Idfc First Bank Ltd. · NSE:IDFCFIRSTB
Idfc First Bank — Q1 FY20 Earnings Presentation
58 slides from Idfc First Bank's earnings presentation, 2019
Slide 1: Corporate Presentation – Q1 FY20
Corporate Presentation – Q1 FY20
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: THE FOUNDING OF IDFC FIRST BANK 11 SECTION 2: FINANCIAL PERFORMANCE 14 SECTION 3: ASSETS Table SECTION 4: LIABILITIES of 20 Contents 25 SECTION 5: FINANCIAL STATEMENTS 28 SECTION 6: DIRECTORS & SHAREHOLDERS 33 SECTION 7: CAPITAL FIRST STRATEGY, LOAN GROWTH AND PROFITABILITY TRENDS FOR 8
Slide 4: Section 1: The Founding of IDFC FIRST Bank
SECTION 1: The Founding of IDFC FIRST Bank • Events Leading to Merger – IDFC Bank - Origin & History Capital First - Origin & History Merger between IDFC Bank and Capital First IDFC Bank Financials Trends leading to merger Capital First Financials Trend leading to merger
Slide 5: IDFC FIRST Bank founded by merger of IDFC Bank and Capital First
Section 1: The Founding of IDFC FIRST Bank.. IDFC FIRST Bank is founded by the merger of Erstwhile IDFC Bank and Erstwhile Capital First on December 18, 2018. 5
Slide 6: The Founding of IDFC FIRST Bank: IDFC Bank and Capital First
Section 1: The Founding of IDFC FIRST Bank.. IDFC BANK CAPITAL FIRST LIMITED In parallel, between 2010-2017, while IDFC Group was going through IDFC Limited was set up in 1997 to finance infrastructure focusing this evolution as described, Capital First was being founded with firm primarily on proje
Slide 7: The Founding of IDFC FIRST Bank
Section 1: The Founding of IDFC FIRST Bank.. IDFC BANK CAPITAL FIRST LIMITED Capital First launched many businesses focused on financing small The parent entity, IDFC Limited, retained businesses of AMC, entrepreneurs and consumers by the use of technology, with particular Institutional Broking and
Slide 8: Merger terms and founding of IDFC FIRST Bank
Section 1: The Founding of IDFC FIRST 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 of Capital First. Thus, ID
Slide 9: Key Strengths
Section 1: Key Strengths • 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. Raised retail CASA of Rs. 2,800 crores, • Track record of continuous growth • 34.62% o
Slide 10: Key Excerpts from MD and CEO's letter to Shareholders
Section 1: Key Excerpts from MD and CEO’s letter to Shareholders in Annual Report 2019 On Our founding philosophy: On the Vision of the New Bank: “ ” On Our Mission: “ ” On Strategy for the new Bank: On the Future Outlook: “ “ “ ” On Contribution to the Country: “ We aspire to create millions of emp
Slide 11: Section 2: Financial Performance of the Bank for Q1-FY20
SECTION 2: FINANCIAL PERFORMANCE OF THE BANK FOR Q1-FY20 • Key Business & Financial Parameters
Slide 12: Snapshot of Key Parameters for the Quarter Q1 FY20
Section 2: Snapshot of Key Parameters for the Quarter Q1 FY20 Rs. 1,12,558 Cr 40% Rs. 1,42,269 Cr 15.08%, 7.02% Funded Assets Retail Assets/Total Borrowing & Deposits CASA Ratio Funded Assets (as % of Total Deposit, as % of Total Borrowing & Deposits) Rs. 17,545 Cr 2.66%, 1.35% 279 14.01% Net Worth-
Slide 13: Snapshot for the Quarter Q1 FY20
Section 2: Snapshot for the Quarter Q1 FY20 • The Net Interest Income for the quarter ended on 30 June 2019 was Rs. 1,174* Cr as compared to Rs. 1,113 Cr for the quarter ended on 31 March 2019, strong annualized growth of 22%. • The Total Operating Income (net of Interest Cost) for the quarter ended
Slide 14: Section 3: Assets
SECTION 3: ASSETS • Asset Break up • Increasing Retailization • Improving NIM Trend • Asset Quality • Capital Adequacy
Slide 15: Loan Assets Breakup
Section 3: Loan Assets Breakup Pre - Merger Post - Merger In Rs. Cr Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Loan Against Property 622 776 997 8,046 9,123 9,945 MSME Loans 1,342 1,597 2,069 5,891 7,122 7,925 Housing Loans 1,617 1,923 2,246 4,509 5,145 5,675 Consumer Loans 416 528 689 13,541 14,885
Slide 16: Retail loans share improved to 40%; plan to reach 70%
Section 3: Retail loans as a % of total loans has quickly improved to 40% as of 30 June 2019 from 13% pre-merger. We plan to take it to 70% in five years. Retail Funded Assets (includes Home Loan, Business Loans, Rural, MSME and Consumer Loans) 5 Years Plan Wholesale Funded Assets (includes Corporat
Slide 17: Net Interest Margin increased from 1.56% pre-merger to 3.01%
Section 3: The Net Interest Margin of the bank has increased from 1.56% pre merger to 3.01% post merger The bank expects that this trend will continue in the next few years Post - Merger 3.03% 3.01%* 2.89% (Pre – Merger) 1.56% Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 * NIM % would have been 3.15% in Q1 FY20
Slide 18: Asset Quality
Section 3: Asset Quality In Rs. Cr Mar-19 Jun-19 GNPL 2,136 2,419 Provisions for GNPL 1,029 1,203 NNPL 1,107 1,216 GNPA (%) 2.43% 2.66% NNPA (%) 1.27% 1.35% • In addition to the above, the bank has identified certain additional exposures for watch list, and as a prudent practice, has taken provision
Slide 19: Capital Adequacy
Section 3: Capital Adequacy Mar-19 Jun-19 Tier 1 Capital Funds 17,373 16,340 Tier 2 Capital Funds 219 156 Total Capital Funds 17,592 16,496 Total RWA 1,13,744 1,17,733 Tier 1 CRAR (%) 15.27% 13.88% Total CRAR (%) 15.47% 14.01% RWA/Total Assets 68.04% 69.79% 1. We have capital headroom available thro
Slide 20: Section 4: Liabilities
SECTION 4: LIABILITIES • Borrowings and Deposit Composition • CASA Growth • Trends of Deposit Ratios • Expanding Network
Slide 21: Breakup of Liabilities
Section 4: Breakup of Liabilities In Rs. Cr Jun-18 Mar-19 Jun-19 YOY % Legacy Long Term Bonds 18,909 15,752 13,865 Infra Bonds 10,434 10,434 10,434 Refinance 627 4,047 13,379 Other Borrowings 4,700 23,256 23,966 Total Borrowings (A) 34,671 53,490 61,644 78% CASA 6,083 9,114 9,987 64% Term Deposits 2
Slide 22: Improving CASA Deposit Ratio
Section 4: Improving CASA Deposit Ratio. CASA to Total Deposits (%) The conventional computation of CASA% in the 30.00% industry is CASA/Total deposits (CASA+ Certificate of Deposits+ Term Deposits). Under this conventional computation method, the bank has sharply improved its CASA percentage within
Slide 23: Improving Core Retail Deposit Ratio
Section 4: Improving Core Retail Deposit Ratio. Core Deposits (Retail CASA + Retail TD) to Total Deposits & Borrowings (%) The bank has a large proportion of liabilities in the form of other borrowings because of our unique history i.e. IDFC Limited was an infrastructure financing Domestic 50.00% Fi
Slide 24: Branch network expanded to 279
Section 4: The combined entity has presence across the length and breadth of the country, expanding its branch network to 279 Urban Bank Branches 162 Rural Bank Branches 117 ATMs 199 Asset Service Branches 102 (Erstwhile Capital First Branches) Rural BC Branches (IFBL) 354 Other BC Branches 166 24
Slide 25: Section 5: Financial Statements
SECTION 5: FINANCIAL STATEMENTS • Income Statement • Balance Sheet
Slide 26: Income Statement
Section 5: Income Statement In Rs. Cr (Pre-Merger) Jun-18 Mar-19 Jun-19 Interest Income 2,321 3,629 3,793* Interest Expense 1,831 2,516 2,619 Net Interest Income 490 1,113 1,174* Fee & Other Income 103 291 301 Trading Gain 96 (18) 9 Core Operating Income 689 1,386 1,485 Operating Expense 446 1,148 1
Slide 27: Balance Sheet
Section 5: Balance Sheet (Pre-Merger) In Rs. Cr Mar-19 Jun-19 Jun-18 Shareholders' Funds 15,438 18,159 17,545 Deposits 54,057 70,479 66,226 Borrowings 47,591 69,983 76,044 Other liabilities and provisions 5,934 8,563 8,891 Total Liabilities 1,23,021 1,67,185 1,68,705 Cash and Bank Balances 2,545 5,4
Slide 28: Section 6: Directors & Shareholders
SECTION 6: DIRECTORS & SHAREHOLDERS • Board of Directors • Shareholding Pattern
Slide 29: Board of Directors
Section 6: Board of Directors 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. He is a banker turned entrepreneur turned banker by merging the NBFC he founded with an existing commercial bank.
Slide 30: Board of Directors
Section 6: 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 Limited. A veteran eco
Slide 31: Board of Directors
Section 6: 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 Elite, a knowledge s
Slide 32: Shareholding Pattern as of 30th June 2019
Section 6: Shareholding Pattern as of 30th June 2019 Scrip Name : IDFC FIRST Bank (BSE: 5394437, NSE:IDFCFIRSTB) Key shareholders % Holding Trusts and IDFC Financial Holding Company Limited 40.00 Other Body Clearing Corporate, Members, Warburg Pincus through its affiliated entities 9.99 PRESIDENT 2.
Slide 33: Section 7: Capital First Strategy, Loan Growth and Profitability Trends
SECTION 7: Capital First Strategy, Loan Growth and Profitability Trends for 8 years (Before Merger with IDFC Bank) • History of Capital First Limited • Transformation into Retail Franchise • Business Areas of Focus • Past Financial Performances
Slide 34: Capital First business model as part of the merged bank
Since the business model of Capital First is an important part of the business to be built in the merged bank, we present to you the business model, business lines, business and profitability trajectory, and financial trends of Capital First Limited. The following slides are essentially an extract o
Slide 35: Capital First 2010-2018: History of Capital First Limited
Section 7: Capital First 2010-2018 - Pre- merger with IDFC bank in December 2018- A recap. 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
Slide 36: Capital First transformation 2010-2018 key parameters
Section 7: Capital First 2010-2018 - Pre- merger with IDFC bank in December 2018- A recap. History of Capital First Limited From 31-March-2010 to 31-Mar-2018, the company has transformed across all key parameters including: 8-Yr CAGR% %Growth – FY18 • The total Capital has grown from Rs. 691 Cr to R
Slide 37: Transformation into Retail Franchise
Section 7: Capital First 2010-2018 - Pre- merger with IDFC bank in December 2018- A recap. Transformation into Retail Franchise * As per Ind - AS Since 2010, the company has consistently stayed with the founding theme of financing entrepreneurs, Rs. 32,622 Cr* $ 4.47 bn MSMEs and consumers through t
Slide 38: Retail Loan Book growth
Section 7: Capital First 2010-2018 - Pre- merger with IDFC bank in December 2018- A recap. Transformation into Retail Franchise The company’s product launches had been highly successful in the marketplace and the company had emerged as a significant player in Indian retail financial services within
Slide 39: Lines of Business: underserved segments
Section 7: Capital First 2010-2018 - Pre- merger with IDFC bank in December 2018- A recap. LINES OF BUSINESS: Capital First provided financing to select segments that are traditionally underserved by the existing financing system • By staying focused on a specific niche (small entrepreneurs and Indi
Slide 40: Key Business Lines: MSME Financing
Section 7: Capital First 2010-2018 - Pre- merger with IDFC bank in December 2018- A recap. Key Business Lines : MSME Financing – A key area of focus for Capital First Capital First emerged as a Specialized Player in financing MSMEs by offering different products for their various financing needs Typ
Slide 41: Strong Risk Management Procedures
Section 7: Capital First 2010-2018 - Pre- merger with IDFC bank in December 2018- A recap. STRONG RISK MANAGEMENT PROCEDURES: Capital First is structured with inherent checks and balances for effective risk management Credit Policy Credit Portfolio Business Loan Booking & (For defining Underwriting
Slide 42: Underwriting Processes
Section 7: Capital First 2010-2018 - Pre- merger with IDFC bank in December 2018- A recap. Underwriting Processes Rigorous Credit Underwriting Process helped in maintaining high asset quality 2-3 ✘ In the Mortgages business at Capital First, about 38% of the total 38-40 ✘ applications were disbursed
Slide 43: Asset Quality
Section 7: Capital First 2010-2018 - Pre- merger with IDFC bank in December 2018- A recap. Asset Quality STABLE ASSET QUALITY: The Company’s asset quality consistently remained high consistently over 8 years. This is despite the fact that the company was providing finance in a less banked segment. F
Slide 44: Capital First Shareholding Pattern
Section 7: Capital First 2010-2018 - Pre- merger with IDFC bank in December 2018- A recap. Shareholding Pattern 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 P
Slide 45: Asset Under Management growth
Section 7: Capital First 2010-2018 - Pre- merger with IDFC bank in December 2018- A recap. Financial Performance: The Asset Under Management has consistently grown at a 8 year CAGR of 52%, FY18 – 37% FY18: YoY Growth 32,622 Asset Under Management (Rs. Cr) 37% 26,997 19,824 16,041 11,975 9,679 7,510
Slide 46: Profitability: Return on Equity
Section 7: Capital First 2010-2018 - Pre- merger with IDFC bank in December 2018- A recap. Profitability: The ROE of the Company continuously increased over the years as a result of transformation Yearly Return on Equity (%) Note: RoE for Q4-FY18 (quarterly annualized) was ~ 15% and trending consist
Slide 47: Yearly Trend of Profit After Tax
Section 7: Capital First 2010-2018 - Pre- merger with IDFC bank in December 2018- A recap. Financial Performance: Yearly Trend of Profit After Tax In FY 08 and 09, the Company had made losses. Even after the new leadership took over, for two years the company continued to post losses as the building
Slide 48: Yearly Earning per Share Trend
Section 7: Capital First 2010-2018 - Pre- merger with IDFC bank in December 2018- A recap. Financial Performance: Yearly Earning per Share (EPS) Trend Earning per Share (EPS) has consistently grown at CAGR of 46% in the last 5 years, this created value for all shareholders. Earning Per Share (Rs.) 3
Slide 49: Trend of Cost to Income Ratio
Section 7: Capital First 2010-2018 - Pre- merger with IDFC bank in December 2018- A recap. Financial Performance: Trend of Cost of Income Ratio (yearly) The Cost to Income ratio, which was high at ~130% in the early stages of the company, reduced to <50% once the business model stabilized over the y
Slide 50: Market Cap grown 800% since inception
Section 7: Capital First 2010-2018 - Pre- merger with IDFC bank in December 2018- A recap. The Market Cap of the Company has grown 800% since inception and 1,000% since the Management Buyout in 2012 Market Capitalization (Rs. Cr) 8,282# 7,628 During this phase, the Company - • built the Retail Platf
Slide 51: Trend of Dividend Payouts
Section 7: Capital First 2010-2018 - Pre- merger with IDFC bank in December 2018- A recap. Financial Performance: Trend of Dividend Payouts The Company has been steadily increasing dividend pay-out every year starting from 10% in FY10 to 28% in FY18. Dividend (as % of face value per share) 28% 26% 2
Slide 52: Summary – Strategy for IDFC FIRST Bank
Section 7: Summary – Strategy for IDFC FIRST Bank In summary, under our stated strategy for the combined entity, IDFC FIRST Bank, the same successful model of Capital First lending business is now being built on a Bank platform from IDFC Bank, thus the business becomes more profitable, robust and su
Slide 53: Section 8: Strategy Going Forward for the Combined Entity
SECTION 8: STRATEGY GOING FORWARD FOR THE COMBINED ENTITY • Key Strategies for the combine entity – Asset Strategy • Growth of Assets • Diversification of Assets • Gross Yield expansion Liability Strategy • CASA Growth • Diversification of Liability • Branch Expansion Profitability • Expand Ne
Slide 54: Disclaimer
Section 8: 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”, “estimate”, “
Slide 55: Asset Strategy
Section 8: Asset Strategy • Growth of Assets: • The Bank plans to grow retail loan assets from Rs. 36,236 Cr (December 31, 2018) to over Rs. 100,000 Cr in the next 5 years • The Bank plans to wind down loans to infrastructure to NIL within five years ( Rs. 22,710 as of 31 December 2018). • The Bank
Slide 56: Liability Strategy
Section 8: Liability Strategy • CASA Growth: This is a key focus and growth area for the bank. We plan to increase the CASA Ratio from 10.4% as of December 31, 2018 on a continuous basis year on year and strive to reach 30% CASA ratio within 5 years, and increase it to 40-50% from there on. An array
Slide 57: Profitability
Section 8: Profitability • Net Interest Margin: The bank plans to expand the NIM to about 5.0% - 5.5% in the next 5 years based on better cost of funds and carefully selecting the product segments where we have strong proven capabilities over the years. • Asset Quality: Over 90% of the Retail Loan B
Slide 58: Thank You
THANK YOU IDFC FIRST Bank