#1IDFC FIRST Bank IDFC FIRST Bank | आई डी एफ सी फर्स्ट बैंक SKC BRANCH Investor Presentation - March 2021#2Disclaimer This presentation has been prepared by and is the sole responsibility of IDFC FIRST Bank Limited (the "Bank" or "IDFC Bank") (together with its subsidiaries, referred to as the "Group"). 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 Group, 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. 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The Group 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. 2 IDFC FIRST Bank#3Executive summary 1 FOUNDING OF IDFC FIRST BANK - Merger between erstwhile IDFC Bank and erstwhile Capital First in December 2018 345 ERSTWHILE IDFC BANK HISTORY AND TRACK RECORD - Demerged infrastructure portfolio from IDFC Limited into IDFC Bank ERSTWHILE CAPITAL FIRST HISTORY AND TRACK RECORD NBFC with specialization of financing consumers and MSMEs EMINENT BOARD AND MANAGEMENT TEAM - PROGRESS SINCE MERGER IN DEC-18: BUILT A STRONG FOUNDATION a A culture of customer first, innovation, collaboration, action oriented, empowered, integrity, trust and transparency Bouquet of loans, savings accounts, fixed deposits, insurance, investments, wealth management, forex services, credit cards products Built a strong branch network (576 branches, 541 ATMs) (1) Built a stable liabilities platform (CASA ratio: 48% (2), retail deposits: INR584bn, retail deposits (<=INR 50mn): 78% (3), top 20 depositors: <10% of customer deposits) (1) e Built a diversified and strong retail lending book (Diversified across more than 8mn customers) f Building digital capabilities ASSET QUALITY a NPA at Bank level Proactive identification and provision on stressed accounts NPA of retail loans Robust acquisition, underwriting, portfolio management, fraud checks, collections capabilities 7 FINANCIAL RESULTS SUMMARY: Strong foundation built; well positioned for growth 12 1. As of Dec 31, 2020 3. % of total customer deposits 2. % of total deposits 3 IDFC FIRST Bank#41. Founding of IDFC First Bank IDFC FIRST Bank was founded by the merger of Erstwhile IDFC Bank and Erstwhile Capital First on December 18, 2018 IDFC IDFC BANK + IDFC Bank was created by demerger of infrastructure lending business of IDFC Limited to IDFC Bank in 2015 IDFC Limited was set up in 1997 to finance infrastructure, focusing primarily on project finance and mobilization of capital for private sector infrastructure development The Bank launched corporate banking, treasury solutions, retail and rural business and achieved CASA of INR 64 bn (1) As a part of its strategy to diversify its loan book, IDFC Bank was looking for a merger with a retail finance institution with adequate scale, profitability and specialized skills Mr. Vaidyanathan concluded a leveraged management buyout in 2012 to form Capital First Company built unique ways of financing MSMEs and Indian consumers in niche segments using analytics-driven technology platform Built a AUM of INR 326bn (1) C CAPITAL FIRST Strong credit skills, maintained low NPA levels years (2) High NIM, profitable growth engine with 5-year profit grew by 5.2x in 5 Consistently rising ROE with pre-merger quarterly annualized ROE at 14.5% (1) Company was on the lookout for a commercial banking license in order to access stable and low cost deposits Post-merger IDFC FIRST Bank Retail lending business model with vintage of 8 years Gross funded assets of INR 1,047bn at merger, out of which 35% of loans were in the retail segment (3) NIM increased to 2.9% on merger (4) Banking platform to grow retail deposits and CASA Large retail customer base 12 1. As on Sep 30, 2018 3. As on Dec 31, 2018 4 2. From FY13 to FY18 4. NIM computed as annualized Net Interest Income divided by average interest earning assets, including Capital First metrics IDFC FIRST Bank#52. Erstwhile IDFC Bank history and track record (pre-merger) Post becoming a bank, IDFC Bank took early steps to diversify away from infrastructure Gross Funded Assets (INR bn) 702 709 753 CASA Deposits (INR bn) 64 57 524 4 21 Mar-16 Mar-17 Mar-18 Sep-18 Mar-16 Mar-17 Mar-18 Sep-18 136 Mar-16 Net Worth (INR bn) 147 NIM (%) 153 148 2.1% 2.0% Mar-17 Mar-18 Sep-18 1.9% 1.7% FY16 FY17 FY18 H1 FY19 Gross Funded Assets mix (1) INR 753bn Others 11% Retail 15% Wholesale 74% Borrowings + Deposits (1) (2) INR 1,012bn Retail Deposits 9% Others Wholesale 64% (2) Deposits 27% Erstwhile IDFC Bank was focused on infrastructure financing in India, but after becoming a bank began to diversify into corporate banking and retail banking 1. As on Sep 30, 2018 2. Others include borrowings, money market borrowings and Certificate of Deposits Source: Annual Reports, Investor Presentations of IDFC Bank 5 IDFC FIRST Bank#63. Erstwhile Capital First - history and track record (pre-merger) Strong track record of loan growth, PAT growth, ROE growth, market cap growth and robust asset quality AUM (INR bn) Profit after tax (INR bn) 326 7.4 13.8 18.2 25.6 33.3 270 3.3 198 2.4 160 1.7 120 97 1.1 0.5 AUM mix (1) INR 326bn Wholesale 9% 2.1 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Sep-18 FY14 FY15 FY16 EPS FY17 FY18 H1 FY19 Retail 91% Asset Quality (2) Return on equity 1.7% 1.7% Market cap (INR bn) (3) Share Price 1.6% 14.5% 13.3% 11.9% 1.2% 10.1% Share Price Rs. 836 Market reaction Post Merger Announcement 1.0% 1.0% Rs. 121 8.3% 0.7% 4.9% 0.5% 10X Market Cap in 6 years 76 83 61 36 39 0.1% 0.2% 12 15 8 Mar-14 Mar-15 Mar-16 GNPA Mar-17 NNPA Mar-18 FY14 FY15 FY16 FY17 FY18 H1 FY19 Mar Mar Mar- Mar- Mar- Mar- Jan- Mar- 12 13 14 15 16 17 18 18 1. As on 30-Sep-2018 3. 2. NPA recognition norms migrated to 90 dpd effective Apr 01, 2017 Source: Annual Reports, Investor Presentations of Capital First Share price of Rs. 121 as of Mar 30, 2012 and Rs. 835 as of Jan 11, 2018 (Source: BSE) 6 IDFC FIRST Bank#74. Driven by strong corporate governance and excellence and led by an experienced management team with oversight from an eminent Board Experienced management team Sudhanshu Jain CFO 17+ Last role: Dy. CFO - PAYTM e-commerce, CFO - PAYTM Payments Bank Madhivanan Balakrishnan 27+ COO Last role: Chief Technology Officer - ICICI Bank ■ V. Vaidyanathan MD & CEO 28+ Founded Capital First by acquiring a stake in a wholesale focused NBFC, and successfully transformed it into a technology driven consumer and MSME financing company, delivering attractive growth and profitability metrics. Merged Capital First with IDFC bank in 2018 and took over as MD and CEO of IDFC First Bank. Worked with Citibank Consumer Banking division 1990-2000. Set up ICICI Group's retail banking from 2000-2009. Joined Board of ICICI Bank in 2006. MD & CEO of ICICI Prudential Life Insurance from 2009-2010 Eminent board of directors Dr. Sanjay Kumar Non-Executive & Non Independent Director (Representing Govt. of India) Dr. Brinda Jagirdar Independent Director (Earlier Association: GM and Chief Economist - SBI) Sunil Kakar Non-Executive & Non Independent Director - (Director IDFC Limited) Pravir Vohra Independent Director (Earlier Association: President and Group CTO - ICICI Bank) Satish Gaikwad 20+ Head Legal and Company Secretary Prior organisation: Bombay Dyeing Hemang Raja Independent Director (Earlier Association: MD and Head, India-Credit Suisse PE Asia) Aashish Kamat Independent Director (Earlier Association: Country Head - UBS India) Saptarshi Bapari Head 17+ Investor Relations Prior organisation: KPMG Sanjeeb Chaudhuri Independent Director (Former Regional Business Head, India and South Asia, SCB) Vishal Mahadevia Non-Executive & Non Independent Director (Warburg Pincus) 7 IDFC FIRST Bank#8Executive summary 1 FOUNDING OF IDFC FIRST BANK - Merger between erstwhile IDFC Bank and erstwhile Capital First in December 2018 2345 ERSTWHILE IDFC BANK HISTORY AND TRACK RECORD - Demerged infrastructure portfolio from IDFC Limited into IDFC Bank ERSTWHILE CAPITAL FIRST HISTORY AND TRACK RECORD - NBFC with specialization of financing consumers and MSMEs EMINENT BOARD AND MANAGEMENT TEAM BUILT A STRONG FOUNDATION a e A culture of customer first, innovation, collaboration, action oriented, empowered, integrity, trust and transparency Bouquet of loans, savings accounts, fixed deposits, insurance, investments, wealth management, forex services, credit cards products Built a strong branch network (576 branches, 541 ATMs) (1) Built a stable liabilities platform (CASA ratio: 48% (2), retail deposits: INR584bn, retail deposits (<=INR 50mn): 78% (3), top 20 depositors: <10% of customer deposits) (1) Built a diversified and strong retail lending book (Diversified across more than 8mn customers) f Building digital capabilities ASSET QUALITY a NPA at Bank level Proactive identification and provision on stressed accounts NPA of retail loans Robust acquisition, underwriting, portfolio management, fraud checks, collections capabilities 7 FINANCIAL RESULTS 8 SUMMARY: Strong foundation built; well positioned for growth 12 1. As of Dec 31, 2020 3. % of total customer deposits 2. % of total deposits 8 IDFC FIRST Bank#95a. Building the right culture of trust, transparency and customer first is a foundation block for the bank Foundation Customer focused We put the customer's interest first by putting ourselves in the customers' situation and viewing things from their perspective G Collaborative We develop, maintain and strengthen relationships with both internal and external stakeholder Empowered We trust our employees' ability to be successful, especially at challenging new tasks; delegating responsibility and authority #alwaysyoufirst Values Our Cultural Tenets to guide every action we take 7 Action oriented Innovative We constantly strive to innovate in the customer's interest Decisive We exercise best judgement by making sound and well-informed decisions We consistently demonstrate focus, initiative and energy to deliver our promise of delighting customers When IDFC First Bank was formed with the merger between erstwhile Capital First and erstwhile IDFC Bank, we deliberated a lot on what our founding theme should be and finalized on the theme 'Always You First' - where 'You' refers to our customer. This theme cuts across the entire organization and binds the bank to a single theme Our Mission We want to touch the lives of millions of Indians in a positive way by providing high-quality banking products and services to them, with particular focus on aspiring consumers and entrepreneurs of our new India, using contemporary technologies 9 IDFC FIRST Bank#10Foundation 5b. The Bank offers a wide bouquet of loan products that have seasoned over the years Products offered across varied customer segments including consumers and MSMEs in different parts of India ■ Loan Against Property Long term loans to MSMEs after proper evaluation of cash flows; against residential or commercial property Small Business Loans Unsecured loans to the self- employed individual or entity against business cashflows Consumer Durable Loans Financing to individuals for purchasing of LCD/LED panels, Laptops, Air-conditioners etc. Home Loans To salaried and self-employed customers for purchasing house property Vehicle Loans To salaried and self-employed customers for purchasing two wheelers Micro Enterprises Loans Loan solutions to small business owners Commercial Vehicle Loans Term Loans for individuals and firms for purchasing new and pre- owned CVs Joint Liability Group Loans Loans for livelihood and micro enterprises for women in rural areas Personal Loans Unsecured Loans to the salaried and self-employed customers for financial needs such as medical emergency To salaried and self-employed customers for purchasing a new car or a pre-owned car Apart from these products, IDFC FIRST Bank also offers working capital loans, corporate loans for business banking and corporate customers in India 10 IDFC FIRST Bank#11Foundation 5b. (contd): Wide product range for deposits, investments and insurance IDFC First Bank provides wide range of products and services along with savings accounts, term deposit accounts, current accounts, wealth management, forex services, cash management services and insurance products (distribution) to its customers 1. Deposits Savings account ✓ Current account ✓ Corporate salary account ✓ Fixed deposit ✓ Recurring deposit Insurance distribution Life insurance solutions from well known insurers ✓ Health and general insurance solutions 民 ✓ Credit cards Dynamic interest rate ✓ Attractive rewarding programs ✓ Interest-free cash withdrawal (1) Wealth management Investment solutions ✓ ✓ Mutual funds distribution ✓ Life, health and general insurance distribution Up to next billing cycle or 48 days, whichever is earlier Payments and online services ✓ Debit cards and prepaid cards ✓ NACH and BHIM UPI BHIM UPI ✓ ✓ Forex services Import and export solutions Domestic trade finance ✓ Forex solutions and remittances ✓ Overseas investments and capital account transactions BANK 1234 668 11 IDFC FIRST Bank#12Foundation 5b. (contd.) In keeping with our philosophy of customer first, a highly customer friendly credit card launched in January 2021 IDFC First Bank Credit Cards customer friendly initiatives A Credit Card with a differentiated proposition Customer friendly card launched by the Bank, keeping in line with the ethos of always customer first Dynamic Interest Rate (9% to 36% APR) (1) No charges for over spends upto 10% (2) Bank will remind customers on going over limit Lifetime Free (No annual fees) Simple scheme, upto 10x reward points No expiry Easy online redemption FIRST Classic FIRST Wealth FIRST Select IDFC FIRST IDFC FIRST IDFC FIRST Bank Family FIRST Millennia וייו FIRST Millennia Interest-free cash withdrawal (up to next billing cycle or 48 days, whichever is earlier) Lifetime free 天 10X credit card Super rewarding program Super saver interest rate (APR starting from 9%) 冠 1. Customer rates depending on algorithm, factoring in credentials, relationship with the Bank and many other parameters 2. 3. Spending over limit is usually inadvertent by customers. Hence as a customer friendly measure, the Bank will intimate the customers if their spends are going above limit to avoid any charges incurred by them Up to next billing cycle or 48 days, whichever is earlier 12 CC Interest free cash withdrawal (3) IDFC FIRST Bank#135c. Expanding our pan-India footprint Jammu & Kashmir Punjab Chandigarh Haryana Uttarakhand Delhi Uttar Pradesh Rajasthan Bihar 2 Assam Meghalaya Nagaland Jharkhand Tripura West Bengal Gujarat Madhya Pradesh Chattisgarh Maharashtra Telangana 2 2 Odisha Goa 2 Karnataka 2 m Andhra Pradesh Tamil Nadu Kerala Puducherry Widespread distribution network (1) Branch network 242 150 576 464 Mar-18 Mar-19 Mar-20 Dec-20 ATM network 113 55 Mar-18 541 356 Mar-19 Mar-20 Dec-20 1. Note: Metrics for FY18, FY19 and FY20 are not comparable due to the merger effective Dec 18, 2018. Illustrative representation of branch footprint as on Dec 31, 2020, picture not to scale Metrics for FY18, FY19 and FY20 are not comparable due to the merger effective Dec 18, 2018 Foundation 13 IDFC FIRST Bank#145d. Built a diversified & stable liabilities platform; proven ability to raise retail deposits at scale Increased retail deposits (INRbn) (1) Foundation Reduced certificate of deposits (INR bn) Reduced wholesale deposits (INR bn) (2) 273 584 238 227 189 197 288 132 57 339 71 67 62 Mar 18 Mar 19 Mar 20 Dec 20 Mar 18 Mar 19 Mar 20 Dec 20 Mar 18 Mar 19 Mar 20 Dec 20 CASA as a % of total deposits (2) 11.5% 11.4% 48.3% 31.9% Mar-18 Mar-19 Mar-20 Dec-20 Deposits <= INR50mn (3) 59.0% 37.0% 28.0% Reduction in Top 20 Depositors (3) 42.0% 78.0% 34.3% 20.3% 9.7% Mar-18 Mar-19 Mar-20 Dec-20 Mar 18 Mar 19 Mar 20 Dec 20 Pre-merger in erstwhile IDFC Bank Post-merger in the merged entity, IDFC FIRST Bank 1. Note: Metrics for FY18, FY19 and FY20 are not comparable due to the merger effective Dec 18, 2018 Indicate core deposits (Retail CASA and Retail TD) 3. As a % of total customer deposits 2. Excluding deposits from NHB which are one-time/ temporary in nature and are considered as non-sustainable in nature with fluctuating balance 14 IDFC FIRST Bank#155e. Built a diversified and strong retail lending book, top 10 borrowers' concentration down to 6.3% of total funded assets Retail gross funded assets (INR bn) Wholesale (excl. infra) loan assets (INR bn) 32% 667 322 573 270 408 70 245 232 Foundation Infrastructure loan assets (INR bn) 268 215 148 116 Mar-18 Mar-19 Mar-20 Dec-20 Mar-18 Mar-19 Mar-20 Dec-20 Mar-18 Mar-19 Mar-20 Dec-20 Contribution to total gross funded assets Retail gross funded assets mix Reduction in Top 10 Borrowers (1) 18.8% 60% 54% 11% 12% 11% 43% 17% 18% 17% 37% 37% 37% 36% 35% 35% 29% 23% 21% 19% 9.8% 7.2% 6.3% 19% 6% 14% 16% * 11% 10% 15% * 32% 35% 35% 37% 9% 8% Mar-18 Retail Mar-19 Mar-20 Dec-20 Mar-18 Mar-19 Mar-20 Dec-20 Mar 18 Mar 19 Mar 20 Dec 20 Wholesale (excl. infra) (2) Infra Others Mortgage MSME/SME Consumer Rural MFI and KCC Post-merger in the merged entity, IDFC FIRST Bank Pre-merger in erstwhile IDFC Bank Note: Metrics for FY18, FY19 and FY20 are not comparable due to the merger effective Dec 18, 2018. KCC - Kisaan credit card As a % of total funded assets 1. 2. Others include Inorganic PSL buyout, Security receipts and Loan converted to equity 15 IDFC FIRST Bank#165f. Building digital capabilities for retail offering ■ Behavioral scorecard ■ Portfolio review ■ Retention calculator Fraud ■ Multiple fraud scorecards Application scorecards with Acquisition demographics, bureau and Banking information ■ Risk based pricing ■ Instant dedupe capabilities Portfolio management Revenue acceleration Robust credit decisions SHOP OPEN Customer Service Collection Π Foundation BANK 1234 4568 ■ Cross sell/up-sell framework " Propensity scorecard Hyper-personalization ■ Next best offer and action ■ Channel performance analysis ■ Online query resolution for improved customer experience Cheque bounce ■ Resolution analysis ■ Flow analysis ■ Vintage analysis 16 IDFC FIRST Bank#175f. (contd.) Recently launched new banking application with an enhanced UI UX - in Test & Learn Stage 9:41 Savings account Own name ****5667 Available balance *50,000.00 Overdraft limit Free to spend 100,000.00 45,000.00 Foundation 9:41 Its Cards Deposits Investments Your investments Total investment value *2,60,000 Total gain/loss value. *60,000 ↑ Current investment value *2.74.600 Absolute return 12.9% ↑ Dashboard Easy navigation - all features in 2-3 clicks • One view of all accounts (savings, current, working capital. deposits, credit cards) • Universal search • Personalized offers Product distribution Asset allocation 21% Sovereign Gold Bonds 42% Deposits Investment Breakdown 14% Alternates Personal Finance Management • Curated narrations and categorization • Search across transactions by name, category, rail-road • Smart filters • Income and expense dashboard Service ⚫ STP service requests e.g. debit card services, profile update, etc. Acquisition journeys • 2 click deposits • Loan application • Credit card pre- approved cross-sell 1 click overdraft against FD Business Solutions Payments • 3 click payment with auto- selection of rail road • Search based payments • 2 step payee addition without IFSC code . Auto-pay for bill payment • QR scan for payments 11:16 Bulk payments • Door step collections 00:07 • Remittances • Credit card payments, convert to EMI, rewards • cash management services Chat, video call & call back (in early stage of launch) OFC FIRST Bank . Trade services Make a transfer Quick loan up Pay a bill 23% to 1,000,000 Mutual Fund You've spent more on grocery this week. > Upcoming Explore History Today Uber Transportation\ Big Bazaar. Start H Have Pay Owe - *2,650,00 • Mutual funds Deposi Investments - 500.00 Investment value Current value *2,74,600 *3,10,500 Investment value C *2,74,600 R • Consolidated dashboard across MFs and deposit products • Select schemes View details View details ㅁㅁ ㅁㅁ More • Digital MF KYC in 2 clicks • Perpetual, step-up and edit SIP • Choose portfolio recommendations based on risk profile Integrated unified communication across voice, video and chat within banking app 17 IDFC FIRST Bank#18Executive summary 1 FOUNDING OF IDFC FIRST BANK - Merger between erstwhile IDFC Bank and erstwhile Capital First in December 2018 2345 - ERSTWHILE IDFC BANK HISTORY AND TRACK RECORD – Demerged infrastructure portfolio from IDFC Limited into IDFC Bank ERSTWHILE CAPITAL FIRST HISTORY AND TRACK RECORD NBFC with specialization of financing consumers and MSMEs EMINENT BOARD AND MANAGEMENT TEAM PROGRESS SINCE MERGER IN DEC-18: BUILT A STRONG FOUNDATION a A culture of customer first, innovation, collaboration, action oriented, empowered, integrity, trust and transparency b Bouquet of loans, savings accounts, fixed deposits, insurance, investments, wealth management, forex services, credit cards products Built a strong branch network (576 branches, 541 ATMs) (1) d Built a stable liabilities platform (CASA ratio: 48% (2), retail deposits: INR584bn, retail deposits (<=INR 50mn): 78% (3), top 20 depositors: <10% of customer deposits) (1) e Built a diversified and strong retail lending book (Diversified across more than 8mn customers) f Building digital capabilities ASSET QUALITY a NPA at Bank level Proactive identification and provision on stressed accounts NPA of retail loans Robust acquisition, underwriting, portfolio management, fraud checks, collections capabilities FINANCIAL RESULTS 7 8 SUMMARY: Strong foundation built; well positioned for growth 12 1. As of Dec 31, 2020 3. % of total customer deposits 2. % of total deposits 18 IDFC FIRST Bank#196a. Overall Bank - Gross and Net NPA, impact of COVID 19 ☐ ◉ Mar-19 Jun-19 Sep-19 Dec-19 Long term pre COVID Average Proforma Dec-20 Change (bps) Dec-20 Gross NPA- Bank 2.43% 2.66% 2.62% 2.83% 2.63% 4.18% 155 Net NPA Bank - 1.27% 1.35% 1.17% 1.23% 1.25% 2.04% 78 Provision Coverage Ratio (%) 48% 50% 56% 57% 53% 52% For the analysis, we submit that the reported NPAs in the last 3 quarters including quarter ending Dec 31, 2020 were lower than actual and not representative of the real situation due to Supreme Court's order on not declaring accounts as NPAs until further orders. Hence the bank draws attention to the pre-COVID NPA levels (1) of the bank, and comparing the same with the proforma (effectively actual) NPA post-COVID (2) As a result of the COVID, the Gross NPA for the bank as of Dec 31, 2020 has increased by 155 bps as compared to Pre-COVID average. Similarly the Net NPA for the bank as of Dec 31, 2020 has increased by 78 bps Provision Coverage including the general provision, COVID19 provision, specific provisions on NPAs was 309% on reported NPA and 99% on Proforma NPA (2) 1. Note: Long term COVID average indicates average GNPA/NNPA of last 4 quarters prior to COVID-19 The period Mar-2019 to Dec-2019 2. As of Dec 31, 2020; Proforma GNPA/NNPA indicates the numbers without considering the impact of the Supreme Court notification to stop NPA classification post August 31, 2020 19 IDFC FIRST Bank#206b. The Bank has identified the stressed accounts (not yet NPA) and has provided for them Exposure to stressed assets (INR bn) PCR % 23% 41 49% 32 Client Description (INR bn) (31-Dec-20) O/S Exposure Provision PCR% Toll Road Projects in MH 9.0 1.5 17% 51% Thermal Power Project in Orissa 5.5 5.5 100% Toll Road (BOT) project in MH 2.5 0.1 5% Financial Conglomerate in Mumbai 2.2 2.2 100% Wind Power Projects in AP, GJ, KN, RJ 1.6 0.9 57% Logistics Company in Karnataka 1.0 1.0 100% Financial Institution in MH 0.9 0.9 100% 25 Solar Projects in RJ 0.9 0% Thermal power in Chattisgarh 0.8 0.2 20% Toll Road Projects in TN 0.4 0.1 23% Wind Power Projects in KN and RJ 0.2 0.2 95% Microfinance Institution in Orissa 0.2 0.2 100% Toll Road Project in Punjab Total Stressed Pool Identified 0.2 0.2 100% 25.3 12.9 51% Mar-19 Mar-20 Dec-20 Apart from the above identified accounts, the Bank had also marked one large telecom account as stressed and provisioned 25% against the total outstanding of INR 32.4bn (Funded - INR 20bn and Non-funded - INR 12.4bn). The said account is current and has no overdues as of Dec 31 2020. 20 IDFC FIRST Bank#216c. Retail Loans - Gross and Net NPA trends, impact of COVID 19 Mar-19 Jun-19 Sep-19 Dec-19 Long term pre COVID Average Proforma Dec-20 Change (bps) Dec-20 Gross NPA- Bank 2.18% 2.32% 2.31% 2.26% 2.27% 3.88% 161 Net NPA Bank - 1.24% 1.14% 1.08% 1.06% 1.14% 2.35% 121 Provision Coverage Ratio (%) 43% 51% 54% 54% 51% 41% Thus as per analysis, as a result of the COVID, the Gross NPA of the retail assets for the bank as of Dec 31, 2020 has increased by 161 bps as compared to pre-COVID average Similarly the Net NPA of the retail assets for the bank as of Dec 31, 2020 has increased by 121 bps Note: Long term COVID average indicates average GNPA/NNPA of last 4 quarters prior to COVID-19. Proforma GNPA/NNPA indicates the numbers without considering the impact of the Supreme Court notification to stop NPA classification post August 31, 2020 21 IDFC FIRST Bank#226d. The Bank underwrites retail loans with lot of due diligence and rigour, drawing on experience and has built effective monitoring and collection capabilities . 6a - Robust Underwriting Process (As applicable product wise) Integrated decision support system for underwriting • Instant de-duplication capability • Financials analysis including net worth, liquidity, leverage, turnover, working capital cycle, GST return • • Banking analysis: the Bank statements of the customer is analyzed and correlated to the financials • Consumer and commercial Credit Bureau check for variables including enquiries, repayment • • record, vintage analysis etc. Demographic and bureau credit scorecards • Fraud check: Hunter checks fraud score • Field verifications • Personal discussions with customer at customer premises 6b - Strong Monitoring Framework • • • • • Cheque bounce analysis and monitoring monthly: product wise, segment wise, geography wise, channel wise Early delinquency analysis: Non-starter (quick mortality) analysis, 1st payment, 2nd payment, 3rd Payment default rates analysis Fraud incidence monitoring Collection efficiency analysis for every mode and channels across delinquency buckets Vintage analysis of the portfolio performance Delinquency flow analysis: Normalization, roll forward, roll back for every delinquency buckets for each product Scorecard monitoring Early warning checks for MSME products . 6c - Efficient Collection Machinery Robust mechanism exists for calling, online collections, digital collections, field collections monitoring Focus on reducing cheque bounces, through better underwriting, interventions and test & learn process Segmentation to drive differentiated collections action basis propensity to flow Constant monitoring of call quality and customer interface quality for improving collection experience for customers Bucket wise, delinquency and resolution % for every product at granular level Granular monitoring of portfolio • • CRILC (RBI) checks for verification on financials, legal cases, directors • • Collateral valuation: legal and technical checks; external valuers 22 IDFC FIRST Bank#23Executive summary 1 FOUNDING OF IDFC FIRST BANK - Merger between erstwhile IDFC Bank and erstwhile Capital First in December 2018 2345 - ERSTWHILE IDFC BANK HISTORY AND TRACK RECORD – Demerged infrastructure portfolio from IDFC Limited into IDFC Bank ERSTWHILE CAPITAL FIRST HISTORY AND TRACK RECORD NBFC with specialization of financing consumers and MSMEs EMINENT BOARD AND MANAGEMENT TEAM PROGRESS SINCE MERGER IN DEC-18: BUILT A STRONG FOUNDATION a A culture of customer first, innovation, collaboration, action oriented, empowered, integrity, trust and transparency b Bouquet of loans, savings accounts, fixed deposits, insurance, investments, wealth management, forex services, credit cards products Built a strong branch network (576 branches, 541 ATMs) (1) Built a stable liabilities platform (CASA ratio: 48% (2), retail deposits: INR584bn, retail deposits (<=INR 50mn): 78% (3), top 20 depositors: <10% of customer deposits) (1) e Built a diversified and strong retail lending book (Diversified across more than 8mn customers) f Building digital capabilities ASSET QUALITY a NPA at Bank level Proactive identification and provision on stressed accounts NPA of retail loans Robust acquisition, underwriting, portfolio management, fraud checks, collections capabilities 7 FINANCIAL RESULTS 8 SUMMARY: Strong foundation built; well positioned for growth 12 1. As of Dec 31, 2020 3. % of total customer deposits 2. % of total deposits 23 IDFC FIRST Bank#247. Balance sheet Particulars (INR bn) CAPITAL AND LIABILITIES Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions TOTAL ASSETS As at March 31, 2018 As at March 31, 2019 As at March 31, 2020 As at December 31, 2020 34 48 48 57 119 134 105 120 482 705 651 843 573 700 574 408 58 86 114 1,265 1,672 1,492 129 1,557 Cash and balances with Reserve Bank of India 31 41 34 38 Balances with banks and money at call and short notice 18 54 8 34 Investments 612 585 454 418 Advances 522 863 856 949 Fixed assets Other assets TOTAL 8 10 10 12 75 119 130 106 1,265 1,672 1,492 1,557 Note: Metrics for FY18, FY19 and FY20 are not comparable due to the merger effective Dec 18, 2018 24 IDFC FIRST Bank#257. Income statement Particulars (INR bn) Gross Interest Income FY18 FY19 FY20 9M FY20 9M FY21 89 119 159 119 116 Interest Expense 71 87 102 78 66 Net Interest Income 18 32 56 41 50 Other Income 11 9 17 12 14 Operating Income 29 41 74 53 64 Operating Expense 17 33 54 39 45 Operating Profit 13 80 19 14 19 Provisions (Other than Tax) & Contingencies 2 15 43 39 15 (Net) Exceptional Items (Goodwill at merger) 26 Profit Before Tax 10 10 (33) (24) (25) 4 Tax Profit After Tax 2 (14) 5 4 1 9 (19) (29) (29) 3 Note: Metrics for FY18, FY19 and FY20 are not comparable due to the merger effective Dec 18, 2018. Metrics for 9MFY20 and 9MFY21 are comparable 25 IDFC FIRST Bank#267. Profitability trend in the last 8 quarters (2.2) (6.2) (6.8) Q4FY19 Q1FY20 Profit after Tax (INR bn) Q2FY20 (16.4) Q3FY20 0.7 0.9 1.0 1.3 Q4FY20 Q1FY21 Q2FY21 Q3FY21 The Bank took provisions against the identified legacy wholesale accounts such as a housing finance company, a financial conglomerate and some infrastructure accounts during the initial periods post-merger, and such provisions reduced the net-worth. This coupled with low yield infrastructure loans kept earnings suppressed post merger. During the last 8 quarters post merger, the bank has increased the NIM to a healthy 4.65% (Q3 FY21) and PPOP of the bank has registered an increase, resulting in positive PAT over the last 4 quarters 26 IDFC FIRST Bank#277. Growth in higher yield retail assets coupled with increasing contribution from low cost retail deposits driving an accelerated NIM expansion Yield accretion driven by retail... Yields (%) 17.0% ...CASA growth driving down cost of funds... ...resulting in accelerated NIM expansion Cost of deposits (%) and cost of funds (%) Net interest margin (%) (1) 4.6% 16.3% 16.3% 16.3% 13.1% 12.5% 12.3% 10.6% 9.2% 15.9% 7.6% 7.4% 7.4%7.1% 7.3% 7.0% 7.0% 6.4% 6.8% 6.4% 2.4% 3.6% 3.4% Hill mall 1.6% FY18 FY19 FY20 9MFY20 9MFY21 FY18 FY19 FY20 9MFY20 9MFY21 FY18 FY19 Yield on overall funded assets Yield on retail funded assets Cost of funds Cost of deposits Note: Metrics for FY18, FY19 and FY20 are not comparable due to the merger effective Dec 18, 2018. Metrics for 9MFY20 and 9MFY21 are comparable On average interest earning assets 1. FY20 9MFY20 9MFY21 27 IDFC FIRST Bank#287. High cost borrowing - cost and maturity profile Potential to be replaced with low cost deposits as and when they mature Particulars (INR bn) Infra Bonds Long Term Legacy Bonds Other Bonds 16 4 Refinance Total Upto Mar-21 FY 21-22 1 21 14 11 11 23 45 55 FY 22-23 15 19 31 65 59 FY 23-24 14 17 8 19 58 59 FY 24-25 57 13 2 6 81 Beyond FY 25 9 38 7 54 Total 95 95 50 83 323 Rol (%) 8.87% 8.98% 8.76% 7.77% 8.60% Wtd. Res. Tenor (Yrs) 3.36 3.97 7.32 1.72 3.74 Note: Positions as of Dec 31, 2020 28 IDFC FIRST Bank#297. Strong capital position and liquidity buffers provide a stable platform for growth going forward Net Worth (Shareholders' Funds) (INR bn) Capital Adequacy Ratio (%) Avg. Liquidity coverage Ratio (1) 182 153 Due to additional Provisioning 153 the last quarters and Capital Raise in Jun-20 CET 1 Regulatory requirement of CRAR Because of Profits during Tier II CAR Regulatory requirement of CET-1 18.0% 132% 177 0.3% 15.5% 0.2% 14.3% 13.4% 0.1% 0.5% 17.7% 15.3% 13.3% 13.8% 111% 10.875% 7.375% Mar-18 Mar-19 Mar-20 Dec-20 Mar-18 Mar-19 Mar-20 Dec-20 Mar-20 Dec-20 Note: Metrics for FY18, FY19 and FY20 are not comparable due to the merger effective Dec 18, 2018 For corresponding quarter 1. 29 IDFC FIRST Bank#308. In summary Established brand with growing presence across India Led by an experienced professional management team backed by an eminent Board IDFC FIRST Bank Building a profitable, scalable and world class retail bank on the platform of new emerging technologies with high levels of corporate governance Retail lending model with experience of growth and profitability Strong liability franchise; proven ability to raise retail liabilities NIM expansion driven by increasing contribution from high yielding retail assets and reducing exposure to low yielding wholesale assets along with replacing high cost legacy liabilities with low cost retail deposits Stable asset quality in retail financing through advanced origination, credit underwriting, monitoring, and collection capability Strong foundations established; well positioned for growth 30 IDFC FIRST Bank