#IDFCFIRSTBank FIRST concall was right now. My key takeaways:
1. Credit costs of 2.5% in FY22, 2% in steady state.
In b/w lines: Bank has incremental NIMs of >9% which will support 2% credit costs. 1800cr provisions taken in Q1 represent a very conservative approach
1. Credit costs of 2.5% in FY22, 2% in steady state.
In b/w lines: Bank has incremental NIMs of >9% which will support 2% credit costs. 1800cr provisions taken in Q1 represent a very conservative approach
A 850cr mumbai toll road account slipped into NPA due to covid lockdowns. There were partial payments. Expect it to come out of NPA post covid wave. VI exposure credit costs not included in 2.5% guidance.
2. Runway for growth is long
In b/w lines: Can grow loan book at 25% for a long time. Expecting 18-20% ROE from retail lending alone in steady state. CASA will also continue to grow enough to support retail lending needs. Enough cash right now.
In b/w lines: Can grow loan book at 25% for a long time. Expecting 18-20% ROE from retail lending alone in steady state. CASA will also continue to grow enough to support retail lending needs. Enough cash right now.
3. Incrementally taking lower risks
In b/w lines:
Expect mortgage to be >40% of loan book in long term. Although margins are lower, operating costs & credit costs are much lower, sticky biz, compounds linearly, dont need to work much for it.
In b/w lines:
Expect mortgage to be >40% of loan book in long term. Although margins are lower, operating costs & credit costs are much lower, sticky biz, compounds linearly, dont need to work much for it.
Even in CapF days, affordable home loans were low NPA product. % of borrowers who are new to credit being given loans has gone down from 20% to 10% now. % of borrowers with credit score > 700 has gone from 60% to 83% now. 
3. Drivers of growth:
Home loans, Loans against property, Rural (MFI) loans, credit card book to grow faster than the rest of the loan book.
Home loans, Loans against property, Rural (MFI) loans, credit card book to grow faster than the rest of the loan book.
All in all, I think the wait for the J shaped profit growth has elongated a bit more. Legacy book was really bad quality. Until VI, 850 cr mumbai toll road etc exposures remain, negative surprises will come from time to time. Retail loan book is performing as per expectations.
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Investor presentation:
bseindia.com/xml-data/corpf…
bseindia.com/xml-data/corpf…
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