IDFC FIRST Bank Merger and Financial Overview
Management Commentary 3/4
Management
Commentary
Strong Growth in Operating Profits: While the loan book grew by only 13% YoY, the Core Operating Profit has risen by 44% from
Rs. 1,909 crores in FY 21 to Rs. 2,753 crores in FY 22. This clearly demonstrates that our incremental business is highly profitable
and we are beginning to see strong improvement in operating leverage. We expect this phenomenon to continue to play out
over the next few years, which will result in increase in overall profitability and ROE.
Net Profit for Q4 FY22: The bank posted net profit of Rs. 343 crores in Q4-FY22 driven by core operational income. Due to
three specific factors (a) legacy high-cost liabilities, (b) retail branch/ ATM/ liabilites set up expenses, and (c) set up of credit
cards, there is a net profit impact of ~ Rs. 500 crores/ quarter. This is reducing every quarter. We expect the drag caused by
these three factors to be largely eliminated by FY 25 based on our internal analysis and trends. Adjusted for these, the return
on equity of the bank is already at ~15%, and we expect our return on equity to stabilise at 17-18% based on calculations of
incremental unit economics.
Corporate Governance: Eminent, qualified and experienced Board of Directors. All committees are headed by independent
directors except CSR which is headed by the MD and CEO. We say things as they are, with transparent communication, both
internal and external, and detailed investor presentation.
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IDFC FIRST
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