Liabilities. Further, the Bank continues to focus on improving profitability through improving its lending yields and improving product penetration across its clients.
165
166 The Bank’s Corporate Coverage Group has focused on reducing the Bank’s balance sheet risk profile from long-term and big-ticket Infrastructure legacy assets to predominantly loans to operating mid-sized and more granular corporate banking assets.
167
168 In the year under review, the Corporate Coverage Group successfully reduced its Infrastructure Legacy Assets exposure by one-third over previous year. Similarly, certain largeticket exposures to corporate entities were also reduced. A combination of these have led to the overall Wholesale Bank book reduce by 27% in its size over this year. Going forward, its Bank will continue to work towards reducing its exposure to infrastructure assets and will be adding exposure to other manufacturing, services and financial firms.
169
170 The Bank actively engages with Institutions like SIDBI, NABARAD, NHB and Exim Bank to avail refinance and with overseas branches of domestic banks to avail foreign currency borrowings. Leveraging on its strong relationships with banks, the Bank also acquired Priority Sector Assets to meet its regulatory requirements, through investment in IBPC issued by these banks and purchased PSLCs from them.
171
172
173 [[image:IDFCFIRSTB2.png]]
174
175 [[image:IDFCFIRSTB3.png]]
176
177
178
179 = Financial results =
180
181 May 8, 2021; The Board of Directors of IDFC FIRST Bank announce financial results for the quarter and the year ended March 31, 2021. {{footnote}}https://www.idfcfirstbank.com/content/dam/idfcfirstbank/pdf/financial-results/IDFC-FIRST-Bank-Financial-Results-Q4-FY21.pdf{{/footnote}}
182
183
184 == Earnings ==
185
186 Profit After Tax: The Profit after Tax for Q4 FY21 was at Rs. 128 crore, recording a growth of 79% as compared to Rs. 72 crore in Q4 FY20. The Profit after Tax for the year ended March 31, 2021, is reported at Rs. 452 crore
187
188 Net Interest Income (NII): Net Interest Income (NII) grew by 15% Y-o-Y to Rs. 1,960 crore, up from Rs. 1,700 crore in Q4 FY20. The sequential Q-o-Q NII grew by 4%.
189
190 Net Interest Margin (NIM%) (quarterly annualized): NIM% rose to 5.09% in Q4 FY21 from 4.61% in Q4 FY20 and 5.04% in Q3 FY21. This accounts for interest on interest provision of Rs. 55 crore in Q4 FY21, excluding which the NIM% for Q4 FY21 would have been higher by about 15 bps on a normalized basis.
191
192 Fee and Other Income (without trading gains) increased 39% to Rs. 600 crore in Q4 FY21 as compared to Rs. 432 crore in Q4-FY20. Similarly, the Fee Income has grown by 3% sequentially QoQ.
193
194 Total Income (net of Interest Expense) grew 14% at Rs. 2,801 crore for Q4-FY21 as compared to Rs. 2,451 crore for Q4-FY20.
195
196 Provisions: The provision for Q4 FY21 was at Rs. 603 crore as compared to Rs. 679 crore for Q4 FY20 and as compared to Rs. 595 crore in Q3 FY21. In Q4 FY21, the Bank released Rs. 324 crores from provisions made for one Telecom Account based on mark to market value of the instruments and made additional provisions of Rs. 375 crore for COVID-19 which is carried forward to the next financial year for the unprecedented situation arising due to COVID-19 second wave in India. Earlier, erstwhile Capital First had portfolios like loan against shares with ticket sizes above Rs. 20 lac and loans with annual interest payments, which were allowed for NBFCs but are not allowed for a Bank. On merger with the Bank, dispensation was provided by the RBI for the said portfolio which is no longer available, due to which the Bank had to make 100% provision on these loans amounting to Rs. 89 crore in Q4-FY21.
197
198
199 == Liabilities ==
200
201 CASA Deposits posted strong growth, rising 122% YoY to Rs. 45,896 crore as on March 31, 2021, as compared to Rs. 20,661 crore as on March 31, 2020.
202
203 CASA Ratio improved to 51.75% as on March 31, 2021, as compared to 31.87% as on March 31, 2020, and 48.31% as on December 31, 2020.
204
205 The total Customer Deposits increased by 43% to Rs. 82,725 crores as of March 31, 2021, as compared to Rs. 57,719 crore as of March 31, 2020.
206
207 Customer Deposits as a percentage of the overall deposits & borrowings improved to 61.52% as on March 31, 2021, as compared to 47.22% as on March 31, 2020
208
209 The Bank increased customer deposits with outstanding balance of Rs. 5 crore and below to 82% of the overall customer deposits as on March 31, 2021, as compared to 59% as on March 31, 2020 which has significantly strengthened the deposit base.
210
211 The Fixed Deposits of the Bank have the highest rating “F AAA/Stable” by CRISIL.
212
213 As of March 31, 2021, the Bank has 596 branches and 592 ATMs and 85 Recyclers across the country.
214
215
216 == Loans and Advances ==
217
218 Total Funded Loan Assets stood at Rs. 1,17,127 crore as on March 31, 2021, compared to Rs. 1,07,004 crore as on March 31, 2020, and as compared to Rs. 1,10,469 crore as on December 31, 2020
219
220 Retail Loan Book, increased to Rs. 73,673 crore as on March 31, 2021, compared to Rs. 57,310 crore as on March 31, 2020. The year-on-year growth of the Retail Loan Book was 26% excluding Emergency Credit Guarantee Line loan book of Rs. 1,687 crore.
221
222 Retail loans including retail PSL portfolio constitute 67% of the overall loan assets.
223
224 Wholesale Loan Book reduced by 14% from Rs. 41,739 crore as of March 31, 2020, to Rs. 36,017 crore as of March 31, 2021.
225
226 This includes Security Receipts of Rs. 924 crore (43% provided) and Loans against Equity of Rs. 1,173 crore (99% provided) as of March 31, 2021.
227
228 Within the wholesale segment, the Infrastructure loan book reduced by 27% to Rs. 10,808 crore as on March 31, 2021, from Rs. 14,840 crore as on March 31, 2020, and reduced by 7% from Rs. 11,602 crore at December 31, 2020.
229
230 Infrastructure financing book as % of overall funded assets has now reduced to just 9.23% of funded assets as on March 31, 2021, as compared to 13.87% as on March 31, 2020, and as compared to 19.44% as on March 31, 2019.
231
232 The bank reduced concentration risk by reducing the exposure to Top 10 borrowers as % of the total funded assets to 5.9% as on March 31, 2021, as compared to 7.2% as on March 31, 2020, and as compared to 9.8% as on March 31, 2019.
233
234
235 == Asset Quality ==
236
237 The Gross NPA of the Bank is reduced by 3 bps to 4.15% as of March 31, 2021, as compared to proforma GNPA of 4.18% as of December 31, 2020.
238
239 The Net NPA reduced by 18 bps to 1.86% as of March 31, 2021, as compared to proforma Net NPA of 2.04% as of December 31, 2020.
240
241 The Gross NPA % of the Retail Loan Book, as of March 31, 2021, increased by 13 bps to 4.01% as compared to proforma Gross NPA of 3.88% as of December 31, 2020, and Net NPA % of the Retail Loan Book reduced by 45 bps to 1.90% as compared to proforma Net NPA of 2.35% as of December 31, 2020.
242
243 Capital Adequacy of the Bank was strong at 16.32% with CET-1 Ratio at 15.62% including equity capital raised through QIP on April 6, 2021, as compared to regulatory requirement for the Capital Adequacy Ratio of 10.875% and for CET-1 Ratio of 7.375%. Excluding this additional equity raised of Rs. 3,000 crore on April 6, 2021, the capital adequacy as of March 31 is reported at 13.77% with CET-1 Ratio of 13.27%.
244
245 Average LCR was at 153% for the quarter ending on March 31, 2021.
246
247
248 **Mr. V Vaidyanathan, Managing Director and CEO, IDFC FIRST Bank**, said, “Including the equity capital of Rs. 3000 crore raised through QIP on April 6, 2021, its overall capital adequacy is strong at 16.32%. The company maintain high levels of liquidity with liquidity coverage ratio of 153%. The company therefore approach FY 22 with strength and confidence.
249
250 Strong inflows from retail customers based on its strong brand, its excellent service levels, and strong product proposition has resulted in surplus liquidity at the bank. The company's CASA grew 122% last year and the company reached a record CASA ratio of 51.75%. IDFC First Bank has therefore reduced its savings rates to as low as 4% and peak savings rates to 5%, effective May 1.
251
252 This reduction of savings rates to market benchmarks is a seminal moment in its journey as a Bank, as the company will now be able to participate in the Prime Home loans market, which is largely to employees of top Corporates. The Bank has started offering prime Home loans at as low as 6.9%. This will set the Bank up for perennial growth with even better asset quality going forward.
253
254 The company's home loan book grew strongly at 37% during FY21. Home loans is a large Rs. 25 lac crore market in India and home loans will continue to be its key business line going forward as well.
255
256 When COVID 1.0 struck in March 2020, the company made necessary changes by restricting lending to COVID affected industries and by tightening credit norms accordingly. Thus the loans booked after June 2020 already factor in the COVID impact, and are in fact behaving better than pre-COVID bookings, adjusted for like-to-like vintage.
257
258 On the collections front, we’re happy to report that its collection efficiency for early buckets in March ‘21 reached 100% of pre-Covid (Jan- Feb 2020) levels. The company will closely watch the impact of COVID second wave and deal with the situation accordingly. The company's bounce back of collections to 100% when economic activity revived in H2 2021 demonstrates that its underlying portfolio quality is high and when the economy revives, customers do start repaying well again.
259
260 With accelerated digital initiatives, new product launches including credit cards, and significant investment in creating superior customer experience, the Bank is now on a strong footing to participate in the emerging opportunities of FY22.”
261
262
263 = References =
264
265 {{putFootnotes/}}

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