Investors of IDFC First Bank Ltd are disappointed with the performance of the June quarter for the June quarter. The bank reported quarterly losses compared to profit expectations due to shortfalls in the major infrastructure loan account.
The worst loans for private lenders have risen to 4.61% of its book from 4.15% in the previous quarter. Most of the pain seems to come from one major infrastructure account that went down during the quarter. The borrower was a paid street account in Mumbai where the bank received Rs854 million.
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This decline has increased the negative lending rate of the infrastructure component to a maximum of 15% from only 5.7% in the March quarter. The toll road account continued to pay the required amount, in part, even in the quarter affected by the second wave (Q1-FY22), the remaining principal dropped by Rs. 19 crore during Q1 FY22. The Bank holds Rs. 154 crore is provided in this account, “the bank said in a statement.
The bank has rescheduled a loan of Rs1,895 crore in total, or 2.01% of the loan letter, since June. During the quarter, however, the bank did not reduce its loan agreements through a recast. Despite the infrastructure crisis, bad interest rates have actually declined on a bank basis. The bad loan rate dropped to 3.86% from 4.01% in the previous quarter and that of the company’s loan has dropped to 2.91%.
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While the concept of asset quality is uncertain, it does not look bleak. The efficiency of the collection has improved since June. But the more than 2% decline in bank shares in initial trading today is more than just a response to its quarterly losses. Perhaps what worries investors is the limited rate of banking provision. The reporting rate was 51%.
But investors should be comforted in the effective working metrics of the bank. IDFC First Bank’s main operating profit, in addition to financial benefits, has grown by 8% year on year. Improvement of marks increased the income of the full interest as the loan balance decreased respectively. It should be noted that large commercial bank loans have shown a consistent increase of 16% as all other components of the loan portfolio have declined.