This is already playing out over the last two and a half years, as the NIM has already expanded from 1.84 percent pre-merger to 5.09 percent in Q4 FY 21 and further to 5.51 percent in Q1 FY 22.
IDFC Bank. (Photo: Facebook/@idfcbankltd)
The IDFC First Bank is targeting to bring its gross NPA level down to 2 percent and net NPA level to 1 percent.
Bank Managing Director and CEO V. Vaidyanathan, in his message to the shareholders in the annual report, said: “We will be targeting a 2-1-2 formula, i.e. Gross NPA of 2 percent, Net NPA of percent and provisions of 2 percent on funded assets on a steady-state basis.”
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In FY21, its gross NPA stood at 4.15 percent, against 2.60 percent in FY20.
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He said the bank’s provisions for FY 21-22 is expected to be only 2.5 percent of the average loan book which is quite reasonable by industry standards, of which a substantial portion has already been taken in Q1 FY22 and it can be expected that the provisions will be successively reduced provisions in Q2, Q3 and Q4 FY 22.
“Going forward we expect to keep our provisions at below 2 percent of the average loan book,” Vaidyanathan said.
This is already playing out over the last two and a half years, as the NIM has already expanded from 1.84 percent pre-merger to 5.09 percent in Q4 FY 21 and further to 5.51 percent in Q1 FY 22.
He also said that the bank is expected to grow its retail book by 25 percent on a compounded basis for a long period of time.
“We expect profitability to increase as we expand the loan book,” he told the shareholders.
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