#1IDFC FIRST Bank | आई डी एफ सी फर्स्ट बैंक BKC BRANCH Investor Presentation FY23 - IDFC FIRST Bank ווי#21 IDFC FIRST Bank Vision 2 Financial Highlights of FY23 3 Our Approach to building IDFC FIRST Bank 4 Background of IDFC FIRST Bank 5 Products and Digital Innovation 6 Deposits and Borrowings 7 Loans and Advances TABLE OF CONTENTS 8 Risk Management & Asset Quality 6 10 Financial Performance Board of Directors Shareholding Pattern 11 12 FIRST Compass (ESG) 13 Awards & Recognition#3IDFC FIRST Bank Vision "To build a world class bank in India, guided by ethics, powered by technology and to be a force for social good." Section 1: Vision 2 IDFC FIRST Bank#4Culture @ IDFC FIRST Bank Section 1: Vision " "The founding years, which I call the next five years, are particularly important, as the DNA we establish now will be hard to correct later. We will make every effort to sell the right products to customers, avoid mis-selling, avoid selling such third-party products that make wonderful fees for us but at the cost of expensive products for the customer. If we make a mistake, we will apologise and correct it. After all, we do not want to take this Bank to great heights in profits and profitability while having earned any penny that truly does not belong to us." (Annual Report 2018-19) Culture is not just about how things get done around here, it's a much longer list such as, about how people conduct themselves in office and in society, how committed they are to the mission, how to resolve conflicts, not using offensive or abusive words, imbibing the organisation's policy that the customer comes first and so on. (Annual Report 2019-20) " We want to touch the lives of millions of Indians in a positive way by providing high quality banking services to them, with particular focus on aspiring consumers and entrepreneurs of our new India, using contemporary technologies We advise our product teams to design products in such a way that it is meant to be sold to our "near and dear" ones. Monthly credits: We have started "monthly" credit of interest on savings accounts, against the industry practice of Quarterly credits. So, our customers (Annual Report 2019-20) (Annual Report 2018-19) Tetum Un equity, and enjoying international respect and admiration. We aspire to be on that list, and are passionate about building such a bank. We have already sown the seeds for such a bank. For a country as large and diverse as India, and a country set to be world's third largest economy by 2030, there are few "world- class" banks in India. (Annual Report 2019-20) partici of wha correc to sell avoid produ us but pocke materi in a tra mistak it. Afte Growth, you will agree, is not an issue in India. Mid-teens ROE can be built for sure, most good banks have achieved it. Our incremental margins are strong. Our business is highly scalable. We have a very high level of corporate governance. We focus on the customer. I believe it is inevitable that value will be created in this approach. V Vaidyanathan Managing Director & CEO. IDFC FIRST Bank " (Annual Report 2019-20) for customers across cross section of society, that can create great social good. To create social good is the purpose of our existence. (Annual Report 2020-21) 3 IDFC FIRST Bank#5Culture @ IDFC FIRST Bank Section 1: Vision After much debate, we settled in on three themes: Ethical Banking, Digital Banking and Social Good. This also goes well with our vision statement. Coding the DNA: By making this seal and sharing with employees, we are attempting to code the DNA of our employees. That's because we are an early stage bank and the DNA code we build will affect the long (Annual Report 2020-21) We will not dilute credit norms to get more business. We are very careful with our portfolio quality and we monitor indicators minutely. We rigorously subject the applications through 10 specific filters. We generally reject about 40-60% of the applications received by us based on product category as part of the above stringent filtration process. that were Don't underestimate the power I motivated of the 50% CASA Bank with a They were customers. powerful and tested lending cheme for credit to machine attached to it. ry credit to extension scholarship graduation, lowance of his greatly. stress tes 2014), de IL&FS cri Grass an average ( retail cred years, our growth ar Corporat Corporate lac crore corporate capital, te a cutting first featu products. regulatory Now coming to business, let me answer some key questions financing that may be on your mind. infra corp (Annual Report 2021-22) express our sincere thanks to our regulator the Reserve Bank of India who have constantly guided us on our approach and supported us throughout. Our Board members are (Annual Report 2020-21) embers are identified he Board, son only a o our focus mpare well hence the st reviews, etc. could er publicly. hortcuts to culture and the genes ur vision to We are a universal bank with highly diversified sources of income. Apart from lending, we have launched several other new businesses such as cash management, Trade Forex, Wealth management, toll and transit, credit card business, segmented current accounts, start- up banking, and distribution of insurance and investment products. online purchase through a payment gateway and not insist estalegusel. Then we made que cowardo (Annual Report 2021-22) CLOSING have always ank for the lo I boxes exce ustomer orie rowth potenti I have always maintained that we are building a world class bank for the longer run and are not rushing it. We tick all boxes except one. We currently iversified by don't make the cut on only one count net profits. I believe we will address this issue in FY23 comprehensively. working seriously on the same. The cost to income ratio is coming down every year since the merger and will continue to trend materially down from hereon. (Annual Report 2021-22) rowing marke le currently rofits. I believ xpect to see I see a strong get here to thi operating prof We look forwa schemes of to education, an combination In parallel, a r like e-gov. Di about which m our business. Our Bank, ove steps to creat forward. Befo would like to of our foundat We know that we are on to a wonderful model, and I am confident that if we stay the course and play with a straight massive long- bat, we will meet all aspirations of investors and other stakeholders. Hence, no matter the pressure, we 'communicate our strategy to all stakeholders in simple terms, stick to the plan, and deliver on the stated strategy. I am confident that with this approach, results will follow, it's only a matter of time. (Annual Report 2021-22) for focussed attention on this matter. She has written a note for us on the initiatives of the bank in this report. We believe we will have strong ROE, with the growth potential of a youthful-stage bank and strong technology orientation to leverage the future. (Annual Report 2021-22) the ban also tha services Yours si V Vaidy Managin IDFC FI GOVERNA Corporate Go model. We ma of accounting prudent risk m compliance et priority of our 4 IDFC FIRST Bank#6F Section 2: Financial Highlights of FY23 5#7Bank At a Glance - FY23 Section 2: Financial Highlights - FY23 Loans and Advances (Bank) Loans and Advances (Retail) Loans & Advances Rs. 1,60,599 Cr Diversification Retail & Commercial Finance 79% of Loans & Advances Deposits Customer Deposits Rs. 1,36,812 Cr (47% YoY) (24% YoY) Asset Quality (Bank) GNPA%: 2.51% Asset Quality (Retail & Commercial) GNPA%: 1.65% Diversification NNPA%: 0.86% Provision Coverage (Bank) 80.29% NNPA%: 0.55% Provision Coverage Retail & Commercial 82.43% Retail Deposits 76% of customer deposits CASA ratio 49.8% Profitability Core Operating Income Key Ratios Return on Assets 1.13% (FY22-0.08%) Rs. 16,777 Cr (35% YoY) Core Operating Profit Rs. 4,607 Cr (67% YoY) Profit After Tax Return on Equity 10.95% (FY22-0.75%) Rs. 2,437 Cr Capital Adequacy 16.82% (FY22- Rs. 145 Cr) Note: Loans & Advances Includes credit substitutes; Provision Coverage including technical write-off 6 IDFC FIRST Bank#8Key Financial Highlights of FY23 Section 2: Financial Highlights - FY23 Area Key Parameters FY22 FY23 Assets Loans & Advances Rs. 1,29,051 Cr Rs. 1,60,599 Cr Growth (%/bps) 24% Customer Deposits Rs. 93,214 Cr Rs. 1,36,812 Cr 47% Deposits CASA Ratio (%) 48.44% 49.77% 133 bps GNPA (%) - Bank level 3.70% 2.51% -119 bps - NNPA (%) Bank level 1.53% 0.86% -67 bps Asset Quality Provision Coverage Ratio - Bank 70.29% 80.29% 1000 bps GNPA (%) - Retail & Commercial 2.63% 1.65% -98 bps - NNPA (%) Retail & Commercial 1.15% 0.55% -60 bps Profit/(Loss) After Tax Rs. 145 Cr Rs. 2,437 Cr 1575% Profitability ROA% 0.08% 1.13% 105 bps RoE% 0.75% 10.95% 968 bps Capital Capital Adequacy Ratio (%) 16.74% 16.82% 8 bps 1. Total Loans & Advances (incl credit substitutes are Net of IBPC; 2. Commercial Finance consists of business installment loans, micro business loans, small business working capital, commercial vehicle, trade advances etc. with most loans < Rs. 5 crore; 3. Provision Coverage ratio includes technical write-offs 7 IDFC FIRST Bank#9F Section 3: Our approach to building IDFC FIRST Bank 8#10Our approach to building IDFC FIRST Bank (1/3) Safety First Culture: Ethical Section 3: Approach to build IDFC FIRST Bank We were previously an infrastructure DFI. At the time of our merger with Capital First in December 2018, 91% of our liabilities were institutional and 73% of our deposits were corporate. To address this, we focused on increasing our retail deposit base, achieving a 3-year CAGR of 84% from Dec-18 to Dec-21. As a result, retail deposits now make up 76% of our customer deposits. We also exercised restraint in our loan growth, with an increase of only 5.1% during the first 3 years post-merger (Dec-18 to Dec-21). This approach of safety first helped strengthen the Bank's liability franchise and set up the bank for growth on a strong foundation. The Bank believes income earned unethically is not worth earning. The Bank prioritizes ethics in all its dealings and in its product design. It applies a "Near and Dear" Test in all product design, so that the employees of the Bank serve only such products they'd want to serve to their own loved ones. Capital The bank is well capitalized for growth at with capital adequacy of 16.82%. 6 IDFC FIRST Bank#11Our approach to building IDFC FIRST Bank (2/3) Section 3: Approach to build IDFC FIRST Bank High Asset Quality In retail which is our main area of growth, we have a track record of 12 years of maintaining our Gross NPA at ~2% and net NPA of ~1%. Our portfolio has been subjected to multiple stress-tests, including economic slowdown (2010-2014), Demonetization (2016), GST implementation (2017), ILFS crisis (2018), Covid (2020- 21). Even post COVID, retail NPA has reverted to the long-term averages and improved further to Gross NPA of 1.65% and Net NPA of 0.55% as of March 31, 2023 Strong Profitability Despite significant setup investments in our bank, we've seen a steady rise in our ROE since the merger, increasing from near-zero to 10.95% in FY23. This is largely due to our strong incremental profitability. Our unit economics are very robust, with incremental ROE of over 20% in our primary growth areas of retail and commercial lending, even after adjusting for operating expenses, credit costs, and taxes. Additionally, our wholesale business is generating an impressive ROE of over 15%. Technology The bank is committed to investing in a modern and adaptable technology architecture that will support its future growth. This investment includes developing advanced capabilities for predictive analytics in key areas such as credit underwriting, portfolio management, collection strategy, and fraud risk mitigation. 10 IDFC FIRST Bank#12Our approach to building IDFC FIRST Bank (3/3) Section 3: Approach to build IDFC FIRST Bank Corporate Governance Our Bank has a distinguished Board of Directors comprising eminent, highly qualified, and extensively experienced individuals. All committees, with the exception of CSR, are led by independent directors, ensuring impartial decision-making. We keep honest and open communication channels both internally and externally. In line with this, we provide detailed investor presentations to keep our stakeholders informed. We respect the independence of control functions including risk, compliance, audit and financial controls. We believe they play an important role in building the organization and they are not given any business responsibilities. ESG and CSR We are committed to the cause of ESG. Our businesses are naturally aligned to social good. Governance is our defining strength, we are making specific efforts on the Environment front in terms of going paperless, investing in green branches and offices, rationalizing travel etc. For us, CSR is a privilege, not an obligation. We have taken part in various initiatives in the area of education, cleanliness and women empowerment. 11 IDFC FIRST Bank#13F Section 4: Background of IDFC FIRST Bank 12#14IDFC FIRST Bank was created by merger of IDFC Bank and Capital First Section 4: Background IDFC FIRST Bank • IDFC FIRST Bank was created by the merger of Erstwhile IDFC Bank and Erstwhile Capital First on December 18, 2018. • • Erstwhile IDFC Bank started its operation as a Bank after demerger from IDFC Ltd, a premier, successful infrastructure Financing Domestic Financial Institution since 1997. The loan assets and borrowings of IDFC limited were transferred to IDFC Bank at inception of IDFC Bank. Erstwhile Capital First was a successful consumer and MSME financing entity since 2012 with strong track record of growth, profits and asset quality. • On merger, the Bank was renamed IDFC FIRST Bank. IDFC + IDFC BANK CAPITAL FIRST IDFC FIRST Bank On merger, 13.9 shares of IDFC Bank were issued for every share of Capital First as part of the merger scheme in December 2018 13 IDFC FIRST Bank#15Background and history of erstwhile IDFC Bank About IDFC Bank Section 4: Background IDFC FIRST Bank IDFC Limited was a leading and reputed infrastructure financing Domestic Finance Institution. The institution diversified into Asset Management, Institutional Broking and Investment Banking. It applied for and acquired a Commercial Banking License from RBI. IDFC Bank laid the foundation for a strong banking framework and created necessary systems, risk management, infrastructure, IT architecture and processes for future growth. It created efficient cash management system and treasury and for managing trading. 1997 IDFC incorporated in Chennai on the recommendation of the Expert Group on commercialization of Infrastructure Projects 2008 • Acquired AMC business of Standard Chartered Bank. Setup an office in Singapore 2011 IDFC Mutual Fund ranked 10th 2014 in the country by AUM Secured license from RBI 2005 IDFC lists on both NSE & BSE. Raises Rs. 1372 crore of equity capital 2009 IDFC is recognised as a top 5 Lead Arranger for Project Finance Loans in Asha by Dealogic 2007 • Does a QIP raising Rs. 2100 crore • Acquired SSKI, a leading domestic investment bank and institutional equities firm 2010 IDFC Investment Bank ranked 2nd in the equity league tables by Bloomberg. IDFC ranked among the top 50 companies in India's S&P ESG Index. 2012 • • IDFC completes 15 years. Recognised as the best NBFC for Infrastructure Financing. 2015 Launch of IDFC Bank 14 IDFC FIRST Bank#16128% 115% Background and history of Capital First Background Capital First was a successful NBFC, growing its loan book and net profits at a 5 year CAGR of 29% and 56% respectively, with stable asset quality of Gross NPA of <2% and Net NPA of <1% for nearly a decade. Strong growth in AUM Wholesale AUM Retail AUM Retail AUM increased from 10% to 90% 935 Total AUM 32,623 26,997 19,824 16,041 11,975 6,186 7,510 9,679 2,751 FY13 FY14 FY15 FY16 FY17 FY18 Sep-18 -15.7 -46.2 Section 4: Background IDFC FIRST Bank 5 Year PAT CAGR of 56% 3.8 5 Year CAGR of 56% (Rs. Cr) 327 239 206 166 114 35 56 Cost to income came down to <50% with scaling up of business 78% 80% 72% 74% 71% 59% 51% 51% 53% 48% FY14 FY15 FY16 FY17 FY18 H1-FY19 Continuous Increase in Return on Equity (%) -2.1% -6.1% FY10 I FY11 ! 0.5% FY12 Consistent growth in RoE 3.6% 4.9% 8.3% 10.1% 11.9% 13.3% 14.5% FY13 FY14 FY15 FY16 FY17 FY18 H1-19 Stock Price increased 7x from Rs. 120 to Rs. 850 in 6 years 7 X increase in stock price in under 6 years 120.55 162.20 178.90 399.40 431.55 782.50 845.60 ill 3/31/2012 3/31/2013 3/31/2014 3/31/2015 3/31/2016 3/31/2017 1/15/2018 15 IDFC FIRST Bank FY15 FY16 FY17 FY18 H1-19#17F Section 5: Products and Digital Innovations - Wide range of Fund and Non-Fund Based Products 16#18Section 5: Products & Digital Innovation The Bank has a wide bouquet of products for consumers, MSMEs and Corporates Personal Banking: For salaried & self-employed individuals, the Bank provides various products to fulfill different financial needs across urban and rural India. Prime Home Loans Affordable Home Loans JLG Loans - Microfinance Business Banking: The bank provides a wide range of solutions including working capital and business loans for businesses. Loan against Property Micro Business Loans Corporate Banking: Comprehensive funded and non-funded product solutions for Corporate customers Working Capital Loans Car Loans Education Loans Gold Loans Business Loans Professional Loans Personal Loans Credit Cards Agri/Farmer Loans Commercial Vehicle Business Banking Jelect VISA LOFC FIRST BASE FAMILY Signatore Consumer Durable Loans Two Wheeler Loans Tractor Loans Trade Finance, Forex & CMS Solutions Term Loans 17 IDFC FIRST Bank#19Section 5: Products & Digital Innovation The Bank has a wide range of Current and Savings Account Offerings CURRENT ACCOUNTS: The Bank has multiple current account offerings doorstep banking, CMS solutions, best in class digital platforms etc, to cater to enterprises, entrepreneurs, start-up and professionals like Doctors/ Chartered Accountants SAVINGS ACCOUNTS: The Bank offers savings accounts with attractive interest rates and multiple features including health benefits, doorstep banking, higher insurance limits which cater to different customer segments with specific offerings to women customers, senior citizens, minors, rural customers and salaried individuals in defence Freedom Current Account MERCHANT MULTIPLIER ACCOUNT FIRSTWINGS W Startup Banking Program $533, 1333 A cox er VISA ENJO VISA 157 Savings Account VISA FIRST Power SA Savings Regular Senior Citizen SA Rs. 10,000 AMB Rs. 25,000 AMB DYNAMIC dP! PROFESSIONAL -CURRENT ACCOUNT- Minor Savings Account Honour FIRST Defence Account XXXXX XXXX XXXXXX XXXXX CAPEROLETERANE VISA Corporate Salary account with Debit card The Bank also offers Term Deposits to individuals and corporate at attractive interest rates 18 IDFC FIRST Bank#20Our Digital Initiatives Significant traction on electronic platforms RTGS & NEFT payments through CMS solutions up by 30% YoY (vol.) FASISQ 12.3 mn+ FASTag issued since launch 96% Of the overall transactions are digital Credit Card Spends: Growth of 118% YoY 3 ום Ranked 4th Bharat Bill Payment System (BBPS): amongst 30 biller operating units UPI Transactions: Growth of ~139% over the last year and by ~18% over the last quarter 1.5 mn+ Credit cards issued since launch in January 2021 POS Transactions (FY23): (Vol): 33% growth YoY (Value): 59% growth YoY Section 5: Products & Digital Innovations • IDFC FIRST Bank has been chosen as one of the first 8 Bank to conduct pilot of Central Bank Digital Current (CBDC). The Bank has already recorded many Retail & Wholesale transactions through CBDC. 19 IDFC FIRST Bank#21Section 5: Products & Digital Innovation India's FIRST FASTAG with Triple Benefits - Toll, Fuel and Parking FIRST forward' IDFC FIRST Bark NETC FREILD FIRST forward NETCH Proting ALWAYS YOU FIRST Tag ek, fayde anek. F IDFC FIRST Bank ALWAYS YOU FIRST TAG EK, FAYDE ANEK. FIRST forward is India's first FASTag with toll, fuel and parking payment benefits. 12 Million FASTag Issued IDFC FIRST Bank issuance business crossed 12 Million FASTAGS. IDFC FIRST Bank Credit Card customers can now link their card with IDFC FIRST FASTAG and enjoy seamless auto recharge Select FIRST forward' NETC PREND - IDFC FIRST FIRST forward® Bank NETC) PRSIng ALWAYS YOU FIRST NOW SAVE FUEL AND TIME. Make cashless and contactless fuel payments. at all HPCL and select IOCL outlets with FIRSTforward FASTag. FIDFC FIRST Bank ALWAYS YOU FIRST NOW THERE'S ONE LESS WORRY WHILE PARKING. With cashless and contactless parking payments at select parking lots through FIRSTforward FASTag. Largest Issuer bank IDFC FIRST is the largest issuer among 45+ Issuer banks in NETC with respect to FASTAG monthly activation numbers and value processed. Largest Acquirer Bank Largest Acquirer Bank with 500+ Toll plaza and parking merchants. FUEL 00.00 IDFC FIRST BANK FANCLY Idfc Banking OFC FIRST BANK 11 August 2022 Now recharge your IDFC FIRST Bank FASTag on WhatsApp! Team IDFC FIRST Bank. Recharge FASTeg 128 pm Today Idfc Banking Now recharge your OFC FIRST Bank FASTag on WhatsAppl Rs. 60 Cr Per Day Issuance Value (March 2023) Recharge FASTag 3:27pm Please confirm if this is the FASTag DL10CA0962 you'd like to recharge. 327pm Source: NPCI website Menu Options Message FIRST Bank to enable FASTAG recharges on WhatsApp Chat using UPI 20 IDFC FIRST Bank#22Building a strong Wealth Management Business AUM of Wealth Management Business has grown 48% YoY to reach Rs. 9,268 crore as on March 31, 2023. 20 ט Arjun Vadakkepat Menon A 3.81 L www Gask M 11 0761 Aggressive 11/1 THE DIGITAL BANKER Digital CX WINNER Awords N IDFC FIRST BANK OUTSTANDING DIGITAL CX-INTERNET BANKING (WEALTH MANAGEMENT) 4.57 L 100% 17500 My d Private Banking WINNER INNOVATION AWARDS BEST PRIVATE BANK FOR WEALTH CREATION & PRESERVATION IDFC FIRST BANK Section 5: Products & Digital Innovation 1 Assisted Transactions: Digitally assisted. execution for Mutual Funds transaction 2 Investment Dashboard: Assets managed by RM & Team, including Product & Asset-Class split 3 Held-away Portfolio to track client's non-IDFC First portfolio along with in-house portfolio 4 Actionable insights: FD/SIP maturity, customer cash-flows, birthday reminders, asset allocation, sectoral exposure 5 6 Portfolio Analytics: Customer portfolio drill down with Asset-class wise holdings & Capital Gain Reports Investment Ideas: Risk adjusted curated portfolios, product discovery via collections & filters 7 Goal Based Investing: Goal creation, implementation and progress tracking 8 Detailed Product Information: scheme performance, risk. profile suitability & minimum investment details Investment Workbench can now be accessed by RMs over the internet from their bank supported devices 21 IDFC FIRST Bank#23Section 5: Products & Digital Innovation Building Corporate Banking Solutions powered by Digital Innovations WHOLESALE LENDING SOLUTIONS FIDFC FIRST ALWAYS YOU FIRST Your banking convenience is our FIRST priority. Introducing Corporate Banking feature through WhatsApp. Cash Management Services (CMS) Receivables Solution, Escrow & Liquidity Solutions, and Payment Solutions Cash Credit WORKING CAPITAL LOANS Working Capital Demand Loan Overdraft Lending Solutions TERM LOANS TRADE & SUPPLY CHAIN SERVICES Online Trade Portal (MTP) A single trade platform that integrates multiple Trade Finance transactions in just a few clicks! Hey there! Corporate WhatsApp Banking is now live Send a 'Hi' from your mobile number to 76698 00709 Whatsapp Banking Comprehensive dashboards 24*7 access to account information B P Accomplish business critical payment obigations FMG-Wholesale FX Manage key account servicing on the go Get customized reports and MIS View Mandate History Initiate Negotiations Create BXP CMS Mandate O tracking status Real-time authorization workflow monitoring FIRST Onboard Execute bulk operational activities, anywhere, anytime BXP - Digital Enterprise Platform Remittance Business & Hedge Solutioning > Current Account/ Capital Account >Import/Export & Liability Hedges >Interest Rate Optimization Solutions Multiple Delivery Channels IDFC FIRST Bank Presents eNACH registration on WhatsApp or Client Chatbot PROCUREMENT SIDE Bank Guarantee & SBLC ⚫ Letter of Credit Purchase Bills / Invoice Discounting ⚫ Others SALES SIDE • Pre-Post Shipment Financing • Sales Bills/Invoice Discounting • Export LC Advising .And many more... Trade Finance & Supply Chain Products >Forwards > Options > Swaps FX Solutions 22 Digital document execution INDUSTRY 1st INDUSTRY FIRST DFC FIRST BANK IDFC FIRST Bank#24Section 6: Deposits and Borrowings a. CASA Deposits b. Customer Deposits C. Total Customer Deposits F d. Summary of Deposits and Borrowings e. Legacy High-Cost Borrowings 23#25a. CASA Deposits Section 6: Deposits & Borrowings CASA Deposits growing at 4 year CAGR of 74% The Bank provides high levels of customer service and becoming a brand with a reputation as a clean and ethical institution, which has helped us grow our deposit base. The deposits of 31st March 2023 includes Rs. 2,131 crore of Current Account Deposits received for short term during the closing days of FY23 from large Government Banking client. Without the same, the CASA balance would be Rs. 69,852 crore as of 31-Mar-23, 37% YoY growth. YoY-Mar-23 vs Mar-22 ↑41% in Rs. crore QoQ-Mar-23 vs Dec-22 ↑ 8% Driven by granular retail CASA 4-Year CAGR: 74% 45,896 51,170 71,983 5,544 31 Mar 18 (Pre-Merger) 7,893 5,274 20,661 31 Dec 18 31 Mar 19 31 Mar 20 31 Mar 21 31 Mar 22 31 Mar 23 (At Merger) 24 IDFC FIRST Bank#26a. CASA Deposits Section 6: Deposits & Borrowings CASA Ratio stable at ~ 50% We reduced deposit rates in 2021 from 7% earlier to 4% up to Rs. 10,00,000. Yet, our deposit growth continues to be strong based on strong service levels and image as a clean ethical institution. Without the Rs. 2,131 crore current account mobilized in March 2023 from Government Banking client as mentioned earlier, the CASA Ratio would be 49.0% as of 31-Mar-23. 11.5% 11.4% 8.7% 31 Mar 18 (Pre-Merger) 31.9% 51.7% 49.8% 48.4% 31 Dec 18 31 Mar 19 31 Mar 20 31 Mar 21 31 Mar 22 31 Mar 23 (At Merger) 25 IDFC FIRST Bank#27b. Total Customer Deposits Section 6: Deposits & Borrowings Total Customer Deposits grew at 4-year CAGR of 36% Total Customer Deposits (Retail Deposits + Wholesale Deposits) has grown strongly by 4 Year CAGR (Mar-19 to Mar-23) of 36%. Without the Rs. 2,131 crore current account mobilized in March 2023 from Government Banking client as mentioned earlier, the total customer deposits would be Rs. 134,681 crore, growth of 44% on YoY basis. YoY - Mar-23 vs Mar-22 ↑47% QoQ-Mar-23 vs Dec-22 ↑ 11% Driven by granular deposits from retail segment 4-Year CAGR: 36% 82,725 93,214 57,719 38,455 40,504 28,370 31 Mar 18 (Pre-Merger) in Rs. crore 1,36,812 31 Dec 18 31 Mar 19 31 Mar 20 31 Mar 21 31 Mar 22 31 Mar 23 (At Merger) 26 IDFC FIRST Bank#28c. Diversification of Deposits Diversification of liabilities: 76% of customer deposits are Retail The Bank has transformed the liability profile in 4 years from wholesale to retail The Retail wholesale Deposits mix has changed from 27: 73 in Dec-18 to 76: 24 in Mar-23. Strong growth in retail deposits has significantly reduced dependency of the Bank on the wholesale deposits. Section 6: Deposits & Borrowings Certificate of Deposits (short term money) has come down from Rs. 28,754 crores as of March 31, 2019 to Rs. 7,826 crores as of March 31, 2023, while the total customer deposit base grew from Rs. 40,504 crore to Rs. 1,36,812 crore in this period. Retail Deposits Wholesale Deposits 27% 73% Dec-18 Rs. 38,455 crore Overall Customer Deposits 76% 24% Mar-23 Rs. 1,36,812 crore 27 IDFC FIRST Bank#29d. Summary of Deposits & Borrowings Summary of Deposits & Borrowings Section 6: Deposits & Borrowings Particulars (in Rs Cr) Legacy Long Term Bonds Mar-22 Dec-22 Mar-23 YoY growth 6,663 6,511 6,411 -4% Legacy Infrastructure Bonds Refinance Other Borrowings Tier II Bonds Total Borrowings (A) CASA Deposits Term Deposits Total Customer Deposits (B) Certificate of Deposits (C) 9,111 7,542 6,915 -24% 16,407 20,227 20,990 28% 5,701 2,064 2,976 -48% 1,500 3,000 3,000 100% 39,382 39,343 40,292 2% 51,170 66,498 71,983 41% 42,044 57,080 64,829 54% 93,214 1,23,578 1,36,812 47% 12,420 9,460 7,826 -37% Money Market Borrowings (D) 13,580 15,063 16,921 25% Borrowings & Deposits (A) + (B) + (C) + (D) 1,58,597 1,87,444 2,01,849 27% CASA Ratio (%) 48.4% 50.0% 49.8% 133bps Average CASA Ratio % (On Daily Average Balance for the Quarter) 49.3% 50.0% 47.7% -162bps 28 IDFC FIRST Bank#30e. Legacy High Cost Borrowings Section 6: Deposits & Borrowings Bank continues to successfully run down the legacy high cost long term borrowings Balance In Rs. Cr Rol (%) As on Mar-22 As on Mar-23 FY24 FY25 FY26 Beyond FY26 Infrastructure Bonds 9,111 6,915 918 5,149 848 0 8.91% Long Term Legacy Bonds 6,663 6,411 1,565 1,231 3,615 0 9.07% Other Bonds 3,539 1,533 765 124 311 334 8.82% Refinance 5,867 2,814 1,884 930 0 0 8.24% Total 25,180 17,673 5,132 7,434 4,773 334 8.86% Because we have a DFI background, the legacy borrowings are costing the bank rather high rate of 8.86%. To simulate, if the Bank had replaced all high-cost legacy borrowings with the current cost of funds, a. The PAT would be higher by Rs. 98 crores in Q4-FY23 b. The return on equity (annualized) for Q4-FY23 would be higher by ~160 bps. 29 IDFC FIRST Bank#31F Section 7: Loans & Advances Bank has a well diversified Credit Portfolio 30#32The Bank lending book is highly diversified Other Corporates Financial Institutions Emerging 8% Enterprises 8% Large Corporates 2% Commercial Finance 8% 7% PSL buyouts 3% Home Loan 11% Credit Card 2% Digital, Gold Loan and Others Rural Finance 10% 6% • Other Corporates Section 7: Loans & Advances Emerging Enterprises 7% 4% Loan Against Property 14% Large Corporates 1% Financial Institutions 8% PSL buyouts 2% Home Loan 12% Consumer Loans 13% Wheels 8% Commercial Finance 10% Credit Card 2% Digital, Gold Loan and Others 7% Loan Against Property 13% Consumer Rural Finance 12% Loans 13% Wheels 9% March 31, 2022 Rs. 1,29,051 crore March 31, 2023 Rs. 1,60,599 crore Commercial Finance consists of Loans to small business owners and entrepreneurs through products like business installment loans, micro business loans, small business working capital, commercial vehicle, trade advances etc. with most loans < Rs. 5 crore. • Loans & Advances are net of IBPC; Consumer Loans include personal loans, education loan, consumer durable loan and cross sell. 31 IDFC FIRST Bank#33Section 7: Loans & Advances Bank has successfully wound down the Infrastructure financing Book In the last 5 years, the Infrastructure financing book as % of overall Loans & Advances has come down from 36.7% to 2.9% as of March 31, 2023 36.7% 26,832 Infrastructure Financing Book (Rs. Crore) % of Loans & Advances 19.4% 21,459 13.8% Decreasing trend of Infrastructure Financing Book 14,315 9.2% 10,808 5.3% 2.9% 6,891 4,664 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 32 IDFC FIRST Bank#34Section 7: Loans & Advances The Bank has built capabilities to originate PSL assets Hence, RIDF subscriptions has reduced substantially. Further, this has also resulted in the reduction in the cost of purchasing PSL certificates. RIDF Bonds Outstanding (Rs. crore) 2,120 3,456 2,737 2,516 1,617 1,262 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 33 IDFC FIRST Bank#35Section 8: Risk Management & Asset Quality a. Break-down of NPA across Business Segments b. Retail & Commercial Finance C. Wholesale Banking d. Provision Coverage Ratio e. Net Stressed Assets i) Risk Management Funnel ii) Underwriting Processes iii) Trend of Bounce rates iv) Trend of collection efficiency v) SMA (1+2) vi) Trend of NPA Ratios vii) Product wise NPA Ratios as of 31 March 2023 i) Underwriting process ii) Risk Management 34#36Break-down of asset quality by business components. Retail has least Gross NPA and Net NPA for over a decade Segment Retail and Commercial Finance Corporate (Non-Infrastructure) 24,258 Infrastructure Financing | 4,436 Overall Bank Level Bank (Excl Infra.) Gross Advances Breakup Section 8: Risk Management & Asset Quality Gross NPA Net NPA PCR% 1,26,135 1.65% 0.55% 82.43% 2.87% 0.01% 99.84% 25.11% 15.73% 56.18% 1,54,830 2.51% 0.86% 80.29% 1,50,394 1.84% 0.46% 86.85% The significant and growing part of the book, i.e. the Retail and commercial business financing business has low NPA levels because of high-quality underwriting, credit bureaus, technology, cash-flow based lending capabilities. Asset Quality in the Corporate Book too is strong with adequate PCR of 99.84%. We expect infrastructure book to wind down in due course, hence the Bank level NPA excluding Infrastructure at 1.84% and 0.46% is relevant point to note. Provision coverage ratio is including technical write-offs. 35 IDFC FIRST Bank#37b. Retail & Commercial Loans Section 8: Risk Management & Asset Quality Risk Management Funnel for Retail & Commercial Loans We have stringent underwriting policy and processes Hence Only 40-60% of applications are approved Hence We have Low Cheque Bounces* (6.6%) We follow it up with High Collection Efficiency (99.6%) This results in low SMA % (1.1%) This leads to Low GNPA (1.65%) & NNPA And (0.55%) Low Credit Losses (~1.5%) Resulting in strong improvement of RoA/ROE This slide explains the rigorous processes we follow to maintain low Gross NPA, low Net NPA and low credit costs for over a decade. * Cheque/ECS / NACH bounces on first EMI presentation 36 IDFC FIRST Bank#38b. Retail & Commercial Loans The Bank has a 10 Step Stringent Underwriting Process (1/2) 1 No-Go Criteria 2 Credit Bureau Check 3 Fraud Check + Credit Scorecard Section 8: Risk Management & Asset Quality The Bank evaluates certain quick no-go criteria such as deduplication against existing records, bank validation and minimum credit parameter rules. The Bank pings the Credit Bureaus to check the customer's credit behavior history, number of credit inquiries, age in bureau, limit utilization, recency of inquiries, level of unsecured debt, etc. The Bank uses certain file screening techniques, banking transaction checks and industry fraud databases to weed out possible fraudulent applications. The bank also uses Fraud Scorecards and real-time video-based checks to identify fraudulent applications The application is then put through scorecards which have been developed based on experience with similar cohort of customers in the past. It includes criteria such as leverage, volatility of average balances, cheque bounces in bank account, profitability ratios, liquidity ratios and study of working capital, etc. 5 Field Verification 6 Personal Discussion The Bank conducts field level verifications, including residence checks, office address checks, reference verification, lifestyle checks (to see if the product/quantum of loan correlates with lifestyle profile) and business activity checks. Based on inputs received, from our processes, a personal discussion is conducted with the customer which includes establishment of business credentials, understanding financials, seeking clarifications on financials, queries on banking habits, queries on the credit bureau report, clarification on banking entries if any, and understanding the requirement and end use of funds. Note: The underwriting process mentioned above, changes depending on product to product. 37 IDFC FIRST Bank#39b. Retail & Commercial Loans Section 8: Risk Management & Asset Quality The Bank has a 10 Step Stringent Underwriting Process (2/2) 7 Industry Check The Bank checks for further credit history and industry level exposure by doing CRILC checks and checks by external entities, where required, to study financials, access to group companies whether legal cases have been filed against the company, disqualification of directors, etc. 8 Cash Flow Analysis 6 10 10 Ratio Analysis Title Deeds Verification The bank statement of account is analyzed for business credits, transaction velocity, average balances at different periods of the month, EMI debits, account churning, interest servicing, etc. This helps us understand the cash flow on the basis of which we calculate the permissible EMI, loan amount, etc. Detailed financial analysis is performed covering, Ratio analysis, debt to net-worth, turnover, working capital cycle, leverage, etc. Evaluation of title deeds of the property and collateral, legality validity, enforceability etc., Repayment: Bank takes standing instructions to debit the bank account of the customers on a monthly basis and thus pulls the EMI from the customers naturally operated account. The cheque returns are low, but the returned cheques are subsequently followed up for collections. Through this stringent underwriting process, the Bank rejects nearly 40% - 60% of the Loan Applications depending on the product category. For some key products, the rejection waterfalls are provided in the annexure Note: The underwriting process mentioned above, changes depending on product to product. 38 IDFC FIRST Bank#40b. Retail & Commercial Loans 34% reduction in the Cheque Bounce during last 4 years Section 8: Risk Management & Asset Quality Pre- Covid Period On trailing 12 months 9.9% Reduction of 34% Post Covid Period 6.6% First EMI (FEMI) Cheque presentation is a direct indicator of the Quality of Booking. Our FEMI cheque Bounce is 34% lesser than FY 20 bookings signifying improving Credit Quality than before. Even with 10% cheque bounce in FY 20, our delinquency was only Gross of 2% and Net of 1% We expect GNPA and NNPA to be better than our past records, i.e. GNPA less than 2% and NNPA less than 1% in retail & commercial book Apr - Mar'20 Apr - Mar'23 39 IDFC FIRST Bank#41b. Retail & Commercial Loans Section 8: Risk Management & Asset Quality Collection Efficiency maintained consistently around 99.5% in all months of FY23 • The Collection % continues to be high at 99.5%. . Thus only 0.5% of the portfolio moves to 0-30 bucket. • This in turn feeds into low Gross and Net NPA at the Bank During FY23, our early bucket collection efficiency remained strong around 99.50% 99.6% 99.6% 99.6% 99.6% 99.4% 99.4% 99.4% 99.5% 99.5% 99.5% 99.5% 99.4% | | | | | | | | | III Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Note: Above numbers pertain to Urban portfolio which is the majority of the Book. Similar experience of improvement is observed in the Rural financing also. Collection % refers to the Primary bucket which is the source bucket. % refer to EMI collected as a % of EMI Due. No prepayment or arrears collection is considered. 40 IDFC FIRST Bank#42Section 8: Risk Management & Asset Quality Retail & Commercial loans: (SMA1 + SMA2) as % of total Book reduced by 50% in FY23 b. Retail & Commercial Loans 2.2% --- Reduction of 50% 1.1% SMA 1 is the overdue portfolio in Bucket 31-60 days, and SMA 2 is the overdue portfolio in 61-90 days. SMA 1 (31-60 days overdue) and SMA 2 (61-90 days overdue), put together are around 1.1% of the Book in retail & commercial segment. Based on this, we expect a lower level of NPA formation in future. Mar-22 Mar-23 41 IDFC FIRST Bank#43b. Retail & Commercial Loans Section 8: Risk Management & Asset Quality Bank has maintained High Retail asset quality GNPA of ~2% and NNPA ~1% for a decade. In Retail & Commercial Finance, We have undergone repeated stress tests over the last 10 years, but our strong and disciplined underwriting capabilities have helped us maintain NPA in the corridor of 2% and 1% consistently for a decade Stress Test 1: Economic Slowdown GNPA NNPA Stress Test 2: Demonetization Stress 3: GST Stress Test 4: IL&FS Crisis Stress Test 5: COVID-19 31-Mar-23 GNPA: 1.65% NNPA: 0.55% 4.01% 2.63% Corridor of GNPA & NNPA Levels at 2% and 1% 2.14% 2.18% 2.02% 1.91% 1.98% 1.77% 1.66% 1.90% 0.99% respectively 1.41% 1.51% 0.53% 1.32% 1.19% 1.24% 1.06% 0.25% 1.65% 1.15% 0.55% 0.08% 0.67% 0.67% 0.06% 0.00% Mar-11 Mar-12 0.38% Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Sep-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Note: "Bank" and "Decade" here pertains to combined history of both Capital First and IDFC Bank. The figures till Sep-18 pertains to the retail portfolio at Capital First Limited. 42 IDFC FIRST Bank#44b. Retail & Commercial Loans Section 8: Risk Management & Asset Quality Key Product wise NPA detail as of March 31, 2023 Here we share the Gross and Net NPA of individual products in Retail & Commercial Finance. Most of the products have GNPA ratio at less than 2% and NNPA ratio at less than 1% as a result of stringent underwriting and risk management funnel described earlier. 2.79% 1.17% Gross NPA Net NPA 1.84% 1.83% 1.65% 1.60% 1.43% 1.05% 0.90% 1.65% 0.66% 0.55% 0.51% 0.46% 0.41% 0.40% 0.41% 0.17% GNPA level guided to market @2.0% NNPA level guided to market @1.0% Loan Against Consumer Wheels Credit Card Digital, Gold Commercial Home Loan Rural Finance Retail and Property Commercial Loans Loan and Others Finance NPA of Loan Against Property is higher because it includes impact of restructuring due to COVID. NPA in this portfolio is expected to come down over time as the COVID affected portfolio runs off. 43 IDFC FIRST Bank#45c. Wholesale Financing Section 8: Risk Management & Asset Quality Stringent Underwriting Process in Wholesale Business • Customer Selection 2 Due Diligence with focus on Cash Flows 3 Smell Check • • All New-To-Bank potential borrowers (incl. promoter/directors) are checked including CIBIL, Suit filed, CFR, CRILC, etc. Further, bank has also defined minimum internal rating thresholds for onboarding any borrower, which acts as a guiding factor for loan originations. The Bank follows a conservative underwriting approach wherein primary assessment of debt servicing ability is based on underlying cash flows of the borrower. • The Bank conducts detailed due diligence of the borrower including objective financial assessment, assessment of borrower's business profile, industry, ownership & management, key risks and customer's past track record, which in turn helps determining the Bank's appetite for the exposure. • As part of underwriting process market feedback is obtained from borrower's peers, customers, suppliers, external rating agencies, banks, etc. S • Granular Exposure Focusing on granular small to medium ticket size credit exposures with average ticket size of New to Bank exposure at Rs. 60 Cr. Risk based approvals • The Bank follows a 'risk-based' approach for credit sanctions wherein higher risk exposures (basis internal rating, quantum and tenure) require approval from higher approval authority. Note: The underwriting process mentioned above, may change depending on product to product. 44 IDFC FIRST Bank#46c. Wholesale Financing Risk Management in Wholesale Banking The Bank has reduced its corporate (non-infra) book from 29% in Mar- 19 to 16% in Mar-23 29% 22% 19% 18% 16% Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Section 8: Risk Management & Asset Quality Similarly, the Bank has reduced its infrastructure financing portfolio from 19% in Mar-19 to 3% in Mar-23 19% 14% 9% 5% 3% Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Also, the exposure to top 20 single borrowers reduced from 16% in Mar-19 to 7% in Mar-23 Further, the exposure to top 5 industries also reduced from 41% Mar-19 to 22% in Mar-23 which has further strengthened the balance sheet. 16% 13% 12% 9% 7% 41% 35% lii 27% 24% 22% Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 45 IDFC FIRST Bank#47d. Provision Coverage Ratio Provision Coverage Ratio increased to 80.29% for the Bank Retail & Commercial Finance 82.43% 69.59% 65.08% 57.53% 44.56% Mar-19 Mar-20 Mar-21 Total Bank Level Section 8: Risk Management & Asset Quality Non-Infra Corporate Book 99.84% 94.50% 72.32% 58.51% 45.95% Mar-22 Mar-23 Mar-19 80.29% 70.29% 66.40% 63.57% 48.67% Mar-19 Mar-20 Mar-21 Mar-22 Mar-20 Mar-21 Mar-22 Mar-23 Total Bank Level (excluding Infra financing book) 44.96% 76.04% 62.34% 62.09% 86.85% Mar-23 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 46 IDFC FIRST Bank Note: Provision Coverage Ratio as shown above are including technical write-offs#48e. Net Stressed Assets Section 8: Risk Management & Asset Quality Net Stressed Assets reduced significantly to only 0.8% of total Assets Net stressed Assets = Net NPA + Net SRs + Net Restructured Assets (OTR) 2.0% Reduction of 59% 0.8% Mar-22 Net NPA Net Restructured Assets (OTR) Net SRs Mar-23 Net Stressed Assets / Total Assets The Bank has reduced the net stressed assets, both in absolute value and as % of the total assets. This indicates lower NPA levels going forward. The restructured pool of the Bank has reduced by 60% in FY23 It forms 0.59% of the overall Loans & Advances as of March 31, 2023 as compared to 1.84% as of March 31, 2022. 47 IDFC FIRST Bank#49F Section 9: Profitability & Capital a. Net Interest Income b. Fee and Other Income c. Composition of Fee and Other Income d. Trend of Core Operating Profit e. Trend of Profitability and Return Ratios f. Financial Statements g. Capital Adequacy 48#50a. Net Interest Income 30% YoY growth in Net Interest Income during FY23 Net Interest Income (In Rs. Crore) 4Y CAGR: 27% 9,706 7,380 6,076 4,845 FY19* FY20 FY21 FY22 Section 9: Profitability & Capital 12,635 FY23 NIM for Q4 FY 23 is 6.41% compared to 6.13% for Q3 FY 23. NIM for FY 23 was 6.05% Gross of IBPC and selldown * H2-FY19 actual annualized 49 IDFC FIRST Bank#51b. Fee & Other Income 54% YoY growth in Fee & Other Income during FY23 Fee and Other Income (In Rs. Crore) 4Y CAGR: 37% 1,550 1,622 1,167 2,691 FY19* FY20 FY21 FY22 * H2-FY19 actual annualized Section 9: Profitability & Capital 50 4,142 FY23 IDFC FIRST Bank#52b. Fee & Other Income Breakup of Fee & Other Income - FY23 General Banking Fees 25% WM / Third Party Distribution, 11% Others 5% Trade & Client Fx 11% Section 9: Profitability & Capital Loan Origination fees 33% • During FY23, the Fee and Other Income of the Bank increased by 54% YoY. The Bank has launched and scaled up many fee-based products in the last 4 years. • Many of these products are in the early stage of their lifecycle and have the potential to grow significantly going forward. • 91% of the fee income & other income is from retail banking operations which is granular and sustainable. Credit Card & Toll 15% 51 IDFC FIRST Bank#53c. Cost to Income Ratio Section 9: Profitability & Capital Bank has reduced Cost to Income ratio from 95% to 72% in 4 years, expected to drop further going ahead.. • During the last three years the bank had to make significant investments in building liabilities and credit card franchise . . Despite this, the cost income issue has come down from 95% to 72% because of the strong incremental unit economics at the bank which is allowing the bank to make the investments as mentioned above. If the high cost legacy borrowings are replaced with current cost of funds, the cost to income for FY23 would be 69.68%. • Cost to income will further come down with scale Core Cost to Income (excluding Trading Gains) Ratio % 95.13% 85.22% 78.79% 77.79% 76.86% 72.54% Q2 FY19 H2 FY19 FY20 FY21 FY22 (Pre-Merger) FY23 52 IDFC FIRST Bank#54c. Cost to Income Ratio Breakup of Cost to Income Ratio by segment • The cost to income ratio has come down for every business line. Section 9: Profitability & Capital • The retail & commercial finance and wholesale banking already have low cost to income ratio The only two businesses that are dragging down the overall cost to income ratio are Liabilities and Credit Cards, but this could not be avoided as the bank is in set up stage. As these businesses get scale and vintage, this will automatically get addressed and bank level cost to income ratio will naturally come down Retail & Commercial Assets 63.4% 55.0% Wholesale Banking 38.1% 31.6% FY22 FY23 FY22 FY23 Liabilities Credit Cards 198.0% 240.0% 173.7% 164.6% FY22 FY23 FY22 FY23 53 IDFC FIRST Bank#55d. Core Pre-provisioning Operating Profit Section 9: Profitability & Capital 67% YoY growth in Core Operating Profit during FY23... Against overall book growth of 24% which showcases the core earning potential of the Bank (Pre-merger standalone Bank) 397 H1 FY19 (Annualized) Core Pre-Provisioning Operating Profit (In Rs. Crore) 1,764 (Post-merger) 1,105 H2 FY19 (Annualized) 4Y CAGR: 43% 2,753 1,909 4,607 FY20 FY21 FY22 FY23 54 IDFC FIRST Bank#56d. Core Pre-provisioning Operating Profit Strong growth in Operating Profit % 0.32% H1 FY19 (Annualized) (Pre-merger standalone Bank) Core Pre-Provisioning Operating Profit (PPOP) as a % of Average Total Assets 1.56% 1.22% 1.11% 0.76% Section 9: Profitability & Capital 2.14% H2 FY19 (Annualized) (Post-merger) FY20 FY21 FY22 FY23 • The bank has improved the core pre-provisioning operating profit despite investment in growing the bank. As the retail lending business is profitable with more than 20% incremental ROE, the Bank is able to absorb the expenses needed to invest for building the bank. In Q4-FY23, the Core PPOP was at 2.36% (annualized) as a % of average assets, as compared to 1.86% in Q4-FY22 * H2-FY19 actual annualized 55 IDFC FIRST Bank#57d. Core Pre-provisioning Operating Profit Section 9: Profitability & Capital The core operating profits growth continues to outpace overall balance sheet growth Balance Sheet Growth PPOP Growth 9% 8% 17% 44% 26% 67% The core PPOP (NII + Fees excluding Trading Gains - Opex) of the Bank grew by 67% as compared to balance sheet growth of 26% in FY23. This demonstrates the power of incremental profitability in all our businesses. This phenomenon has played out to bring in growth in core PPOP every quarter and we expect it to continue over the next few years till we reach sustainable ROA / ROE levels as comparable to the industry. FY21 FY22 FY23 56 IDFC FIRST Bank#58d. Core Pre-provisioning Operating Profit Strong growth in Core Operating Profits.. Section 9: Profitability & Capital The consistent QoQ growth of the crore operating profit showcases the strength of the core operating model, despite the investments in building capabilities including new products, network, people, digital innovations etc. during this phase which has made the organization ready for the next wave of growth. Quarterly Core Pre-Provisioning Operating Profit (excluding the trading gains) in Rs crore 1,600 Core PPOP (Rs crore) Core PPOP as % of Total Avg Assets (%) 1,400 1,200 2.50% 2.33% 2.26% 2.02% 2.04% 1.84% 2.00% 1.72% 1,000 800 1.48% 1.33% 1.21% 1.23% 1.26% 1.02% 1.45% 1.34% 1.50% 1.03% 600 0.79% 0.78% 0.68% 1,342 1.00% 1,225 1,052 987 400 836 745 0.11% 601 0.50% 540 555 571 200 428 468 465 484 405 328 276 275 32 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 57 0.00% IDFC FIRST Bank#59e. Net Profit Section 9: Profitability & Capital .. Driving the Net Profit growth despite the impact of stressed legacy assets and Covid Quarterly Net Profit / Loss (Rs crore) 803 556 605 474 343 281 72 == 94 101 130 128 152 וייוי -1,538 Provisions on Infra Provisions on revaluation; Reliance Capital, Provisions on DHFL, Infra A/Cs Goodwill Write-off on merger Infra A/Cs -1,639 Provisions on Telecom A/C COVID 2nd wave -630 The Bank has sustainably turned around and improved its profitability every quarter based on growth in its core operating profit Since there was no moratorium in COVID second wave, the bank took additional provisions based on ageing. The Bank in due course recovered from the provisioned portfolio, especially in retail loans. Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Q1FY22 Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23 In Q4-FY23, the Bank had trading gains of Rs. 216 crore and the Bank utilized Rs. 79 crore of of the same to increase the PCR. Adjusting for these one-time items, the net profit of the Bank would have been Rs. 701 crore for Q4-FY23. We expect profitability to further improve going forward with scale. 58 IDFC FIRST Bank#60e. Net Profit Section 9: Profitability & Capital The Bank has strong unit economics . Since the merger in December 2018, the Bank had to account for much higher than normalized provisions due to legacy wholesale stressed assets as well as the impact of COVID-19. This has clouded the core incremental economics (NII Plus Fees less Opex). . This analysis has been prepared to understand how the core business model of the bank is evolving • This analysis shows that the core normalized simulated net profit has been rising steadily and strongly at the Bank, from net losses at merger to net profit of Rs. 2201 crore in FY23 (without trading gain). In Rs. Crore Simulated Normalized PAT (Rs crore) FY19* FY20 FY21 FY22 FY23* 2,201 Average Funded Asset, (Actual) 92,868 1,08,055 1,08,243 1,19,572 1,44,965 Core Operating Profit, (Actual) 1,101 1,764 1,909 (excluding trading gains) 2,753 4,607 Credit Cost, (Simulated) 1,393 1,621 1,624 1,794 @1.5% of Avg loans & advances 1,665 213 107 718 Simulated normalized PBT -292 143 285 959 2,942 -218 Simulated normalized PAT -218 107 213 718 2,201 FY19* FY20 FY21 FY22 FY23 * FY23 numbers including credit cost are on actuals. 59 IDFC FIRST Bank#61f. Profitability Ratios Consistent improvement in ROA and ROE 5.44% 6.67% Return on Equity (%) 10.13% 8.96% 10.72% Section 9: Profitability & Capital Return on Assets (%) 13.45% 1.41% Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 0.76% 0.64% 1.11% 1.07% 0.97% Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Adjusting for the one-time items in Q4-FY23, the annualized ROA would have been 1.23% and the annualized ROE would have been 12.30% in Q4-FY23, which has improved from 6.67% in Q4-FY22 ROA(%) and ROE(%) are quarterly annualized 60 IDFC FIRST Bank#62g. Financial Statements Annual - Income Statement Section 9: Profitability & Capital Growth (%) In Rs. Crore FY22 FY23 YOY Interest Income 17,173 22,728 32% Interest Expense Net Interest Income 7,467 10,092 35% 9,706 12,635 30% Fee & Other Income 2,691 4,142 54% Trading Gain 531 325 -39% Operating Income 12,928 17,102 32% Operating Income (Excl Trading Gain) 12,397 16,777 35% Operating Expense 9,644 12,170 26% Operating Profit (PPOP) 3,284 4,932 50% Operating Profit (Ex. Trading gain) 2,753 4,607 67% Provisions 3,109 1,665 -46% Profit Before Tax 175 3,267 1765% Tax Profit After Tax 30 830 2697% 145 2,437 1575% 61 IDFC FIRST Bank#63g. Financial Statements Quarterly Income Statement Section 9: Profitability & Capital Growth (%) In Rs. Crore Q4 FY22 Q3 FY23 Q4 FY23 YOY Interest Income Interest Expense Net Interest Income 4,554 5,912 6,424 41% 1,884 2,627 2,828 50% 2,669 3,285 3,597 35% Fee & Other Income 841 1,117 1,181 40% Trading Gain -9 36 216 Operating Income 3,500 4,438 4,994 43% Operating Income (Excl Trading Gain) 3,510 4,402 4,778 36% Operating Expense 2,674 3,177 3,436 28% Operating Profit (PPOP) 827 1,261 1,559 89% Operating Profit (Ex. Trading gain) 836 1,225 1,342 61% Provisions 369 450 482 31% Profit Before Tax 457 811 1,076 135% Tax 114 206 274 139% Profit After Tax 343 605 803 134% 62 IDFC FIRST Bank#64g. Financial Statements Balance Sheet Section 9: Profitability & Capital Growth (%) In Rs. Crore Mar-22 Dec-22 Mar-23 (YoY) Shareholders' Funds 21,003 22,698 25,721 22% Deposits 1,05,634 1,33,038 1,44,637 37% - CASA Deposits -Term Deposits 51,170 66,498 71,983 41% 54,464 66,540 72,655 33% Borrowings 52,963 54,406 57,212 8% Other liabilities and provisions 10,581 11,232 12,371 17% Total Liabilities 1,90,182 2,21,374 2,39,942 26% Cash and Balances with Banks and RBI 15,758 12,319 13,898 -12% Net Retail and Wholesale Loans & Advances* 1,24,075 1,47,109 1,56,371 26% Investments 41,544 51,016 57,809 39% Fixed Assets 1,361 1,902 2,090 54% Other Assets 7,443 9,028 9,773 31% Total Assets 1,90,182 2,21,374 2,39,942 26% *includes credit investments (Non-Convertible Debentures, RIDF, PTC, SRS and Loan Converted into Equity) 63 IDFC FIRST Bank#65h. Capital Adequacy Ratio Section 9: Profitability & Capital Capital Adequacy Ratio is strong at 16.82% as on March 31, 2023 In Rs. Crore Common Equity Tier 2 Capital Funds Total Capital Funds Total Risk Weighted Assets CET 1 Ratio (%) Total CRAR (%) The Bank is well capitalized for growth in future. Mar-22 Dec-22 Mar-23 20,199 22,140 24,816 2,525 4,218 4,585 22,724 26,358 29,401 1,35,728 1,64,094 1,74,762 14.88% 13.49% 14.20% 16.74% 16.06% 16.82% 64 IDFC FIRST Bank#66F Section 10: Board of Directors 65#67Board of Directors: MD & CEO Profile Section 10: Board of Directors Vaidyanathan aspires to create "a world-class bank Indian Bank which offers high-quality affordable and ethical banking for India". He left a Board level position at ICICI group in 2010 and acquired stakes in of a small listed, loss making, real-estate financing NBFC with market cap of Rs. 780 crores ($140m) with the idea of converting it to a Bank. He did so through a leveraged buyout which was funded by personal borrowing Rs. 78 crore ($14m), which he raised by pledging the purchased stock and his home as collateral. He then changed the business model to financing micro and small entrepreneurs by use of technology with ticket sizes of $100-$100K, demonstrated the proof of concept to investors and raised fresh PE backed equity of Rs. 810 crores.. He renamed the company Capital First and became its Chairman and CEO. He turned the company around from losses of Rs. 30 crores ($5m, 2010) to profit of Rs. 358 crore ($ 50m, 2018). The share price of Capital First rose from Rs. 122 (2012) to Rs. 850 (2018) and the market cap increased >10 times from Rs. 780 crores ($120 m, 2010) to Rs. 8200 crores ($1.2 b, 2018). Per stock exchange filings, he bought the NBFC shares at Rs. 162 and sold part of his holdings at Rs. 688 in 2017 to close the loan availed to purchase the shares. Capital First's retail loan grew from Rs. 94 crores ($14m, 2010) to Rs. 29,600 crores ($4 b, 2018) with 7 million customers. Having built Capital First to scale, he looked out for a commercial banking license to convert it to a Bank. In 2018, opportunity struck in the form of an offer for merger from IDFC Bank. He led the integration and took over as the MD and CEO of the merged bank, renamed to IDFC First Bank. Since then, he has increased retail and commercial finance book to Rs. 1,26,135 crores, increased CASA from 8.7% to 50.0%, and turned the bank into profitability. The vision of IDFC First Bank is "To build a world class bank in India, guided by ethics, powered by technology and be a force for social good." Earlier, Vaidyanathan worked with Citibank from 1990-2000. He joined ICICI Group in 2000 when the retail banking business was in its inception. He took the branch network to 1411, built a large CASA book, and built retail lending including mortgages, auto loans, and credit cards of Rs. 1.35 trillion ($30 bn) by 2009. The retail banking business he built helped transform the institution from a wholesale DFI to a retail banking institution. He joined the Board of ICICI Bank in 2006 at age 38 and became MD and CEO of ICICI Prudential Life Insurance Company at 41. He has received many domestic and international awards notably EY "Entrepreneur of the Year Financial Services, India, 2022", ET Most inspiring CEO 2022, CNBC Awaaz "Entrepreneur of the Year" 2020, "Most Inspirational Leveraged Management Buyout, India 2018" by CFI Awards, London, CNBC Asia's "Most Innovative Company of the Year" 2017, "Entrepreneur of the Year" at Asia Pacific Entrepreneurship Award 2016 & 2017, "Most Promising Business Leaders of Asia" by Economic Times. in 2016, Business Today - India's Most Valuable Companies 2016 & 2015, Economic Times 500 India's Future Ready Companies 2016, Fortune India's Next 500 Companies 2016, Dun & Bradstreet India's Top 500 Companies & Corporates 2016 & 2015, "Outstanding contribution to Financial Inclusion, India, 2017" from Capital Finance, London, "Most Promising Business Leaders of Asia" 2016 by Economic Times. He is an alumnus of Birla Institute of Technology and Harvard Business School (Advanced Management Program). He has run 24 half-marathons and 8 full marathons. IDFC FIRST Bank#68Board of Directors Section 10: Board of Directors MR. SANJEEB CHAUDHURI - PART-TIME NON-EXECUTIVE CHAIRPERSON (INDEPENDENT DIRECTOR) Mr. Sanjeeb Chaudhuri is a Board member and Advisor to global organizations across Europe, the US and Asia. He has most recently been Regional Business Head for India and South Asia for Retail, Commercial and Private Banking and also Global Head of Brand and Chief Marketing Officer at Standard Chartered Bank. Prior to this, he was CEO for Retail and Commercial Banking for Citigroup, Europe, Middle East and Africa. He is an MBA in Marketing and has completed an Advanced Management Program. MR. AASHISH KAMAT - INDEPENDENT DIRECTOR Mr. Aashish Kamat has over 32 years of experience in the corporate world, with 24 years being in banking & financial services & 6 years in public accounting. He was the Country Head for UBS India, from 2012 until his retirement in January 2018. Prior to that he was the Regional COO/CFO for Asia Pacific at JP Morgan based out of Hong Kong. Before moving to Hong Kong, he was in New York, where is was the Global Controller for the Investment Bank (IB) at JP Morgan in New York; & at Bank of America as the Global CFO for the IB, and, Consumer and Mortgage Products. Mr. Kamat started his career with Coopers & Lybrand, a public accounting firm, in 1988 before he joined JP Morgan in 1994. 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 sharing platform for finance and treasury professionals. She is a member, Banking and Finance Committee, Indian Merchants Chamber and also nominated as member, Depositor Education and Awareness (DEA) Fund Committee by the RBI. She retired as General Manager and Chief Economist, SBI, based at its Corporate Office in Mumbai. She has a brilliant academic record, with a Ph.D. in Economics from the Department of Economics, University of Mumbai, M.S. in Economics from the University of California at Davis, USA, M.A. in Economics from Gokhale Institute of Politics and Economics, Pune and B.A. in Economics from Fergusson College, Pune. She has attended an Executive Programme at the Kennedy School of Government, Harvard University, USA and a leadership programme at IIM Lucknow. 67 IDFC FIRST Bank#69Board of Directors Section 10: Board of Directors MR. HEMANG RAJA - INDEPENDENT DIRECTOR Mr. Hemang Raja, is an MBA from Abilene Christian University, Texas, with a major in finance. He has also completed an Advanced Management Programme (AMP) from Oxford University, UK. He has vast experience in the areas of Private Equity, Fund Management and Capital Markets in companies like Credit Suisse and Asia Growth Capital Advisers in India as MD and Head - India. He has served on the executive committee of the Board of the National Stock Exchange of India Limited; also served as a member of the Corporate Governance Committee of the BSE Limited. MR. PRAVIR VOHRA - INDEPENDENT DIRECTOR Mr. Pravir Vohra is a postgraduate in Economics from St. Stephen's College, University of Delhi & a Certified Associate of the Indian Institute of Bankers. He began his career in banking with SBI where he worked for over 23 years. He held various senior level positions in business as well as technology within the bank, both in India & abroad. The late 1990s saw Mr. Vohra as Vice President in charge of the Corporate Services group at Times Bank Ltd. In January 2000, he moved to the ICICI Bank group where he headed a number of functions like the Retail Technology Group & Technology Management Group. From 2005 till 2012 he was the President and Group CTO at ICICI Bank. MR. S GANESH KUMAR - INDEPENDENT DIRECTOR Mr. S Ganesh Kumar was the Executive Director of the Reserve Bank of India. He was with the Reserve Bank of India for more than three decades. His most recent responsibilities included the entire gamut of Payment and Settlement Systems, creation and development of strategic plans for the Bank and to take care of the external investments and manage the foreign exchange reserves with the central bank. Mr. Kumar is a post graduate in Management having experience in varied fields such as marketing, market research, banking, finance, law, and Information Technology. 68 IDFC FIRST Bank#70Board of Directors Section 10: Board of Directors MR. AJAY SONDHI - NON-EXECUTIVE NON INDEPENDENT DIRECTOR Mr. Ajay Sondhi, is a 2017 Fellow, Harvard Advanced Leadership Initiative, MBA - Finance from JBIMS, Mumbai University, and B.A. in Economics (Honors) from St. Stephens College, Delhi University. He is a seasoned Financial Services and Board professional with extensive Indian and global experience. Most recently he was Founder & CEO of Sentinel Advisors Pte Ltd, Singapore, a boutique business and strategy advisory firm. He was previously MD and Regional Manager for PWM at Goldman Sachs, Singapore. He has had a long career in banking, and has held several senior leadership roles in the industry in India and overseas. DR. JAIMINI BHAGWATI - NON-EXECUTIVE NON INDEPENDENT DIRECTOR Dr. Jaimini Bhagwati is a former IFS officer, economist and foreign policy expert. He received his PhD in Finance from Tufts University, USA. He did his Master's in Physics from St Stephen's College, Delhi and a Master's in Finance from the Massachusetts Institute of Technology, USA. He was the High Commissioner to the UK and Ambassador to the European Union, Belgium and Luxembourg. Dr. Bhagwati has served in senior positions in the Government of India, including in foreign affairs, finance and atomic energy. In his earlier role at the World Bank, he was a specialist in international bond and derivatives markets and was the RBI chair professor at ICRIER. He is currently a Distinguished Fellow at a Delhi based think-tank called the Centre for Social and Economic Progress (CSEP). MR. VISHAL MAHADEVIA - NON-EXECUTIVE NON INDEPENDENT DIRECTOR Mr. Vishal Mahadevia joined Warburg Pincus in 2006 and is Managing Director, Head of India and is a member of the firm's executive management group. Previously, he was a Principal at Greenbriar Equity Group, a fund focused on private equity investments in the transportation sector. Prior to that, Mr. Mahadevia worked at Three Cities Research, a New York-based PE fund, & as a consultant with McKinsey & Company. He received a B.S. in economics with a concentration in finance & B.S. in electrical engineering from the University of Pennsylvania. 69 IDFC FIRST Bank#71F Section 11: Shareholding 70#72Shareholding Pattern as of March 31, 2023 Scrip Name: IDFC FIRST Bank (BSE: 539437, NSE:IDFCFIRSTB) Other Body Corporate (1.22%) Trusts and Clearing Members (0.23%) President of India (3.95%) Public (26.00%) MF/Insurance/Ba nk/FI/AIF (3.54%) Section 11: Shareholding Book Value per Share (Rs.) 39.35 55.05 Others (0.03%) 38.86 38.43 37.98 33.78 31.90 31.37 Promoters (39.99%) Dec-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 FDI/FPI/FC/FN/NRI (25.05%) 1.13 1.46 0.66 0.78 1.18 1.42 Total # of shares as of Mar31, 2023 661.81 Cr Basic EPS (FY23) Rs. 3.68 Price to Book (x) Market price 71 IDFC FIRST Bank#73F Section 12: FIRST Compass (ESG) 72#74Our FIRST Compass ESG Priorities Align with our Corporate Vision Our Vision: To Build A World-Class Bank in India powered by Technology • • Guided by Ethics Highest standards of corporate governance, ethics and integrity Strong regulatory compliance E&S framework for project finance Responsible sales and marketing . Highly engaged and active Board . • Systemic risk management Transparency, disclosures and stakeholder engagement Climate action and environmental footprint mapping 1 FIRST Priorities (immediate and continuing) • ボ Achieve best-in-class ratings for our ESG approach and performance Section 12: FIRST Compass (ESG) and be a force for Social Good Product innovation Advanced analytics Digital-first and contemporary customer interfaces Streamlined, digitally-enabled people processes Data security Customer privacy Financial inclusion and credit access Customer centricity Meritocracy, diversity, equity and inclusion Responsible finance Influencing responsible customer behaviour Strong employee engagement with focus on learning and holistic wellbeing Community wellbeing through CSR and volunteering Values-led culture NORTH STAR Priorities (Medium-to-long term) •Innovate and develop ESG-centric products and services suite Implemented through our FIRST COMPASS programme to create sustained value for all stakeholders Customers Investors Employees Government Develop ESG-led KRAS for management Reserve Bank of India and other regulatory bodies Suppliers and partners Environment 73 IDFC FIRST Bank#75Section 12: FIRST Compass (ESG) ✓ ✓ ✓ ✓ ✓ ✓ ✓ FIRST Compass at IDFC FIRST Bank FY23 Highlights Environmental Infrastructure: IGBC certification & LEED Certified Gold Standard for multiple large offices The HO IDFC FIRST Bank Tower (The Square, BKC) is fully powered by green energy Adopted Motion Sensors for lights and introduced Internet of Things (IoT) in our AC systems in multiple offices. Minimal consumption of water through aerators in washrooms at large offices Financing: Over 1.2 Lakh units (INR 1160 Cr) financed in EV sales in FY 23 compared to 20K+ units in FY 22 Leading financier with maximum finance tie ups; introduced industry first end-to-end digital journey on EV financing Adherence to Equator Principles for project finance Customer: Fully digitized customer journeys for multiple products to save paper Green financing towards purchase of low carbon electronics: financed over 96K+ units of Invertor ACs. This Bank is spreading awareness for using high energy-efficient products to reduce carbon emission. Waste Management: Swachh Worli Koliwada Program: More than 130K+ kg dry and wet waste processed in FY23 as compared to 92K+ kg in FY 22. About 10K households made aware about waste management. Segregation of dry & wet waste in 4 of our large offices Over 10k KG of E-waste recycled through certified channel in FY 23 Social ✓ Employee engagement and learning: Focus on Employee L&D: About 17.5 lakh learning hours achieved with 50 average learning hours per employee in FY 23 Holistic employee wellbeing programmes covering physical, mental and financial health with 134 Sessions held in FY 23 ✓ Kamyaab Scholarship Program for students with autism where assistance was provided to students in FY 23 ✓MBA Scholarship Program for students with family income <Rs 6 lakhs. There were 351 beneficiaries in FY 23 and over 1100 till date. ✓ Customers & financial inclusion: MSME Lending: Approx 10k Cr loans disbursed in MSME segment during FY 23 ✓ Rural bank branches with focus on lending to Small & Marginal Farmers and customers with annual income below 2.5-3 lakhs 71% of female borrowers in live rural assets portfolio ✓ Large distribution reach to drive financial inclusion: Present in 25 Indian states and 3 union territories ~20% of corporate book exposed to environmentally & socially responsible companies in FY 23 ✓ Community interventions: Employee Volunteering Over 6.5k volunteers participated in various programs and contributed close to 8.5k hours in FY 23 Women Rehabilitation Program ✓ ✓ Strong focus on CSR activities with voluntary spends of over Rs. 51 Cr over the last three years. Over 17 Cr CSR expenditure in FY 23. ✓ ~20K households in FY 23 (~91K till date) benefitted through Shwetdhara Program which helps in generating livelihoods for dairy farmers Junoon Program for driving entrepreneurship from slum communities Financial literacy campaign: Awareness about financial products and services in 11 regional languages Governance Strong and experienced Board: • • • • • Independence: 60% Directors Independent 11 Board Committees (majority members are IDs and chaired by IDs) Management committees are mapped to respective Board Committees. Diverse and relevant skill sets, with 40% of Directors experienced in Digitalization and IT/cyber security Highly competent Board with over 30. years of average experience Dynamic and engaged Board, with high frequency of Board meetings 100% average Board attendance ✓ 25 unique customer-friendly, and fee-free services for savings account customers. ✓ Stringent Credit and Provisioning Policy ✓ Strong Capital Adequacy, LCR, PCR, Credit Rating ✓ Strong Risk Management Framework ✓ Strong Vigilance Mechanism ✓ Transparency: ZERO penalties on the bank for non- disclosure ✓ No political contributions ✓ IDFC FIRST Bank Certified with ISO 27001 (Information Security Management System) 74 IDFC FIRST Bank#76ESG Governance, Commitments and Ratings ESG Governance Structure Section 12: FIRST Compass (ESG) ESG Commitments Board Level Committee • Board Committee: Stakeholder, ESG and Customer Relationship Committee - Chaired by Independent Board member Management Level Committee Chaired by MD & CEO • Drives the strategic integration of sustainability • 12 executive members including heads of Group functions Steering Committee and Working Group • Specific working groups with cross-functional composition and expertise responsible for delivering on the ESG agenda • Facilitated by a dedicated ESG team • Letter of commitment submitted and confirmed as a participant for United Nations Global Compact (UNGC) • One of the three official supporters of Task Force on Climate-Related Financial Disclosures (TCFD) in the Indian Banking sector . • One of the first financial institutions in India to be signatory to the Equator Principles 7+ ESG-related policies formulated ESG ratings CRISIL DJSI Refinitiv 44 (2022) 62 (B) (2022) 19 (2021) 50 (B-) (2021) 66 (B) (2022) 75 IDFC FIRST Bank#77ESG Awards AFC FIRS k EXCELLENCE AANANDS CONGRATULATIOSSY BEC FIRST BANK BEST CSR SUSTAINABILITY AWARDS BANKS) नवभारत RF WA Section 12: FIRST Compass (ESG) Social Impact Bank of the Year ST Ban Best Bank Leading the Way in ESG 3rd Annual ESG Summit & Awards, 2023 - Best CSR Sustainability Award – Economic Times BFSI Excellence Awards Feb 2023 Navabharat BFSI Award Best Sustainable Bank Strategy Oct 2022 Social Impact Bank of the Year Sep 2022 13 HSBC WINNER cfi.co FINANCY RANGE 2021 Inclusive Finance India Awards Breaking Ground in WASH Financing Award Dec 2021 CFI Award Best Sustainable Banking Strategy 2021 une 201 Water.org & Sa-Dhan Awards Oct 2021 WORLD FINANCE 2 CORPORATE GOVERNANCE AWARDS 2 2 World Finance Organisation Best Corporate Governance, India Jun 2022 76 IDFC FIRST Bank#78F Section 13: Awards and Recognition 77#79Awards and Recognition great plece of news Most Consulter Digital Mank in andia Best Consumer Digital Bank in India, Sept 2021 - Received from Global Finance Magazine Digital CX Awards c Outstanding Digital CX- Internet Banking (Wanith Management) IDFC First Bank WINNER THE BANKER 6112 Section 13: Awards & Recognitions THE ECONOMIC TIMES Peb BFSI BEST BRANDS 2022 Global Private Banking Innovation Awards 2022. Best Payments & Collections Solution Award 2021 - Asset Asian Awards Best Innovative Payment Solution - Phi Commerce Best Consumer Digital Bank in India - 2021 - Global Finance Magazine Best Wealth management provider for Digital CX - Digital CX - Excellence in User Experience – Website - Digital CX Asia Private Banking Award - Asia Money Best BFSI Brands in Private Bank Category - ET BFSI Best Corporate Governance, India 2022 - World Finance Corporation Most Trusted Brands of India 2021 - CNBC TV18 Most Harmonious Merger Award - The European 666 WINNER Best Pr WINNER Bank for Weath Creation & Motion Vieath Management Pervation ERVER HIGHLY ACCLAIMED Best Private Banks for HNW Clients Social Impact Bank of the Year 2022 - The European Most Innovative Digital Transformation Bank 2022 - The European Most Innovative Banks - IFTA 2021 Most Trusted Companies Awards 2021 - IBC Most Promising Brand Awards 2022 - ET BFSI Outstanding Digital CX - Internet Banking (WM) - Digital CX ET Most Inspiring CEO Award - by Economic Times 78 IDFC FIRST Bank#80ETHICAL IDFC FIRST Bank DIGITAL BANKING * SOCIAL-GOOD We are building a world class bank with: - Highest levels of corporate governance - Stable balance sheet growth of ~20-25%, - - - Robust asset quality of GNPA less than 2% and net NPA of < 1% High teens ROE - Contemporary technology and - High levels of Customer Centricity. 79 IDFC FIRST Bank#81Disclaimer 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 part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer or recommendation to purchase or subscribe for, any securities of the Company, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contractor commitment therefore. In particular, this presentation is not intended to be a prospectus or offer document under the applicable laws of any jurisdiction, including India. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained in this presentation. Such information and opinions are in all events not current after the date of this presentation. There is no obligation to update, modify or amend this communication or to otherwise notify the recipient if information, opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. 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”, “expect”, “intend”, “may”, “objective", "goal", "plan", "potential", "proforma", "project", "pursue", "shall", "should", "will", "would", or other words or phrases of similar import. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other projections. Important factors that could cause actual results, performance or achievements to differ materially include, among others: (a) material changes in the regulations governing our businesses; (b) the Company's inability to comply with the capital adequacy norms prescribed by the RBI; (c) decrease in the value of the Company's collateral or delays in enforcing the Company's collateral upon default by borrowers on their obligations to the Company; (d) the Company's inability to control the level of NPAs in the Company's portfolio effectively; (e) certain failures, including internal or external fraud, operational errors, systems malfunctions, or cyber security incidents; (f) volatility in interest rates and other market conditions; and(g) any adverse changes to the Indian economy. This presentation is for general information purposes only, without regard to any specific objectives, financial situations or informational needs of any particular person. The Company may alter, modify, regroup figures wherever necessary or otherwise change in any manner the content of this presentation, without obligation to notify any person of such change or changes. IDFC FIRST Bank#82Thank You IDFC FIRST Bank#83Annexure 1 Performance of the Bank against the stated goals 82 IDFC FIRST Bank#84We are happy to say that the Bank is performing well on the guidance given at the time of the merger. Dec-18 Particulars Guidance for FY24-FY25 Mar-23 Status (At Merger) CET - 1 Ratio Capital 16.14% >12.5 % 14.20% On Track Liability Capital Adequacy (%) CASA as a % of Deposits (%) Branches (#) CASA + Term Deposits<5 crore (% of Customer Deposits) Certificate of Deposits of % of total deposits & borrowings Quarterly Avg. LCR (%) Retail and Commercial Finance (Net of IBPC) 16.51% >13.0 % 16.82% On Track 8.7% 30% (FY24), 50% thereafter 49.8% On Track 206 800-900 809 On Track 39% 85% 83% On Track 17% <10% of liabilities 4% Achieved 123% >110% 120% On Track Rs. 36,927 Cr Rs. 100,000 Cr Rs. 1,26,135 Cr Achieved Retail and Commercial Finance as a % of Total Loans & Advances 35% 70% 79% Achieved Assets Wholesale Loans & Advances¹ Rs. 56,770 Cr < Rs. 40,000 Cr Rs. 30,558 Cr Achieved Rs. 22,710 Cr Nil in 5 years Rs. 4,664 Cr On Track - of which Infrastructure loans 1. Excluding Security Receipts, Loan converted into Equity, RIDF and PTC. Some new guidance has been included for greater clarity. No guidance given at the time of the merger has been amended No guidance provided earlier for these parameters 83 IDFC FIRST Bank#85We are happy to say that the Bank is performing well on the guidance given at the time of the merger. Particulars Top 10 borrowers as % of Total Loans & Advances (%) GNPA (%) Asset Quality NNPA (%) Dec-18 Guidance for FY24-FY25 Mar-23 (At Merger) 12.8% < 5% 2.7% Status Achieved 1.97% 2.0% -2.5% 2.51% On Track 0.95% 1.0% 1.2% 0.86% On Track ~70% 80% On Track 3.10% 5.0% - 5.5% 6.05%¹ Achieved 55% 72.54% Estimated to drop to 65% by Q4-FY25 -3.70% 1.4-1.6% 1.13% On Track Provision Coverage Ratio³ (%) 53% Net Interest Margin (%) - FY23 Cost to Income Ratio² (%) - FY23 81.56% Profitability Return on Asset (%) - FY23 Return on Equity (%) - FY23 1. Gross of IBPC & Sell-down 2. Excluding Trading Gains 3. Including technical write-offs. Note: Earnings for Dec-18 are for the quarter, NIM, ROA, ROE are annualized for the corresponding quarter. -36.81% 13-15% 10.95% On Track 84 IDFC FIRST Bank#86Annexure 2 Breakup of the funded asset with YoY growth 85 IDFC FIRST Bank#87Breakup of Loans & Advances Gross Loans & Advances (In Rs. Growth Growth Mar-22 Dec-22 Mar-23 Crore) Home Loan Loan Against Property YoY (%) QoQ (%) 14,106 17,783 19,552 39% 10% 18,142 19,678 20,199 11% 3% Wheels 9,658 13,893 14,823 53% 7% Consumer Loans 17,355 20,098 20,819 20% 4% Rural Finance 13,000 16,248 19,181 48% 18% Digital, Gold Loan and Others 8,059 11,523 12,123 50% 5% Credit Card 2,013 3,146 3,510 74% 12% } Commercial Finance 10,144 14,311 15,928 57% 11% Corporate 23,676 25,373 25,894 9% 2% Infrastructure 6,891 5,572 4,664 -32% -16% Others 6,007 4,527 3,906 -35% -14% Total Gross Loans & Advances 1,29,051 1,52,152 1,60,599 24% 6% Note: Growth driven by Prime Home Loans launched in 2021 Building organic capabilities for PSL compliance New Businesses launched - Low base effect 1. The figures above are net of Inter-Bank Participant Certificate (IBPC) transactions & includes credit substitutes; 2. Commercial Finance consists of Loans to small business owners and entrepreneurs through products like business installment loans, micro business loans, small business working capital, commercial vehicle, trade advances etc. with most loans < Rs. 5 crore; 3. Others include Security Receipts, Loan converted into Equity, PTC and RIDF. 86 IDFC FIRST Bank#88Annexure 3 Since the business model of Capital First is an important part of the business being built in the merged bank, the brief history and the progress of Capital First is being provided for ready reference to investors. 87 IDFC FIRST Bank#89Successful Trajectory of Growth and Profits at Capital First Financial Performance: The Asset Under Management has consistently grown at 5-Year CAGR of 29% 935 2,751 Asset Under Management (In Rs. Crore) 8 year CAGR of 52%, 5 year CAGR of 29% 19,824 16,041 11,975 9,679 7,510 6,186 26,997 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 88 32,623 H1-FY19 IDFC FIRST Bank#90Successful Trajectory of Growth and Profits at Capital First 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 blocks for new age retail lending were prepared. Once the company got scale, Capital First posted a CAGR growth in profits of 56% for last 5 years. ■ New Leadership takes over in 2010. ■ New Retail Product Lines launched. ■ Retail Team, Systems, Processes designed. ■Closed down subsidiaries, prepared company for PE equity backing ■ Platform set for Business growth and Profitability. Profit After Tax (Normalized) – Rs. crore - ■Company turned profitable in FY12 and since then consistently increased profit for the next 6 years with a CAGR of 45% -15.7 -46.2 3.8 53.2 35.1 5 Year CAGR - 56% 238.9 166.2 114.3 327.4 * For Half Year H1-FY19 206.1* FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 H1-FY19 89 IDFC FIRST Bank#91Successful Trajectory of Growth and Profits at Capital First This page is an extract from Capital First investor Presentation of September 2018, which is the last quarter prior to merger. Presented here to demonstrate the capability of the core loan book and the track record of growth and profitability. 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 years. Cost to Income ratio (%) 128% 115% ~ 70-80% 78% 80% 72% 74% 71% < 50% 59% 51% 51% 53% 48% FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 H1-FY19 90 IDFC FIRST Bank#92Capital First: the Return on Equity continuously improved over the quarters... This page is an extract from Capital First investor Presentation of September 2018, which is the last quarter prior to merger. Presented here to demonstrate the capability of the core loan book and the track record of growth and profitability. All figures are annualised 4.93% Raised equity in Q4-FY14 at Rs. 152 per share 8.33% FY15 FY14 11.09% 4.15% 2.96% 2.28% Q1 FY14 7.02% Raised equity in Q4-FY15 at Rs. 390 per share 10.29% 9.58% 8.89% 8.32% 10.14% FY16 11.20% 10.68% 10.08% *Highlighted figures are based on Indian AS in comparison to quarterly figures for earlier periods based on Indian GAAP. 11.39% Raised equity in Q3-FY17 at Rs. 712 per 11.93% FY17 share 13.31% 14.51% H1-FY18 FY18 14.82% 14.47% 14.46% 14.08% 13.06% 12 87% 12.49% 12.10% 11.46% 91 Q2 FY19* IDFC FIRST Bank#93Successful Trajectory of Growth and Profits at Capital First This page is an extract from Capital First investor Presentation of September 2018, which is the last quarter prior to merger. Presented here to demonstrate the capability of the core loan book and the track record of growth and profitability. During this phase, the Company - . built the Retail Platform, technologies for chosen segments, divested/closed down non-core businesses like broking, property services, Forex services etc, Merged NBFC subsidiary with the parent brought down high NPA levels (GNPA 5.28% and NNPA 3.78%) 1,174 31-Mar-10 Post-Merger Announcement Market Capitalization (Rs. crore) 8,282# 7,628 1000% growth 3,634 3,937 1,478 1,152 902 782* 31-Mar-11 31-Mar-12 31-Mar-13 6,096 31-Mar-14 31-Mar-15 31-Mar-16 31-Mar-17 12-Jan-18 31-Mar-18 * Market Cap as on 31-March-2012, the year of Management Buyout # Market Cap on the day before the announcement of merger with IDFC Bank (Jan 13, 2018). 92 IDFC FIRST Bank#94Successful Trajectory of Growth and Profits at Capital First This page is an extract from Capital First investor Presentation of September 2018, which is the last quarter prior to merger. Presented here to demonstrate the capability of the core loan book and the track record of growth and profitability. Stock Price increased 7x from Rs. 120.55 to Rs. 845.60 in 6 years 7 X increase in stock price in under 6 years 178.90 162.20 120.55 431.55 399.40 845.60 782.50 3/31/2012 3/31/2013 3/31/2014 3/31/2015 3/31/2016 3/31/2017 93 1/15/2018 IDFC FIRST Bank#95Annexure 4 Proforma Financials before merger (H1-FY19) 94 IDFC FIRST Bank#96Pre merger - Proforma Financials of IDFC Bank and Capital First - P&L (H1 FY19) In Rs. Crore Loans & Advances / AUM Net-Worth NII Fees & Other Income Treasury Income Total Income Opex PPOP Provisions PBT Erstwhile IDFC Bank (H1 FY 19) Erstwhile Capital First (H1 FY 19) 75,332 32,623 14,776 2,928 912 1,143 Proforma Total (H1 FY 19) 1,07,955 17,704 2,055 256 153 409 31 31 1199 1,297 2,496 1108 616 1,724 91 681 772 562 363 925 -471 317 (154) Key Ratios NIM % RoA at PBT level % ROE % (at normalized level) Cost to Income Ratio % 1.56% 8.20% 2.85% (0.75%) 2.26% (0.20%) (4.18%)* 14.51% (1.21%) 92.41% 47.52% 69.09% Note: IDFC Bank and Capital First Limited (CFL) were in IGAAP and IND-AS respectively in H1-FY19 95 IDFC FIRST Bank