IDFC First Bank Limited

Check the Basel disclosures made by the bank.
Q3


Q2

Q4

The bank has to disclose the interest rate regime sensitivity to their govt bond portfolio. What we can see is that for last 3Q bank has been silently preparing for a high interest rate regime.

That for a 250bps increase in rate, the 1-off 1-time loss might be 48cr. Now, since Indian interest rates have been adjusted <1% the estimated loss should be < 20cr by linear extrapolation.
Do keep in mind that this is the calculation according to the duration & coupon rate of the bond. Market forces can cause a larger or smaller loss, so to be safe i expect a 20 ± 10 cr loss in treasury in Q1

As we can see, bank has been shifting monies to rbi repo to make it’s ride smoother in anticipation of an interest rate cycle.

Can we please go back to analysing the core biz & not the non core 1-off 20 cr potential loss in next Q?

Disclaimer: invested biased,
Data based on discussion with @manikya_saiteja_gund

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