Idfc First Bank Ltd. · NSE:IDFCFIRSTB
Idfc First Bank — Q3 FY19 Earnings Presentation
57 slides from Idfc First Bank's earnings presentation, January 2019
Slide 1: Corporate Presentation: Debut Results of IDFC FIRST Bank (Q3 FY19)
Corporate Presentation: Debut Results of IDFC FIRST Bank (Q3 FY19)
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by and is the sole responsibility of IDFC FIRST Bank (together with its subsidiaries, referred to as the “Company”). By accessing this presentation, you are agreeing to be bound by the trailing restrictions. This presentation does not constitute or form
Slide 3: Table of Contents
4 SECTION 1: FOUNDING OF IDFC FIRST BANK 12 SECTION 2: PATH AHEAD SECTION 3: PERFORMANCE HIGHLIGHTS Table 18 of SECTION 5: ASSETS 21 Contents 27 SECTION 6: LIABILITIES 31 SECTION 7: FINANCIALS 34 SECTION 8: DIRCETORS & SHAREHOLDERS
Slide 4: Section 1: The Founding of IDFC FIRST Bank
SECTION 1: The Founding of IDFC FIRST Bank
Slide 5: The Founding of IDFC FIRST Bank
SECTION 1: FOUNDING OF IDFC FIRST The Founding of IDFC FIRST Bank.. BANK IDFC FIRST Bank is founded by the merger of Erstwhile IDFC Bank and Erstwhile Capital First on December 18, 2018. 5
Slide 6: Events leading to the merger: IDFC Bank side
SECTION 1: FOUNDING OF IDFC FIRST The Founding of IDFC FIRST Bank.. BANK EVENTS LEADING TO THE MERGER in January 2018- At IDFC Bank side. IDFC Limited was set up in 1997 to finance infrastructure focusing primarily on project finance and mobilization of capital for private sector infrastructure deve
Slide 7: Events leading to the merger: Capital First side
SECTION 1: FOUNDING OF IDFC FIRST The Founding of IDFC FIRST Bank.. Contd. BANK EVENTS LEADING TO THE MERGER in January 2018- At Capital First side Around the same time (2010-2017), while these events were playing out at IDFC Group, certain events were playing out in parallel at Capital First. Mr Va
Slide 8: The Founding of IDFC FIRST Bank
SECTION 1: FOUNDING OF IDFC FIRST The Founding of IDFC FIRST Bank BANK In January 2018, IDFC FIRST Bank and Capital First announced that they had reached an understanding to merge with each other and shareholders of Capital First were to be issued 139 shares of the merged entity for every 10 shares
Slide 9: IDFC Bank – Financial Trends
SECTION 1: FOUNDING OF IDFC FIRST IDFC Bank – Financial Trends BANK Loan Assets (Rs Cr) Networth (Rs Cr) 15,257 Net Interest Margin (%) 75,337 73,055 70,248 13% 14,776 2.0% 2.1% 11% 14,678 1.9% 4% 1.7% 53,903 1% 72% 70% 69% 13,633 90% 26% 20% 15% 9% FY16 FY17 FY18 H1FY19 Mar-16 Mar-17 Mar-18 Sep-18
Slide 10: Capital First – Financial Trends
SECTION 1: FOUNDING OF IDFC FIRST Capital First – Financial Trends BANK Assets Under Management (Rs Cr) Net Worth (Rs Cr) NIM (%) 32,622 Retail 2,928 26,997 9.60% 2,618 9.02% Wholesale 2,304 7.63% 8.01% 19,824 6.57% 16,041 1,704 91% 1,574 5.35% 4.86% 11,975 94% 1,172 9,679 961 7,510 93% 86% 81% 84%
Slide 11: Financials of the two institutions for the last quarter before the merger
Financials of the two institutions for the last quarter before SECTION 1: FOUNDING OF IDFC FIRST the merger (September 30, 2018) BANK CAPITAL FIRST IDFC BANK LIMITED1 LIMITED Loan Asset (on-Book) Rs. 27,351 Cr Rs. 75,337 % of Retail Loan Assets 89% 13% Total Borrowing + Deposits Rs. 24,550 Cr Rs. 10
Slide 12: Section 2: Path Ahead
SECTION 2: PATH AHEAD
Slide 13: Disclaimer
SECTION 2: PATH AHEAD Disclaimer Certain statements contained in this presentation that are not statements of historical fact constitute “forward- looking statements.” You can generally identify forward-looking statements by terminology such as “aim”, “anticipate”, “believe”, “continue”, “could”, “e
Slide 14: IDFC FIRST Bank - Path Ahead
SECTION 2: PATH AHEAD IDFC FIRST BANK - Path Ahead • Strong Systems and Processes • Strong Retail Franchise in niche • Strong Loan assets of more than Rs. segments with strong credit skills 104660 Cr • Launched retail liability operations. Opened 200 bank branches (Dec 18), • Track record of continu
Slide 15: Asset Strategy
SECTION 2: PATH AHEAD 1 Asset Strategy • Growth of Assets: • The Bank plans to grow the retail asset book from Rs. 36,236 Cr (December 31, 2018) to over Rs. 100,000 Cr in the next 5-6 years • The Bank plans to reduce the loans to infrastructure segments ( Rs. 22,710 as of 31 December 2018) as they m
Slide 16: Liability Strategy
SECTION 2: PATH AHEAD 2 Liability Strategy • CASA Growth: The key focus of the Bank would be to increase the CASA Ratio from 10.3% (December 31, 2018) on a continuous basis year on year and strive to reach 30% CASA ratio with in the next 5-6 years, as well as set a trajectory to reach a CASA ratio o
Slide 17: Profitability
SECTION 2: PATH AHEAD 3 Profitability • Net Interest Margin: As the retail asset contribution moves towards 70% of the total fund assets, it is planned that the gross yield will continuously increase. Coupled with lower cost of funds (From improved CASA ratio), it is planned to expand NIM to about 5
Slide 18: Section 3: Performance Highlights
SECTION 3: PERFORMANCE HIGHLIGHTS
Slide 19: Snapshot of Key Parameters
Snapshot of Key Parameters SECTION 3: PERFORMANCE HIGHLIGHTS (As of 31 December 2018) Rs. 1,04,660 Cr 34.62% Rs. 130,529 Cr 10.37%, 4.92% Funded Assets Retail Assets/Total Borrowing & Deposits CASA Ratio Funded Assets (as % of Total Deposit, as % of Total Borrowing & Deposits) Rs. 18,376 Cr 1.97%, 0
Slide 20: Snapshot of Financial Performance for the Quarter
Snapshot of Financial Performance for the Quarter SECTION 3: PERFORMANCE HIGHLIGHTS (For Q3-FY19) IDFC FIRST Bank is practically a new entity formed by the merger of Capital First and IDFC Bank. Hence the financial results of the quarter are not comparable either with IDFC Bank or with Capital First
Slide 21: Section 5: Assets
SECTION 5: ASSETS
Slide 22: Breakup of Loan Assets
SECTION 5: ASSETS Breakup of Loan Assets Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 (Erstwhile (Erstwhile (Erstwhile (Erstwhile (Merged new Funded Assets (In INR Cr) IDFC Bank) IDFC Bank)) IDFC Bank) IDFC Bank) entity IDFC FIRST Bank) Retail Funded Assets 5,376 7,043 8,211 9,918 36,236 Rural 2,652 3,218 3,6
Slide 23: Retail Assets as a % of Total Funded Assets Improved from 13% to 35%
Retail Assets as a % of the total Funded Assets has improved SECTION 5: ASSETS substantially from 13% to 35% post the merger 1,04,660* 35% 73,052 75,190 75,337 69,065 10% 11% 13% 8% 74% 74% 74% 72% 54% 5% 4% 4% 4% 3% 13% 12% 11% 11% 8% Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Retail Funded Assets Wholesal
Slide 24: Spreads have increased from 1.7% to 3.6% post the merger
Spreads have increased from 1.7% to 3.6% post the merger SECTION 5: ASSETS Q3 FY18 Q2 FY19 Q3 FY19# Spreads - Consolidated (Erstwhile IDFC Bank) (Erstwhile IDFC Bank) (Merged new entity IDFC FIRST Bank) Yields 9.3% 9.4% 11.5% Retail 16.9% 15.7% 16.6% Wholesale Bank 9.7% 9.2% 9.5% Corporate Banking 8
Slide 25: Stressed Assets
SECTION 5: ASSETS Stressed Assets Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 (Erstwhile (Erstwhile (Erstwhile (Erstwhile (Erstwhile Capital In INR Cr IDFC Bank) IDFC Bank)) IDFC Bank) IDFC Bank) First + Erstwhile IDFC Bank) Stressed Assets 5,316 3,884 3,836 3,120 3,826 NPL 2,777 1,779 1,774 895 1,671 Others
Slide 26: Investments
SECTION 5: ASSETS Investments Dec-18 In INR Cr Dec-17 Mar-18 Jun-18 Sep-18 (Merged entity) CRR 2,798 3,124 3,089 3,081 3,510 SLR 15,243 16,334 16,483 16,806 17,946 LCR / Others 1,828 1,941 2,998 3,165 6,213 Bonds (Non - Repoable) 5,866 5,438 4,020 3,569 3,203 Certificate of Deposit - 249 - - - Comme
Slide 27: Section 6: Liabilities
SECTION 6: LIABILITIES
Slide 28: Borrowings and Deposits
SECTION 6: LIABILITY Borrowings and Deposits In INR Cr Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Borrowings 36,373 36,483 34,671 37,844 57,403 Others Short Term CASA Legacy Long Term Bonds 23,636 21,405 18,909 18,632 16,385 12% 5% Term Deposits Infra Bonds 10,434 10,434 10,434 10,434 10,434 25% Other Borro
Slide 29: CASA and Retail Deposits
SECTION 6: LIABILITY CASA and Retail Deposits 14,025 12,879 11,053 9,817 7,605 6,453 7,991 4,970 4,107 3,737 3,092 3,112 4,398 3,533 1,859 2,971 3,334 2,395 2,177 2,022 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Current Accounts Saving Accounts Retail Term Deposits All figures are in INR Crores unless speci
Slide 30: The combined entity has presence across the country
The combined entity has presence across the length and SECTION 4: DISTRIBUTION breadth of the country Urban Bank Branches 114 Rural Bank Branches 92 ATMs 140 Asset Service Branches 102 (Erstwhile Capital First Branches) Rural BC Branches (IBL) 354 Other BC Branches 100 30
Slide 31: Section 7: Financial Statements
SECTION 7: FINANCIAL STATEMENTS
Slide 32: Income Statement
SECTION 7: FINANCIAL STATEMENTS Income Statement In INR Cr Q3 FY19* Interest Income 3,664 Interest Expenses 2,519 Net Interest Income 1,145 Fee & Other Income 301 Core Operating Income 1,446 Operating Expenses 1,142 Core Operating Profit 305 Trading Gain 3 Credit Provisions 338 Treasury MTM Provisio
Slide 33: Balance Sheet
SECTION 7: FINANCIAL STATEMENTS Balance Sheet In INR Cr Dec-18* Shareholders' Funds 18,376 Deposits 61,914 Borrowings 68,614 Other liabilities and provisions 8,012 Total Liabilities 1,56,916 Cash and Bank Balances 1,636 Net Retail and Wholesale Assets 1,01,694 Statutory Investments 21,456 Trading In
Slide 34: Section 8: Directors & Shareholders
SECTION 8: DIRECTORS & SHAREHOLDERS
Slide 35: V Vaidyanathan, Managing Director & CEO
SECTION 8: BOARD & SHAREHOLDERS V Vaidyanathan, Managing Director & CEO Mr. V. Vaidyanathan is the first Managing Director and CEO of IDFC FIRST Bank, a bank founded by the merger of Capital First and IDFC Bank in December 2018. Prior to this role, he founded Capital First Limited by first acquiring
Slide 36: Board of Directors
SECTION 8: BOARD & SHAREHOLDERS Board of Directors DR. RAJIV B. LALL - PART-TIME NON-EXECUTIVE CHAIRMAN Dr. Rajiv Lall is the Non-Executive Chairman of IDFC Bank. He was the Founder MD & CEO of IDFC Bank from October 1, 2015 till December 18, 2018. Previously, he was the Executive Chairman of IDFC L
Slide 37: Board of Directors
SECTION 8: BOARD & SHAREHOLDERS Board of Directors DR.(MRS.) BRINDA JAGIRDAR - INDEPENDENT DIRECTOR Dr. (Mrs.) Brinda Jagirdar, is an independent consulting economist with specialization in areas relating to the Indian economy and financial intermediation. She is on the Governing Council of Treasury
Slide 38: Board of Directors
SECTION 8: BOARD & SHAREHOLDERS Board of Directors MR. PRAVIR VOHRA - INDEPENDENT DIRECTOR Mr. Pravir Vohra is a postgraduate in Economics from St. Stephen's College, University of Delhi and a Certified Associate of the Indian Institute of Bankers. He began his career in banking with State Bank of I
Slide 39: Current Shareholding Pattern
SECTION 8: BOARD & SHAREHOLDERS Current Shareholding Pattern Scrip Name : IDFC FIRST Bank (BSE: 5394437, NSE:IDFCFIRSTB) Key shareholders % Holding Public (incl Other Bodies IDFC Financial Holding Company Limited 40.00 NRIs) Corporate 22.3% 3.3% Warburg Pincus through its affiliated entities 9.99 MF
Slide 40: Capital First business model and profitability trends
Since Capital First business model and profitability trends will form an important part of the new business trajectory, we present to you the business model and financial trends of Capital First Limited. These slides are essentially an extract of the last official investor presentation of Capital Fi
Slide 41: History of Capital First Limited
History of Capital First Limited The Company was first listed on Stock Exchanges in January 2008. Between 2010 to 2012, Mr Vaidyanathan acquired a stake in the company and executed a Management Buyout (MBO) of the Company with equity backing of Rs. 810 Crore from Warburg Pincus, and created a new br
Slide 42: History of Capital First Limited
History of Capital First Limited From 31-March-2010 to 31-Mar-2018, the company has transformed across all key parameters including: • The total Capital has grown from Rs. 691 Cr to Rs. 3,993 Cr • The Assets under Management increased from Rs. 935 Cr to Rs. 26,997 Cr • The retail Assets Under Manage
Slide 43: Over eight years the company has grown the retail franchise
Over the last Eight years the company has consistently stayed with the founding theme of financing self-employed entrepreneurs, MSMEs and consumers through the platform of technology & has grown the retail franchise * As per Ind - AS Rs. 32,622 Cr* A highly diversified portfolio across 600 industr
Slide 44: Growth in Retail Assets
Growth in Retail Assets The company’s product launches have been highly successful in the marketplace and the company has emerged as a significant player in Indian retail financial services within eight years of inception with the Retail Loan Book crossing Rs. 29,625 Crores (USD 4.06 bn) Rs. 29,625
Slide 45: Capital First financed underserved segments
Capital First provided financing to select segments that are traditionally underserved by the existing financing system Traditionally these end uses are underserved by the financial system as ticket sizes are small, credit evaluation is difficult, collections is difficult, and business is often unvi
Slide 46: MSME Financing – A key area of Focus
MSME Financing – A key area of Focus Capital First has emerged as a Specialized Player in financing MSMEs by offering different products for their various financing needs Typical Loan Ticket Size From CFL Typical Customer Profile To Small and Medium Entrepreneurs financing based on customised cash f
Slide 47: Key Product Offerings
Key Product Offerings Average Loan Average Average Loan Challenges Products Key Features Ticket Size Loan Tenor to Value Ratio (Rs.) (Months) (%) CFL provides long term loans to MSMEs after proper Evaluation of cash flows is a key 7,400,000 60* 45% evaluation of cash flows. challenge for credit appr
Slide 48: Rigorous Credit Underwriting Process helps maintain high asset quality
Rigorous Credit Underwriting Process helps in maintaining high asset quality In the Mortgages business at Capital First, about 38% of the total applications are disbursed after passing through several levels of scrutiny and checks, mainly centred around cash flow evaluation, 2-3 ✘ credit bureau and
Slide 49: Reputed marquee FIIs and DIIs have invested in CFL
Reputed marquee FIIs and DIIs have invested in CFL Key Shareholders of Capital First Limited (as of 30 September 2018) Warburg Pincus, through its affiliate entities V. Vaidyanathan GIC, Sovereign Wealth Fund, Singapore 25.72% Government Pension Fund Global, Norway 35.52% Birla Asset Management, Ind
Slide 50: AUM growth by quarter
- 10,000 15,000 20,000 25,000 35,000 30,000 5,000 Q1-FY14 8,024 Q2-FY14 8,244 Q3-FY14 9,071 Q4-FY14 9,679 Q1-FY15 10,603 Q2-FY15 11,045 Q3-FY15 11,695 Q4-FY15 11,975 Q1-FY16 12,644 Q2-FY16 13,604 Q3-FY16 14,973 Q4-FY16 16,041 AUM (In Rs. Cr)-LHS AUM (In Rs. Cr)-LHS Q1-FY17 17,212 Q2-FY17 17,937 Q3-F
Slide 51: Profit After Tax has grown steadily with improvement in Cost to Income ratio
The Profit After Tax has grown steadily with improvement in Cost to Income ratio 120.0 90% PAT (In Cr) (LHS) OPEX to Income 104.6* 80% 101.5* 100.0 95.3 87.0 70% 78.3 80.0 60% 70.8 67.0 61.4 50% 60.0 57.6 47.5 49.2 40% 44.5 41.0 40.0 36.5 30% 33.1 29.8 29.9 27.0 20.8 20% 20.0 10.1 10% 5.5 7.2 - 0% Q
Slide 52: Yearly Profit Growth Trend
Yearly Profit Growth Trend.. Yearly Net Profit (Rs Cr) 327 239 206* 166 114 53 FY14 FY15 FY16 FY17 FY18 H1 FY19 *Figures for H1-FY19 are based on Ind AS and earlier periods are under Indian GAAP 52
Slide 53: Return on Equity has continuously improved over the quarters
With enhanced business operations, the Return on Equity has continuously improved over the quarters… 14.51% 13.31% H1-FY18 All figures are annualised 11.93% FY18 10.14% 14.82% FY17 14.47% 14.46% 8.33% 14.08% FY16 4.93% 12.87% 13.06% FY15 12.49% 12.10% FY14 11.09% 11.20% 11.39% 11.46% 10.68% 10.29% 1
Slide 54: The Market Cap of the Company grew more than 10X in 6 years
The Market Cap of the Company grew more than 10X in the last 6 years.. Market Capitalization Rs. 8,282 Cr# Rs. 7,628 Cr ($ 1,274 Mn) ($ 1,174 Mn) Rs. 6,096 Cr ($ 938 Mn) Rs. 3,937 Cr Rs. 3,634 Cr ($ 606 Mn) ($ 559 Mn) Rs. 1,478 Cr Rs. 1,152Cr ($ 227 Mn) Rs. 781Cr* ($ 177 Mn) ($ 120 Mn) 31-Mar-12 31-
Slide 55: The Company has been steadily increasing dividend pay-out every year
The Company has been steadily increasing dividend pay-out every year.. Dividend (as % of face value per share) 28% 26% 24% 22% 20% 18% 31-Mar-13 31-Mar-14 31-Mar-15 31-Mar-16 31-Mar-17 31-Mar-18 55
Slide 56: Returns have shown consistent growth over the last six years
With the increasing assets size, returns have shown a consistent growth over the last six years… FY13 FY14 FY15 FY16 FY17 FY18 CAGR AUM (Rs. Cr) 7,510 9,679 11,975 16,041 19,824 26,997 29% Total Income (Rs. Cr) 357.3 422.2 658.8 991.8 1,640.3 2,429.6 47% PAT (Rs. Cr) 63.1 52.6 114.3 166.2 238.9 327.
Slide 57: Thank You
THANK YOU IDFC FIRST Bank