IDFC FIRST BANK 2022-23 Annual Report Analysis

Thu, 10 Aug

IDFC FIRST BANK has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the bank during the year 2022-23.

IDFC FIRST BANK Income Statement Analysis

• Interest income during the year rose 32.3% on a year-on-year (YoY) basis.
• Interest expenses were up by 35.2% YoY during the same period.
• Operating expenses increased by 26.2% YoY during the year.
• The bank's net interest income (NII) increased by 30.2% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 5.9% in FY23 as against 5.9% in FY22.
• Other income increased by 40.8% YoY during the year.
• Net profit for the year increased by 1778.2% YoY.
• Net profit margins during the year increased to 10.9% in FY23 from 0.8% in FY22.

IDFC FIRST BANK Income Statement – 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Interest Income	Rs m	171,727	227,278	32.3%
Other Income	Rs m	31,726	44,673	40.8%
Interest Expense	Rs m	74,651	100,906	35.2%
Net Interest Income	Rs m	97,076	126,372	30.2%
Operating Expense	Rs m	95,967	121,082	26.2%
Pre-provision Operating Profit	Rs m	32,836	49,962	52.2%
Provisions & Contingencies	Rs m	31,513	25,113	-20.3%
Profit before tax	Rs m	1,750	33,314	1804.0%
Tax	Rs m	427	8,465	1884.2%
Profit after tax	Rs m	1,323	24,849	1778.2%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	5.9	5.9
Net profit margin	%	0.8	10.9

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IDFC FIRST BANK Balance Sheet Analysis

• The bank's deposits during FY23 stood at Rs 1,444.7 bn as compared to Rs 1,055.4 bn in FY22, thereby witnessing an increase of 36.9%.
• Advances for the year stood at Rs 1,517.9 bn as compared to Rs 1,178.6 bn during FY22, a rise of 28.8%.
• Cost of deposits for IDFC FIRST BANK rose 6.0% and stood at 4.3%, while yield on advances rose to 12.6%.
• The lender's investments rose to Rs 609.1 bn during the year from Rs 459.3 bn in FY22.
• Borrowing stood at Rs 572.1 bn, a growth of 8.0% as compared to previous year.
• Overall, the total assets and liabilities for FY23 stood at Rs 2,398.8 bn as against Rs 1,901.5 bn during FY22, thereby witnessing a rise of 26.2%.

IDFC FIRST BANK Balance Sheet – as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	210,660	258,104	22.5%
Advances	Rs m	1,178,578	1,517,945	28.8%
Deposits	Rs m	1,055,396	1,444,695	36.9%
Yield on advances	%	12.0	12.6
Cost of Deposits	%	4.1	4.3
Investments	Rs m	459,346	609,133	32.6%
Borrowings	Rs m	529,626	572,121	8.0%
Total Assets	Rs m	1,901,457	2,398,821	26.2%

Current Valuations for IDFC FIRST BANK

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 3.8, an improvement from the EPS of Rs 0.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 88.2, stands at 12.4 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 2.3 times, while the price to income ratio stands at 1.4 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Income per share (Unadj.)	Rs	27.6	34.3
Earnings per share (Unadj.)	Rs	0.2	3.8
Diluted earnings per share	Rs	0.2	3.7
Avg P/E ratio	Rs	234.3	12.4
Avg P/ABV ratio	Rs	1.4	2.3
Avg Market Cap	Rs	309,953	308,570
Dividends per share (Unadj.)	Rs	0.00	0.00

Ratio Analysis for IDFC FIRST BANK

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio deteriorated and stood at 105.1x during FY23, from 111.7x during FY22. The credit/deposit ratio tells us how much money a bank has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The bank's debt to equity ratio increased and stood at 7.81x during FY23, from 7.52x during FY22. The debt to equity ratio of a bank tells us how much debt a bank uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): IDFC FIRST BANK's capital adequacy ratio (CAR) was at 16.8% as on 31 March 2023 as compared to 16.7% a year ago. This ratio helps measure the financial strength of the bank or any finance company to meet their obligations using their assets and capital.

  A bank that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the bank's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a bank sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the bank is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that banks hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the bank improved and stood at 9.6% during FY23, from 0.6% during FY22. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the bank improved and stood at 1.04% during FY23, from 0.07% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the bank improved and stood at 9.16% during FY23, from 4.86% during FY22. The ROCE measures the ability of a bank to generate profits from its total capital (shareholder capital plus debt capital) employed in the bank.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a bank's gross NPAs to gross advances. IDFC FIRST BANK's gross NPA ratio stood at 2.5% as of 31 March 2023 compared to 3.7% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a bank's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the bank has made provisions.

  The net NPA ratio of IDFC FIRST BANK was 0.9% in financial year 2023. This compared with 1.5% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Credit/Deposit Ratio	x	111.7	105.1
Debt to Equity Ratio	x	7.5	7.8
Loans / Deposits	x	0.5	0.4
Capital Adequacy Ratio	%	16.7	16.8
Return on Equity	%	0.6	9.6
Return on Assets	%	0.1	1.0
Return on Capital Employed	%	4.9	9.2
% of Gross NPAs	%	3.7	2.5
% of Net NPAs	%	1.5	0.9
Yield on Advances	x	12.0	12.6
Yield on Investments	x	6.9	5.8

To see how IDFC FIRST BANK has performed over the last 5 years, please visit here.

IDFC FIRST BANK Share Price Performance

Over the last one year, IDFC FIRST BANK share price has moved up from Rs 44.8 to Rs 88.2, registering a gain of Rs 43.5 or around 97.1%.

Meanwhile, the S&P BSE BANKEX is trading at 50,380.4 (down 0.2%). Over the last one year it has moved up from 43,855.5 to 50,380.4, registering a gain of 6,524.9 points (up 14.9%).

Overall, the S&P BSE SENSEX is up 12.1% over the year.

(To know more, you can check out historical annual results for IDFC FIRST BANK here and quarterly results for IDFC FIRST BANK here)