IDFC First Bank Limited - First Bank Preference for Long Term Investors too?

[valueseeker9]

@ishanagarwal89

Any bank holds bonds in 3 categories which are HTM, AFS and HFT. Only securities held in the HFT category require MTM provisioning.

This is incorrect MTM provisions are required for HFT and AFS securities, see below from the RBI website-

Secondly I have only taken 50% or 30,000cr of their total holdings so there is enough margin of safety.

@ishanagarwal89

The bank has been consciously reducing the HFT portfolio in anticipation of a rising interest rate scenario.

Please provide a source for this info, as per their last presentation their investments went up by 10,000cr from 30,000cr to 40,000cr-

@ishanagarwal89

To give you some empirical evidence, 10 year gsec yield moved from 6.45% to 6.84%(total 39 bps)from 31st Dec,2021 to 31st March, 2022, yet the bank posted a trading loss of only 25 crs. In the current quarter the yields have moved from 6.84% to 7.45%(total 61 bps). The bank has been consciously reducing the HFT portfolio in anticipation of a rising interest rate scenario. From the above data, in my view the bank can make a loss of 45-55 crs in Q1 instead of 25 crs made in Q4.

Treasury losses were 75cr in Q4FY22

This loss is after accounting for the yield/income from investments. So for example say they had income on investments of Rs 300cr in Q4FY22, MTM losses were Rs 375cr for a net loss of Rs 75cr from the Treasury segment. Now in Q1FY23 if income stays the same but MTM losses double to Rs 750cr then we will have a net loss from the Treasury segment of Rs 450cr.