What do you all think of them cancelling out on the Debit card reward points and started charging 200rs per year for new Debit cards issuance yearly fro all accounts? Any idea what’s happening?
IMHO banking is going through a major transformation. Getting deposits will be difficult than it was in the past. Freebies given with accounts like reward points, atm usage will go away. They may start charging for depositing or withdrawing cash. Reducing transaction costs will be critical for their survival. Technology will play a major role in that. Physical contacts will be at a premium. So this is just the beginning of things to come.
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Ramanathan_Narasimha :
Yes, your observations look correct to me.
Probably, we need to look at Banking businesses in USA, UK and Europe to get some idea about future trends in Indian banking industry. In developed nations, current account and savings account interest rates were generally negligible in late 1990(s) and Now Indian banks are also moving in that direction. Retail investors in those developed nations have been investing in shares, mutual funds - equity and debt since 1990(s) and 2000(s) and Now that seems to be happening in India.
Most likely we may not get more than 1.0% to 1.5% interest on Savings account in next few years.
Also, Banks might start offering more Flexible FD / RD products and allow you to invest flexibly in RD as & when required like Mutual Funds. This might help them to retain few customers who need such flexibility.
We may see increase in penalty for breaking FD earlier than its tenure.
More innovations might be required to attract and retain younger customers. Also there could be rise in Fee(s) on various products to retain and increase their Fee based income. We may see substantial increase in ATM, Debit/Credit Card Fees, Cash Withdrawal Fees, Loan Processing Fees going forward over next decade.
This may or may not happen but there would be many such transformations going forward.
Note : This is not applicable to IDFC FIRST BANK but my general observations about Banking business model.
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My expectations of price action for the upcoming Quarterly results
There will be no negative surprises, hence no increased provisioning. This will cause another rally. A new all time high is on the cards.
All the current negatives have been factored in.
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If I am not sure of something, I am learning to be honest with myself and realistic about my options.
So let’s say I want to capture growth in India’s banking & finance space but I am not sure that one specific stock like IDFC Bank could get me there.
How could I still play this option/theme? Well, I could hedge my bets. There are atleast 5 index funds & ETFs that track the BFSI space in addition to plenty of Banking sector mutual funds.
If I can honestly do a comparison of average returns from these funds vs. the return this specific stock has given, I can then better determine the amount of exposure to this specific stock vs. the overall BFSI industry exposure.
This way I wouldn’t feel like a complete loser while hoping for the best with this stock.
So, if I am not completely sure about what I am doing, hedging can be my good friend!
I am writing this for novice investors like me who do not fully understand this business, so that they can understand that there could be better choice and options if one is prepared to look a little more broadly 
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What should be a deserving Price/Book ratio for IDFC First Bank given its future outlook? Is the current multiple the right one. Any thoughts on how to think about that.
“IDFC FIRST Bank’s P/B ratio will depend on its future ROA. As the ROA moves closer to 2%, the P/B ratio — which is currently around 1.4–1.6 — can move towards 2.5 to 3. Looking at the current P/E ratio does not justify the valuation, because if we consider the bank’s projected FY27 earnings, the P/E at the current market price would be around 14–15.”
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Management may be calculative when taking a voluntary hit in NiM.
Sacrificing NIM to get CASA and stronger loan book. Due to this, we might see a very good year.
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