MOSL: IDFC BANK (Neutral)-Focusing on retail assets-stressed assets stable
​IDFC Bank: Focusing on retail assets; stressed assets stable
(IDFCBK IN, Mkt Cap USD3.0b, CMP INR61, TP INR62, 2% Upside, Neutral)
- IDFC Bank’s (IDFCBK) PAT rose 7% YoY to INR1.76b (12% beat), led by lower-than-estimated opex and provisioning.
- Total income was largely stable YoY at INR5.6b (28% miss), driven by 21% YoY growth in NII to INR5b, offset by a 59% decline in non-interest income to INR563m. NII missed our estimate by 5% due to pressure on margins. The decline in non-interest income was on account of INR258m of trading losses, as against INR782m of trading gains in 4QFY16.
- Operating expenses came in 20% below estimate at INR3.0b (1% YoY, -22% QoQ), driven by lower employee expenses (-30% YoY). Management has guided for average 2HFY17 employee cost as a run-rate (without considering new employee addition). C/I ratio remained largely stable YoY at 53%.
- GNPL fell 57% QoQ to INR15.4b, resulting in GNPL ratio declining sequentially from 7% to 3%. This reduction is due to sale of INR40b NPLs to an ARC.
- Loan book growth remains sluggish. Advances grew 8% YoY (+5% QoQ) to INR494b. Management targets to increase the share of retail loans from 25% to 55-60% in three years via both organic and inorganic opportunities.
IDFC Bank is a universal banking company based in India. Co. is active in the banking sector with a focus on Commercial and Wholesale Banking, Bharat Banking and Personal and Business Banking business and an added emphasis on infrastructure financing. Co.'s banking business consists of three distinct strategic business verticals as follows: Commercial and Wholesale Banking caters to large corporates, mid-markets & SME clients (commercial banking), Government business, financial institutions, treasury, cash management, transaction banking and investment banking; Bharat Banking caters to semi-urban and rural areas; and Personal and Business Banking caters to the urban retail consumers.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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