The two key factors I have been monitoring is
there is much expectation from Vaidyanathan that he will move away from wholesale and infrastructure funding .
Looks like disappointing results to me and will be a significant gap down opening today. Few things which really disappointed me- 1. increase in Gross NPA. Why didnt all the probable loss accounts treated as NPA in dec 2018 at the time of merger. This way, it would have been much cleaner slate to start with. 2. How come company reported losses in retail banking segment whereas wholesale banking was in profit. 3. Even treasury business made losses. 4. Loan growth is low compared to the expectations.
^ No exposure towards IL& FS n jet airways.
Question remains how much more provisioning is left out ? IDFC bank is in fast expansion mode which will require a lot of capital. Hence it appears that IDFC bank will take a few more quarters to show good results.
Disclosure: IDFC bank is 5 percentage of PF.
Seems like next qtr there will not be any more provisioning on these accounts ( Seems like management is confident ).
5616 crore of stressed account. ( 5.09% stressed asset ).
2800 crore ( which is not part of stressed account, but management is prudent and have taken 15% provision - bit scary), This is not IL&FS / Jet airways. This is mostly rel capital / DHFL…
Disc : 25% portfolio is invested in IDFC first bank and Waiting.
Fully Believe in Vaidyanathan, He will make it a better bank as years go by.
Please visit their new website, they are updating new features frequently…
loans up to 100 per cent of vehicle cost, zero processing fee, down payment of ₹999, and extended loan tenure of 48 months
Does this not sound like subprime?
One of the major contributors to subprime was balloon loans where the borrower got an enticing very low initial interest rate/payment (and of-course lack of credit-worthiness check or the credit check showed that the borrower could only pay that low EMI), which ballooned in an year or so to the really un-affordable real EMI.
Hope they check credit-worthiness for the real EMI thoroughly and not indulge in balloon-loans. This has the makings of sub-prime.
Capital first had very good data processing and analytical ability… they have well credit check policies in place. So hoping that this wont lead to subprime loans from the contract but they must adjust the risk in to returns…
Does anyone have the credit suisse report?
Cost to income ratio of capital first also was 75% in 2012. Came down to 50-55% in few years. For retail assets to go from 30k cr. To 100k cr. , Expenses go into creating asset generating engine as well, for example putting a sales agent in Vijay sales with a laptop requires expenditure, the same agent generated 12 loans per month back in the past, now generates 60 loans per month…from what I have gathered from a few sources, the asset side expenditure is complete now with q4 and liability side expenditure, opening and running new branches will go on.
Disclosure: Invested.
Icra Ratings downgrade from AA+( stable) to AA(stable)
https://www.icra.in/Rationale/ShowRationaleReport/?Id=80505
V. Vaidyanathan says raised incremental fund of Rs 3,000 cr during Q4; Plan to replace Rs 26,000 cr of bonds of 9% rate with 7-7.5% rate deposits & low-cost deposits is at Rs 9,100 cr.
Source : CNBCTV18
This should provide some relief to IDFC First Bank…
If we go by the words of Vaidyanathan, less chance of this stressed assets becoming NPA and also provisioning also remain stable or in negative trend.
Main concern is cost to income. Aggressive branch expansion may hurt balancesheet. So management should take prudent approach
