#1IDFC FIRST Bank | आई डी एफ सी फर्स्ट बैंक BKC BRANCH Investor Presentation - Q3 FY22 IDFC FIRST Bank ווי#2Table of Contents ווי 76 1 SECTION 1: EXECUTIVE SUMMARY FOR Q3 FY22 11 SECTION 2: CREATION OF IDFC FIRST BANK 19 SECTION 3: VISION & MISSION OF IDFC FIRST BANK 24 SECTION 4: PRODUCT OFFERING 39 SECTION 5: BUSINESS AND FINANCIAL PERFORMANCE SECTION 6: BOARD OF DIRECTORS & KEY SHAREHOLDERS IDFC FIRST Bank#3Bank At a Glance (as of 31 December 2021) Profitability Q3 FY22 Core Operating Profit Rs. 745 Cr 54% (Y-o-Y) Profit After Tax Rs. 281 Cr 117% (Y-o-Y) NII & NIM% Q3 FY22 NII Rs. 2,580 Cr 36% (Y-o-Y) NIM% 5.90%¹ (5.76%) Funded Assets Retail Book Fee & Other Income Q3 FY22 Rs. 744 Cr 28% (Y-o-Y) Asset Quality GNPA % 3.96% (4.27%) CASA Ratio (%) Section 1: Executive Summary for Q3 FY22 Customer Deposits 51.59% (51.28%) % of Total Deposits Rs. 85,818 Cr 11% (Y-o-Y) Capital Adequacy Ratio (%) Liquidity Average LCR (%) Q3 FY22 % Rs. 1,22,219 Cr 11% (Y-o-Y) Retail Mix: 62%² (59%) 28% (Y-O-Y) Home Loans Growth 44% (Y-o-Y) NNPA % 1.74% (2.09%) PCR% 57%³ (52%) 15.38% (15.60%) Reg. Requirement: 11.5% 149% (174%) Reg. Requirement:100% 1. For one large telecom company, where the interest income was accounted on cash basis, the NIM% of 5.90% excludes interest income pertaining to prior periods. Including the same NIM% for Q3 FY22 is 6.18%. 2. The Bank has reclassified Commercial Banking Loans separately from this quarter. Including the same, Retail and Commercial Banking will be 70% of the gross funded assets 3. Including Technical write-offs and Excluding one large toll accounts, where we expect no material economic loss, the PCR would have been 75% () Figures in brackets are for the sequential quarter unless specified otherwise. 2 IDFC FIRST Bank#4Highlights of Q3 FY22 Results Earnings • Net Profit grew by 117% YoY basis to reach Rs. 281 crore in Q3-FY22 • Core operating profit (excluding trading gains) grew by 54% YOY to reach Rs. 745 crore Section 1: Executive Summary for Q3 FY22 • • NII grew by 36% on a YoY basis to reach Rs. 2,580 crore in Q3-FY22. NIM stood at 5.90% excluding interest income pertaining to prior period for one telecom account. Including the same, NIM is at 6.18% for the quarter. Fee and Other Income grew by 13% QoQ and 28% YoY to reach Rs. 744 crore in Q3 FY22 • • Core operating income (excluding trading gains) grew by 34% YOY to Rs. 3,324 crore in Q3-FY22 Provisions other than tax were lower by 32% Y-o-Y basis at Rs. 392 crore in Q3-FY22 Deposits . CASA balance: Grew by 18% YoY basis to reach Rs. 47,859 crore ✓ CASA ratio: 51.59% as of Dec 31, 2021, as compared to 48.31% as of Dec 31, 2020 ✓ Avg. CASA Ratio: 50.54% as on Dec 31, 2021, as compared to 44.66% as on Dec 31,2020 • Customer Deposits: Grew by 11% YoY to reach Rs. 85,818 crore 3 IDFC FIRST Bank#5Highlights of Q3 FY22 Results Funded Assets & Asset Quality • Funded Assets: Grew by 11% YoY to reach Rs. 1,22,219 crore Section 1: Executive Summary for Q3 FY22 • ✓ Retail Loan and Commercial Finance grew by 26% Y-o-Y to reach Rs. 86,052 crore, primarily driven by growth in Home Loans which grew by 44% YOY Asset quality at Bank Level: GNPA and NNPA reduced sequentially by 31 bps and 35 bps to reach 3.96% and 1.74% respectively Gross and Net NPA of Retail and Commercial Finance reduced by 53 bps and 37 bps respectively ✓ PCR increased from 52.06% as at Sept 30, 2021 to 57.06% at December 31, 2021 in order to strengthen the balance sheet. (67% including technical write-off) ✓ Collection Efficiency: Early bucket collection efficiency in Retail surpassed Pre-COVID levels for both urban and rural retail loans Capital Adequacy Ratio & Liquidity • • Capital Adequacy Ratio: Strong at 15.38% with CET-1 Ratio at 14.83% Average Liquidity Coverage Ratio (LCR): Strong at 149% for Q3-FY22. 4 IDFC FIRST Bank#6CAPITAL We are happy to say that the Bank is performing well on the guidances given at the time of the merger. Net-worth CET 1 Ratio - Capital Adequacy (%) CASA Deposits CASA as a % of Deposits (%) Particulars A Average CASA Ratio (%) B I Branches (#) L I CASA + Term Deposits<5 crore (% of Customer Deposits) T | Certificate of Deposits E S Quarterly Avg. LCR (%) Dec-18 Guidance for FY24-FY25 (At Merger) Rs. 18,736 Cr 16.14% 16.51% Rs. 5,274 Cr >12.5% >13.0 % -- 8.68% 30% (FY24), 50% thereafter 8.39% 206 800-900 39% 85% Section 1: Executive Summary for Q3 FY22 Dec-21 Latest quarter Rs. 20,649 Cr 14.83% 15.38% Rs. 47,859 Cr 51.59% 50.54% 599 87% Rs. 22,312 Cr <10% of liabilities Rs. 6,947 Cr 123% Some new guidance has been included for greater clarity. No guidance given at the time of the merger has been amended No guidance provided earlier for these parameters >110% 149% 5 IDFC FIRST Bank#7We are happy to say that the Bank is performing well on the guidance given at the time of the merger. Section 1: Executive Summary for Q3 FY22 Particulars Dec-18 (At merger) Guidance for FY24-FY25 Retail and Commercial Book Rs. 36,927 Cr Rs. 100,000 Cr Dec-21 Latest quarter Rs. 86,052 Cr (27%) Retail and Commercial Book as a % of Total Funded Assets 35% Wholesale Funded Assets¹ Rs. 56,770 Cr ASSETS A - of which Infrastructure loans Rs. 22,710 Cr EARNINGS Top 10 borrowers as % of Total Funded Assets (%) GNPA (%) NNPA (%) Provision Coverage Ratio (%) Net Interest Margin (%) Cost to Income Ratio² (%) Return on Asset (%) Return on Equity (%) 12.8% 70% < Rs. 40,000 Cr Nil in 5 years < 5% Rs. 29,697 Cr (-14%) Rs. 8,051 Cr (-31%) 70% 4.3% 1.97% 2-2.5% 3.96% 0.95% 1.1.2% 1.74% 53% ~70% 67% 3.10% 5-5.5% 5.90%3 81.56% 55% 77.59% -3.70% 1.4-1.6% 0.66% -36.81% 13-15% 5.59% 1. Excluding Security Receipts, Loan converted into Equity, RIDF and PTC. 2. Excluding Trading Gains 3. Excluding interest income pertaining to prior period for one telecom account. Including the same, NIM is at 6.18% for the quarter 4. Including technical write-offs. Earnings for Dec-18 and Dec-21 are for the quarter. ()brackets represent YoY growth 6 IDFC FIRST Bank#8Key Strengths of IDFC FIRST Bank 1. Vision: Section 1: Executive Summary for Q3 FY22 The summary of our vision statement can be captured in three words "Ethical, Digital and Social Good". We believe ethical banking is at the core of everything we do. Digital is how we do it. And we believe our business has to contribute to larger social-good. 2. Customer First approach We are built on the foundation of customer-first principles. We believe in being transparent and not in billing the customer fees or charges in small bits and pennies through fine-prints. For instance, unlike common market practice in India and elsewhere, we do not charge non-home. branch charges, SMS update fees, IMPS fees, Annual card fees etc. We were the first universal bank to offer monthly interest credit for savings accounts. In credit cards, we were the first bank to introduce low, dynamic pricing, zero interest rate on cash withdrawal till billing date, lifetime Free credit cards and so on. Similarly, in every product we launch, whether current accounts, fleet cards or wealth management, we are bringing something new and customer-first special to the market. Thus, there are many "firsts" we have introduced to the industry. On the lending side, we are attractively priced like regular mainstream banks. 3. Corporate governance Eminent, qualified and experienced Board of Directors. All committees are headed by independent directors except CSR which is headed by the MD and CEO. We say things as they are, with transparent communication, both internal and external, and detailed investor presentation. 7 IDFC FIRST Bank#9Key Strengths of IDFC FIRST Bank 4. Strong capital adequacy Section 1: Executive Summary for Q3 FY22 Capital Adequacy is strong at 15.38% with CET-I Ratio of 14.83% as on December 31, 2021. We always keep our capital at levels significantly higher than the regulatory requirements. 5. Strong Deposits business We have a strong, stable and growing deposits franchise with a strong pan-India branch network of 599 branches. For instance, we grew our retail deposits by a whopping Rs. 29,970 crores even in the COVID affected year FY 20-21. We can comfortably grow deposits depending on requirements, based on our strong customer focus, customer-first products, technology focus and our strong brand. 6. Strong Liquidity The Bank is conservative in liabilities management, and always maintains a strong Liquidity Position. The Average LCR for Q3 FY22 was 149%. Even during the peak of the once-in-a-century COVID crisis we comfortably cruised through the situation with high LCR levels because we proactively planned our liquidity before the crisis. 7. Improving asset quality and strong risk management practices We have a track record of maintaining high asset quality with Gross NPA of ~2% and net NPA of ~1% (including Capital First and IDFC Bank experience) for close to a decade and we are confident of returning to the same metrics soon on the retail loans side. Retail Gross and Net NPA reduced to 2.92% and 1.28% in Q3 FY 22. Key indicators of trends such as cheque bounces, collections, recovery, vintage analysis, indicate that Gross and Net NPA would reduce from here on to reach 2% and 1% respectively. 8 IDFC FIRST Bank#10Key Strengths of IDFC FIRST Bank 8. Legacy wholesale account issues largely behind us Section 1: Executive Summary for Q3 FY22 Over the last three years, we have decisively dealt with, and accounted for almost all legacy infrastructure and corporate accounts. The quality of incremental corporate loans has been excellent in the last three years. 9. Contemporary Technology The bank continues to invest in laying a strong, modular and contemporary technology architecture that will help the bank to simultaneously enable efficiency, resilience, and growth. Our newly launched mobile app based on these technologies is top rated and provides several unique services and experiences to our customers. The Bank continues to strengthen its superior capabilities of predictive analytics in the area of credit underwriting, portfolio management, collection strategy, fraud risk mitigation and other such areas. 10. Strong unit economics on an incremental basis Our retail lending is giving us strong ROE of 18 to 20% on an incremental basis. Its not hard to see how. The NBFC, whose business is now subsumed in the bank was posting ROE of 15% and rising, with ~9% cost of funds. Therefore, with cost of funds now under 5%, we can comfortably generate ROE of ~18 to 20% on retail lending. Even though we have additionally started doing lesser margin products like prime home loans and new car loans, the overall returns are strong because of lower cost of funds. Currently, we are incurring cost of legacy borrowing of the DFI background @ 8.7% for Rs. 26,163 crores of borrowings. Further, since the bank is in set-up stage, we are incurring cost of launching/scaling many new businesses. These factors are masking these strong underlying economics and ROE, but this will get addressed in due course with scale and repayment of legacy liabilities. 9 IDFC FIRST Bank#11Key Strengths of IDFC FIRST Bank 11. Diversified business lines Section 1: Executive Summary for Q3 FY22 We are a full-service bank. Our lending is diversified over millions of customers and over many business lines including Home Loans, Loan against property, business loans, gold loans, credit cards, small business working capital loans, bank guarantees, trade finance, etc. No business except wholesale loans are > 15% of the overall loan book. Similarly, on the liabilities and fee businesses side, we have a complete array of deposits, payment products, Fleet card, wealth management, distribution of insurance, mutual funds etc. We provide high quality corporate banking services and Cash management solutions. 12. Strong growth opportunities In virtually all our businesses, across assets, deposits, and fee businesses, we have huge scope for growth. India is hugely underserved in financial services. Our opportunities for growth have increased substantially as we have started providing prime low-risk prime home loans and new auto loans where the market is larger. 13. Successful Track record The senior management has a track record of turning around and building successful institutions. Our senior management earlier turned a loss-making real-estate financing NBFC and converted it to a large diversified highly profitable institution with significant increase in shareholder value. 14. An employee friendly organisation We believe in meritocracy. We provide our employees with growth opportunities, empowerment, training, digital tools and capabilities to be able to make a difference. For employees affected by COVID wave 1, wave 2 and currently Omicron, we offer the most generous COVID welfare program. 10 IDFC FIRST Bank#12Table of 1 SECTION 1: EXECUTIVE SUMMARY FOR Q3 FY22 11 SECTION 2: CREATION OF IDFC FIRST BANK 19 SECTION 3: VISION & MISSION OF IDFC FIRST BANK Contents 24 SECTION 4: PRODUCT OFFERING ווי 39 SECTION 5: BUSINESS AND FINANCIAL PERFORMANCE 76 SECTION 6: BOARD OF DIRECTORS & KEY SHAREHOLDERS IDFC FIRST Bank#13IDFC FIRST Bank was created through Merger of two institutions Section 2: Creation of IDFC FIRST Bank IDFC + IDFC BANK - CAPITAL FIRST F IDFC FIRST Bank IDFC FIRST Bank was created by the merger of Erstwhile IDFC Bank and Erstwhile Capital First on December 18, 2018. Prior to this IDFC First Bank was a premier infrastructure Financing Domestic Financial Institution renowned for its contribution to infrastructure in India since 1997 and Capital First was a successful consumer and MSME financing entity since 2012. 12 IDFC FIRST Bank#14Section 2: Creation of IDFC FIRST Bank Background information of IDFC Bank . • • • Erstwhile IDFC BANK IDFC Limited was set up in 1997 with equity participation from the Government of India, to finance infrastructure focusing primarily on project finance and mobilization of capital for private sector infrastructure development. Whether it is financial intermediation for infrastructure projects and services, or innovative products to the infrastructure value chain, or asset maintenance of existing infrastructure projects, the company built a substantial franchise and became acknowledged as experts in infrastructure finance. Dr. Rajiv Lall joined the company in 2005 and successfully expanded the business to Asset Management, Institutional Broking and Infrastructure Debt Fund. In 2014, the Reserve Bank of India (RBI) granted an in-principle approval to IDFC Limited to set up a new bank in the private sector. Following this, the IDFC Limited divested its infrastructure finance assets and liabilities to a new entity - IDFC Bank- through demerger. Thus IDFC Bank was created by demerger of the infrastructure lending business of IDFC to IDFC Bank in 2015. The bank was launched through this demerger from IDFC Limited in November 2015. During the subsequent three years, the bank developed a strong and robust framework including strong IT capabilities for scaling up the banking operations. The Bank designed efficient treasury management system for its own proprietary trading, as well as for managing client operations. The bank started building Corporate banking businesses and diversified from infrastructure. Recognizing the change in the Indian landscape, emerging risk in infrastructure financing, and the low margins in corporate banking, the bank launched retail business for assets and liabilities and put together a strategy to retailize its loan book to diversify and to increase margins. Since retail required specialized skills, seasoning, and scale, the Bank was looking for inorganic opportunities for merger with a retail lending partner who already had scale, profitability and specialized skills. The bank was looking for a merger with a retail finance institution with adequate scale, profitability and specialized skills. 13 IDFC FIRST Bank#15Section 2: Creation of IDFC FIRST Bank . • • • Background information of Capital First • • Erstwhile CAPITAL FIRST LIMITED • Mr Vaidyanathan had built ICICI Bank's Retail Banking business between 2000-2009 and was later the MD and CEO of ICICI Prudential Life Insurance Company in 2009-10. During 2010-12, he acquired a significant stake in a small real-estate financing NBFC through leverage, wound down the then businesses of broking, wealth and Foreign Exchange, and instead used the NBFC vehicle to start financing consumers (Rs 12000-Rs. 30,000) and micro- entrepreneurs (Rs. 1-5 lacs) who were not financed by existing banks, by using alternative and advanced technology led models. Within a year he built a prototype loan book of Rs. 770 crore ($130m, March 2011), and presented the proof of concept to many global private equity players for a Leveraged Buyout (LBO). In 2012, he concluded India's largest Leveraged Management Buyout, got fresh equity of Rs. 100 crore into the company and founded Capital First as a new entity with new shareholders, new Board, new business lines, and fresh equity infusion. He then turned around the company from losses of Rs. 30 crore and Rs. 32 crore in FY 09 and FY 10 respectively, to PAT of Rs. 327 crore ($ 4.7b) by 2018, representing a 5 year CAGR increase of 56%. The loan assets grew at a 5 year CAGR of 35% to reach Rs. 29,625 crore (Sep 2018). The company financed seven million customers for Rs. 60,000 crore ($8.5b) through new age technology models. The market capitalization of the company increased ten-fold from Rs. 780 crore on in March 2012 to over Rs. 8,282 crore in January 2018 at the time of announcement of the merger. As per its stated strategy, Capital First was looking out for a banking license to convert to a bank when opportunity struck in the form of an offer from IDFC Bank to merge with Capital First, with Mr. Vaidyanathan to become the CEO of the merged bank. Erstwhile Capital First, as part of its stated strategy, was on the lookout for a commercial banking license. 14 IDFC FIRST Bank#16Erstwhile IDFC Bank was an eminent institution respected for its corporate governance and its contribution to Indian Infrastructure. Section 2: Creation of IDFC FIRST Bank 1997 IDFC incorporated in Chennai on the recommendation of the Expert Group on commercialization of Infrastructure Projects IDFC raises Rs. 893 crore for India's 2008 2003 first infrastructure dedicated growth equity fund2.8 IDFC raises Rs. 700 million in a second growth equity fund and Rs. 930 million in a new asset-class to recycle equity in completed infrastructure projects Acquired AMC business of Standard Chartered Bank. Setup an office in Singapore 2011 • • IDFC Mutual Fund ranked 10th in the country by AUM IDFC completes 15 years. Recognised as the best NBFC for Infrastructure Financing. Set up an office in New York, USA. . 2005 IDFC lists on both NSE & BSE. Raises Rs. 1372 crore of equity capital IDFC is recognised as a top 5 Lead Arranger for Project Finance Loans in Asha by Dealogic 2012 2009 IDFC becomes a signatory to UNPRI, CDP and the UNGC Global Compact 2006 IDFC raises over Rs. 2000 crore for its second infrastructure focused growth equity fund 2013 IDFC becomes the first signatory to the Equator Principles 2007 Does a QIP raising Rs. 2100 crore Acquired SSKL, a leading domestic investment bank and institutional equities firm 2010 • IDFC Investment Bank ranked 2nd in the equity league tables by Bloomberg. IDFC ranked among the top 50 companies in India's S&P ESG Index. Secured license from RBI 2014 ⚫ IDFC launches the National PPP Capacity Building programme to train over 10,000 government officials Launch of IDFC Bank 2015 About IDFC Bank In 2015, IDFC Bank was formed out of demerger from IDFC Ltd which was one of the biggest infrastructure finance company in India. The institution diversified into Asset Management, Institutional Broking and Investment Banking. It applied for and acquired a Commercial Banking License from RBI IDFC Bank created a strong banking framework creating all the necessary systems, risk management, infrastructure, IT architecture and processes for future growth. It created efficient cash management system and treasury and for managing trading. 15 IDFC FIRST Bank#17FY14 FY15 128% 115% FY16 FY17 Erstwhile Capital First had a history of strong growth and profitability. Background Capital First was a successful NBFC, growing its loan book and net profits at a 5 year CAGR of 29% and 56% respectively, with stable asset quality of Gross NPA of <2% and Net NPA of <1% for nearly a decade. Strong growth in AUM Wholesale AUM Retail AUM Retail AUM increased from 10% to 90% 935 Total AUM 32,623 26,997 19,824 16,041 11,975 6,186 7,510 9,679 2,751 FY14 FY15 FY16 Cost to income came down to <50% with scaling up of business 78% 80% 72% 74% 71% 59% 51% 51% 53% 48% FY17 FY18 Sep-18 Continuous Increase in Return on Equity (%) 0.5% Consistent growth in RoE 3.6% 4.9% 8.3% 10.111.9% 13.3% 14.5% FY18 H1-FY19 -2.1% -6.1% FY10 I FY11 ! FY12 FY13 FY14 FY15 FY16 FY17 FY18 6T-TH 31-Mar-10 31-Mar-11 -15.7 -46.2 1,174 902 10X Market Cap in 6 years 782 1,152 1,478 3,634 3,937 31-Mar-12 31-Mar-13 31-Mar-14 31-Mar-15 FY13 FY14 3.8 FY15 Section 2: Creation (Rs. Cr) 5 Yr PAT CAGR of 56% 5 Year CAGR of 56% 56 35 114 166 FY16 FY17 10X growth in the Market Cap in 6 years merger Mcap fell after announcement 8,282 7,628 31-Mar-16 16 IDFC FIRST Bank 31-Mar-17 12-Jan-18 31-Mar-18 6,096 FY18 H1-19 327 239 206 of IDFC FIRST Bank#18Asset quality remained high for close to a decade at Capital First. Section 2: Creation of IDFC FIRST Bank We present below the asset quality trends of our bank (including pre-merger history at Capital First) as demonstration of our skills and track record in managing stable and high asset quality, i.e. Gross NPA and Net NPA was maintained at ~2% and 1% respectively over a long time. The portfolio remained stable even after being stress tested through economic slowdown in 2010-2014, demonetization (2016), GST implementation (2017). After the merger, the bank has been able to move to even safer credit categories like prime home loans because of reduced cost of funds of a bank. Based on the above, we expect to maintain the business at Gross NPA of 2%, Net NPA of 1% and credit costs of ~2% in a stable manner. Largely Wholesale Loan 5.28% Book during this phase 3.78% CFL-GNPA CFL-NNPA During this phase, the Company transformed into a Retail Financing Player with introduction of many Retail Loans products and consequently the quality improved and remained high over the years. (Section of the Graph is representative) Demonetization Nov 8th 2016 GST Launched July 1st 2017 1.74% 1.21% 1.71% 1.13% 1.52% 1.59% 1.65% 1.72% 1.63% 1.59% 1.62% 1.57% 0.97% 1.00% 1.00% 1.04% 1.00% 0.97% 1.00% 1.00% 31-Mar-10 31-Mar-16 30-Jun-16 30-Sep-16 31-Dec-16 31-Mar-17 30-Jun-17 30-Sep-17 31-Dec-17 31-Mar-18 30-Jun-18 Note: NPA recognition norm migrated to 90 dpd effective from 01 April, 2017. 17 IDFC FIRST Bank#19Pre merger - Proforma Financials of IDFC Bank and Capital First - P&L (H1 FY19) Section 2: Creation of IDFC FIRST Bank In Rs. Crore Funded Assets / AUM Net-Worth NII Fees & Other Income Treasury Income Total Income Opex PPOP Provisions PBT Erstwhile IDFC Bank (H1 FY 19) Erstwhile Capital First (H1 FY 19) 75,332 32,623 14,776 2,928 912 1,143 Proforma Total (H1 FY 19) 1,07,955 17,704 2,055 256 153 409 31 31 1199 1,297 2,496 1108 616 1,724 91 681 772 562 363 925 -471 317 (154) Key Ratios NIM % RoA at PBT level % ROE % (at normalized level) Cost to Income Ratio % 1.56% 8.20% 2.85% (0.75%) 2.26% (0.20%) (4.18%)* 14.51% (1.21%) 92.41% 47.52% 69.09% Note: IDFC Bank and Capital First Limited (CFL) were in IGAAP and IND-AS respectively in H1-FY19 18 IDFC FIRST Bank#20Table of 1 SECTION 1: EXECUTIVE SUMMARY FOR Q3 FY22 11 SECTION 2: CREATION OF IDFC FIRST BANK 19 SECTION 3: VISION & MISSION OF IDFC FIRST BANK Contents 24 SECTION 4: PRODUCT OFFERING ווי 39 SECTION 5: BUSINESS AND FINANCIAL PERFORMANCE 76 SECTION 6: BOARD OF DIRECTORS & KEY SHAREHOLDERS IDFC FIRST Bank#21Vision and Mission of IDFC FIRST Bank Our Vision: "To build a world class bank in India, guided by ethics, powered by technology and be a force for social good." Section 3: Vision, Mission & Culture of the Bank Our Mission: "We want to touch the lives of millions of Indians in a positive way by providing them high-quality affordable banking" Organisation Theme Line: #alwaysyoufirst When IDFC FIRST Bank was formed with the merger between erstwhile Capital First and erstwhile IDFC Bank, we deliberated a lot on what our founding theme should be and finalised on the theme "Always You First' - where "You" refers to our customer. This theme cuts across the entire organisation and binds the bank to a single theme. 20 IDFC FIRST Bank#22ETHICAL - DIGITAL - SOCIAL GOOD Our vision is captured in 3 simple words ETHICAL DIGITAL We made a seal to capture our vision and shared with our employees. In all products we launch, we are driven about one thing: to deliver high-quality affordable banking services. Employees' DNA are being coded to be sincere about working in the customer's interest at all times. BANKING SOCIAL-GOOD Section 3: Vision, Mission & Culture of the Bank 21 IDFC FIRST Bank#23Section 3: Vision, Mission & Culture of the Bank “ Key excerpts from MD & CEO's letter in Annual Report 2019-20 The financial year 2019-20 was a year of building the foundation for the Bank. This was a year of non-stop, high octane action at our Bank; we completed the merger, integrated two systems, technology, processes and people, re-defined reporting hierarchies, energised the teams, went all out for retail liabilities (up 157%), grew retail loans (up 40%), changed the composition of the balance sheet, reduced dependence on institutional deposits, reduced Top-20 borrower exposure percentages, reduced Top-20 depositor percentages, dealt with unexpected hits on some wholesale banking accounts, appointed a brand ambassador, dealt with COVID-19 and lockdowns, raised 2,000 crore of equity capital in the midst of the lockdown, and are submitting this annual report to you from behind screens. Our Bank enjoys an excellent brand image. Q4 FY20 was, without doubt, the most trying period of our lifetime. Global indices crashed 20-25%, and NYSE shut down at lower circuit breakers, twice in March 2020. Our own stock exchanges were crashing by the day due to COVID-19. There was total panic in the markets. At the same time, news about one private sector bank was quite negative and that bank was put on moratorium by the regulatory authorities. You will be happy to note even in a quarter of such chaos, the Retail Deposits of our Bank grew by 4,658 crore in Q4 FY20 alone, representing a sequential QoQ growth of 16%. Such is the confidence our Bank enjoys in the market. " CE Growth, you will agree, is not an issue in India. Mid-teens ROE can be built for sure, most good banks have achieved it. Our incremental margins are strong. Our business is highly scalable. We have a very high level of corporate governance. We focus on the customer. I believe it is inevitable that value will be created in this approach. GE Culture is not just about how things get done around here, it's a much longer list such as, about how people conduct themselves in office and in society, how committed they are to the mission, how to resolve conflicts, not using offensive or abusive words, imbibing the organisation's policy that the customer comes first and so on. " 22 " IDFC FIRST Bank#24Key Excerpts from MD & CEO's letter in Annual Report 2020-21 Section 3: Vision, Mission & Culture of the Bank usually renUS d profitability are carrying rgely legacy, are replaced r Bank, you ability of our ump straight ncremental ur Bank. I class bank irst values, We make products with transparent pricing and lees. Working on the theme of Customer First, we came up with many unique features as follows: We advise our product teams to design products in such a way that it is meant to be sold to our "near and dear" ones. ■ Monthly credits: We have started "monthly" credit of interest on savings accounts, against the industry practice of Quarterly credits. So, our customers earn "interest on interest" monthly on their savings accounts. To the best of our knowledge, no large 21-22 is loan book tandards, ady been ect to see . Q3 and keep our ban book. g a 2-1-2 of 1% and a steady borrowings of our DFI background, and these are the challenges of converting a DFI into a bank. When our Bank will replace this at say, 5.0%, we would save about * 1,000 crore per year on an annuity basis compared to today. This is a legacy issue on the liability side and will go away with time. When our bank will replace this at say, 5.0%, we would save about 1,000 crore per year on an annuity basis say that were Don't underestimate the power tayed motivated of the 50% CASA Bank with a OVID. They were ssist customers. powerful and tested lending are scheme for salary credit to machine attached to it. loan, extension ths, scholarship until graduation, hing allowance of ated this greatly. zation program. ew products. We ank. Our senior bnus cuts to lead I express our sincere thanks to our regulator the Reserve Bank of India who have constantly guided us on our approach and supported us throughout. Our Board members are eminent people with rich experience, have great intellect, highest levels of integrity and have constantly guided the Bank with strategic inputs and towards very high standards of corporate governance. I sincerely thank our customers for hanking with us I also loans profitably which has multiplied our market opportunities. Reducing our savings account interest rates had another positive side benefit; we can now participate in prime Home loans profitably which has multiplied our market opportunities. lucing Concentration risk: Deposits from our Top depositors have reduced from 40.0% of customer osits at merger to only 7.7% as of March 31, 2021. rink mitigation meaALLA You can b. C. d. from large corporate accoun finance company, a finan Mumbai based Toll Road based power account, a te few other such accounts cycle in infrastructure financ financial conglomerates gol exposure to the telecom ac the issues are behind us. Infrastructure financing because of dependence or and dependence on ecosyst limited control. We have b outstanding to infrastructure merger to 10,808 crore as On the Corporate Bank implemented good controls recent portfolio performanc Significant reduction in th list: We have brought down i. 2- 1-2 Formula: We will be targeting a 2-1-2 formula, i.e. Gross NPA of 2%, Net NPA of 1% and provisions of 2% on funded assets on a steady state basis. We will be targeting a 2-1-2 formula, i.e. Gross NPA of 2%, Net NPA of 1% and provisions of 2% on funded assets expect mortgage backed loans to form 40% of our loan book in due course. We expect mortgage backed loans to form 40% of our loan book in due course. Credit Costs: Our provisions for FY 21-22 is expected to be only 2.5% of the average loan book which is quite reasonable by industry standards, of which a substantial portion has already been Thus our incremer is estimated at 18 b. Strong increm Lending busines business ROE is But you are not ye because of the fol C. Higher cost of currently: As of crore of liabilities borrowings of our challenges of com Bank will replacet * 1,000 crore per 23 IDFC FIRST Bank#251 SECTION 1: EXECUTIVE SUMMARY FOR Q3 FY22 11 SECTION 2: CREATION OF IDFC FIRST BANK Table of Contents 19 SECTION 3: VISION & MISSION OF IDFC FIRST BANK 24 SECTION 4: PRODUCT OFFERING ווי 76 39 SECTION 5: BUSINESS AND FINANCIAL PERFORMANCE SECTION 6: BOARD OF DIRECTORS & KEY SHAREHOLDERS IDFC FIRST Bank#26Section 4: Product Offerings The Bank has wide bouquet of Consumer and MSME loans .. across varied customer segments including Consumers and MSMEs in different parts of India ETHICAL Prime Home Loans: Starting at 6.9% to select Prime Salaried Customer of top corporates, Self-employed customers for buying house property. Ticket Size Range Rs. 35-500 lacs Affordable Home Loans: Smaller ticket size home loans to salaried and self-employed customers for purchasing house property. Ticket Size Range Rs. 5-30 lacs Loan Against Property: Long term loans to MSMEs after proper evaluation of cash flows; against residential or commercial property Ticket Size Range ~Rs. 1-1.5 crore New and Pre-owned Car Loan: To salaried and self-employed customers for purchasing a new car or a pre-owned car Ticket Size Range ~Rs. 6-8 lacs Business Loans: Unsecured Loans to the self- employed individual or entity against business cash-flows Ticket Size Range Rs. 15-25 lacs DIGITAL BANKING *SOCI Personal Loans: Unsecured Loans to salaried and self-employed customers for fulfilling their financial needs Ticket Size Range Rs. 4-5 lacs Consumer Durable Loans: financing to individuals for purchasing of LCD/LED panels, Laptops, Air-conditioners etc Ticket Size Range Rs. 18-20k Two Wheeler Loans: To the salaried and self- employed customers for purchasing new two wheelers Ticket Size Range ~Rs. 50-1 lakh Micro Enterprise Loans: Loan solutions to small business owner Ticket Size Range ~Rs. 1-1.5 lakh JLG Loan for Women: Sakhi Shakti loan is especially designed as the livelihood advancement for women, primarily in rural areas Ticket Size Range ~Rs. 30-40k Apart from these products, IDFC FIRST Bank also offers Working Capital Loans, Corporate Loans for Business Banking and Corporate Customers in India 25 IDFC FIRST Bank#27Pya 50.000 t 2 741 3 KONGAM Toppola www. n 108 arcrests IDFC FIRST Bank ALWAYS YOU FIRST Key Features of the new App launched by us. • • . 13903 Fast Payments with Beneficiary name validation UPI with linkage to any Bank Account Pay to Contacts ML based categorisation of transactions wal Search It's intuitive. It's intelligent. • Income and Expense Analyser for Cash flow analysis Instant Online Loans (pre-approved) • Instant Online Credit Cards (pre-approved) . Ready to use virtual credit card • It's innovative. • Experience a revolution in digital banking. and Fintech on a superior banking platform. FIRST IDFC FIRST Bank Machine leaming based transaction categorisation Income and Expense Analyzer Pre-approved loan offers | Personalised Offers | Universal Search Invest in Mutual Fund Dep And over 900+ banking/finance-related features, you don't want to miss! Open your power-packed Savings Account and earn up to 60% more on savings than your existing bank offering 2.75%. 1Cr <6Lakh 35Lakh Airport Tol Cily Pos Lis Personal d Ewy Da Bean the OR code for 10X 2174/lakh LN Prae Cres Care Low 5% p.a. instant account opening 1800 419 4332 . • In app Video calling Consolidated Investments Dashboard covering MF, Gold Bonds, Deposits, Alternate Investment Funds etc. ASBA facility 2 click MF investments 1 Click OD against FD • Current Account and Personal Savings Accounts access within same App with single login • Input and Approver management for MSME transactions#280000 IDFC FIRST Bank ALWAYS YOU FIRST Differentiated Features of Savings Account You pay EMIs monthly. Why should you receive interest credits on Savings Account quarterly? (₹ INTRODUCING MONTHLY INTEREST CREDITS ON YOUR IDFC FIRST BANK SAVINGS ACCOUNT Check out our amazing "ALWAYS YOU FIRST" features! Special Features Personal Accident Insurance Average Monthly Balance of 10,000 2,00,000 Average Monthly Balance of 25,000 35,00,000 ATM Withdrawal Daily ATM Withdrawal Limit 5 FREE transactions monthly 1.00.000 Unlimited FREE withdrawals. 2.00.000 Attractive Interest Rates p.a. on Savings Account Daily Purchase Limit (POS) 1,50,000 6,00,000 Air Accident Insurance Airport Lounge Access NIL NIL 1,00,00,000 Lost Card Liability 750,000 Complimentary 2 per quarter 6,00,000 For Balances up to 1 lakh >1 lakh up to 10 lakhs >10 lakhs up to 2 crores 4% 4.5% 5% Purchase Protection NIL 1,00,000 Debit Card FREE VISA Classic FREE VISA Signature IMPS FREE FREE Cheque Book FREE FREE For a host of Debit Card activation and cashback offers, reward vouchers on on-boarding, digital platforms, 24 X 7 call center and full interest rate table. please refer to www.idfcfirstbank.com Polo ETHICAL ITALOO BANKING SOCIAL 8% Monthly Interest credit on Savings account: India's first large universal bank to offer this feature, a Customer First Interest up to 5% : This enables our customers to earn between 34% and 58% more with IDFC FIRST Bank Savings Account as compared to leading banks who pay 3% for deposits upto Rs. 50 lacs, and 3.5% above Rs. 50 lacs of balances. No penalty for senior citizens on early withdrawal: If a senior citizen customer gets his/her FD pre-matured, no penal charges are levied Higher limits and Insurance: *6 lakhs/day Purchase limit and * 2 lakhs/day ATM withdrawals and *35 lakhs free personal accident insurance cover & 1 crore free air accident insurance cover on Debit Card Interest payment on Employee Reimbursement Accounts for corporate salary customers and many more: ....#29Η Wealth Management FIRST FIRST FIRST Private Wealth Select IDFC FIRST Bank#30Wealth Management - Customer Segment led Approach Brands Segmenting basis customer profile Wealth Management Solutions Section 4: Product Offerings Delivery Model Campaigns, Rewards and Offers Automated Customer Lifecycle Management Digital Onboarding FIRST Private HNI & UHNI Mutual Funds, Bonds, LAS, Pre- IPO Investing, Estate - Inheritance & Succession Planning, Immigration linked Investing, Private Equity & Real Estate AIFs, Broking Services, Offshore Investment Solutions Full Scale Private Banking FIRST Wealth Affluent FIRST Select Mass Affluent Mass Classification: Confidential - Regulator Shareable Mutual Funds, Gold Bonds, Loan Against Securities, Broking Services RM Assisted Digital Goal based investing Insurance Goal based investing Insurance DIY Digital 29 IDFC FIRST Bank ETHICAL * BANKING SOCIAL#31Wealth Management - Differentiated Banking & Wealth Experience IDFC FIRST Bank ALWAYS YOU FIRST Section 4: Product Offerings ETHICAL BANKING SOCIAL IDFC FIRST Bank ALWAYS YOU FIRST IDFC FIRST Bank ALWAYS YOU FIRST FIRST Select FIRST Select is an enhanced banking program to make everyday banking as special as you are Relationship Banker for your banking and financial needs Superior investment solutions FIRST Wealth FIRST Wealth program brings you the best-in-league banking experience with unrivaled benefits and privileges Relationship Manager for your banking and financial needs Tailored investment solutions FIRST Private A bespoke personal banking program which brings to you an unparalleled banking experience Private Banker for your financial needs OC 40 Exclusive banking privileges with preferential rates on loans, lockers and forex FIRST Select Debit Card* with exclusive benefits LAUNCHING SOON * You can continue using your existing debit card till we send you your new FIRST Select Debit Card Superior Banking for a Select Few Exclusive banking privileges with preferential rates on loans, lockers and forex FIRST Wealth Debit Card* LAUNCHING SOON with exclusive benefits * You can continue using your existing debit card till we send you your new FIRST Wealth Debit Card An Extraordinary Banking Experience for Extraordinary Customers Classification: Confidential - Regulator Shareable Bespoke investment solutions Exclusive banking privileges with preferential rates on loans, lockers and forex FIRST Private Debit Card* LAUNCHING SOON with premium benefits * You can continue using your existing debit card till we send you your new FIRST Private Debit Card Bespoke Banking for the Exclusive 30 IDFC FIRST Bank#32Easy to use Wealth Management Application Section 4: Product Offerings ETHICAL DIGITAL BANKING SOCIAL GOOD 1 9:41 Cards Deposits Investments 2 On-line Mutual Fund Investing Consolidated Investment Dashboard Curent 12,74,800 3 MF Holdings & Transaction Management 12.9% 7 4 Investor Risk Profiling Asset allocation Product distribution Award winning Digital Investing Platform A PRIVATE BANKING AWARDS 2021 ASIAMONEY Best Bank for HNW, India Your investments 22,60,000 To ganes we +60,000 ↑ 23% 21% Devenge Deld Binds 14% 42% Depos Differentiators - Asia Pacific Banking Apps Mutual funds Investment valu 14,54,43,295.25 Cument velve 7,02,88,322.14 View detala TL D START PAY LOME UT 5 6 7 6 Quant based Research Recommendations Investment Ideas for Mutual Funds Sovereign Gold Bonds IDFC FIRST Demat Account Opening Goal Based Investing wenet 22.74.600 8 00 DO Classification: Confidential - Regulator Shareable 10 Term Insurance Quote Comparison 11 Edit SIP Features - Pause, Change Amount & Date 31 IDFC FIRST Bank#33Credit Cards Business 4 F FIRST Millennia VISA Platinum FIRST Millennia VISA Platinum FIRST Classic FIRST Wealth FIRST Select IDFC FIRST IDFC FIRST IDFC FIRST Bank Family VISA Signature IDFC FIRST Bank#34Launch of our Credit Card Business was based on Unique Industry First Features Customer Segments Core Value Proposition Millennials Mass Household Emerging Affluent Affluent *年 CVP & Segment: FIRST Classic FIRST Millennia FIRST Classic Millennia VISA 16PC FIRST DAN FAMILY FINES Millennia VISA 19TC FEAST SANK FAMILY Life Time Free Credit Card Dynamic lowest interest rate from 9% to 36% pm$ Interest free cash withdrawals 10X rewards above spends of Rs 20,000 | Never expiring points Movie, Travel & Lounge privileges IDFC FIRST Bank Family VISA Platinum Exceptional value and classic features FIRST Select FIRST Select Uber cool looks & slick features FIRST Wealth FIRST Wealth *Spending over limit is usually inadvertent by customers. Hence as a customer friendly measure, the Bank will intimate the customers if their spends are going above limit to avoid any charges incurred by them. $Customer rates depending on algorithm, factoring in credentials, relationship with the bank and many other parameters IDFC FIRST BANK FAMILY VISA Signature Life's little luxuries IDFC FIRST BANK FAMILY >))) VISA Infinite All premium features for international traveler 33 IDFC FIRST Bank#35Since Launch in Jan 2021, the Bank has issued 5.3+ Lac Credit Cards till December 31, 2021 A Credit Card, like no other Customer friendly card launched by the Bank, keeping in line with the ethos of always customer first. FIRST Classic FIRST Wealth FIRST Select 55 FIRST Millennia VISA Platinum FIRST Millennia VISA Platinum Section 4: Product Offerings ETHICAL TALO DIGITAL BANKING SOCIAL ✓ Since launch the Bank has issued over 0.5 million cards and that too without any intermediaries. The Credit card is loaded with customer-first features that has made it a huge hit in the market. ✓ Cards in Force grew by 34% QoQ. ✓ Activation rate of 71%. IDFC FIRST IDFC FIRST VISA IDFC FIRST Bank Family Signature 34 IDFC FIRST Bank#36Cash Management Solutions IDFC FIRST Bank#37Best-in-Class Cash Management Solutions CMS Solutions are best-in-class, technology-led, client centric customized offerings with seamless experience. Responsive to business requirements Section 4: Product Offerings Client Centric Approach Differentiated Offering Technology Led Provide Customised solutions Bringing financial & operational efficiency Sector specific solutions with product innovation at core. ✓ Extensive reach to provide unified experience across locations Enabling customers to move from physical to digital cost-effective automated solutions ✓ Simple, convenient, one channel Banking experience. ✓ Comprehensive API banking to provide real time banking Integrated and flexible IT architecture to improve customer's experience Key Highlights: Growing @ 40+% CAGR over 3 yrs. 1300+ Active CMS customers across industry segments ✓ Volume growth of 2x (last 12 months) ✓ Digital/Electronic txn : · 95+% of Payments 75+% of Receivables Classification: Confidential - Regulator Shareable 36 IDFC FIRST Bank#38Best-in-Class Cash Management Solutions Innovative online banking platform Section 4: Product Offerings Completely paperless transactions No physical documentation for any kind of payment Single-Window Experience for all transactions Unified platform for Cash, Trade, Treasury and Channel Finance Unified balance position View balances of all your bank accounts (even outside IDFC FIRST BANK) in one screen One file any payment Initiate payments across modes through single file BXP Business experience Platform Intelligent report builder - Build your Own Pick and choose the required fields required by you FX rates on a click First-of-its-kind User Level Functionality for blocking FX rates Online Trade regulatory reporting Online regularization of I/EDPMS and download of related data Classification: Confidential - Regulator Shareable 37 IDFC FIRST Bank#39Best-in-Class Cash Management Solutions A complete product suite Receivables Solutions Cheque/Cash m-Cheque R Kiosk Walk-in (Partner Tieup) PG/POS UPI B FAsiaq BHARAT BILLPAY Virtual Account NACH / eNACH UPI BBPS Collect Fastag Escrow & Liquidity Solutions >> x והנוער Escrow Structures Nodal Solutions Penny Drop Solution API Alerts 999 Flexi Deposit Solutions Auto Recon Solutions Range of CMS Products 80 P Cheque/ DD Cash Delivery Classification: Confidential - Regulator Shareable Section 4: Product Offerings Payment Solutions m Lon Remote Cheque Tax Payments Printing B BHARAT BILLPAY BBPS Pay Bulk Electronic Payments Connectivity Solutions BXP (Internet Banking) Host to Host API 38 K Branch IDFC FIRST Bank#40Table of 11 1 SECTION 1: EXECUTIVE SUMMARY FOR Q3 FY22 SECTION 2: CREATION OF IDFC FIRST BANK 19 SECTION 3: VISION & MISSION OF IDFC FIRST BANK Contents 24 SECTION 4: PRODUCT OFFERING ווי 39 SECTION 5: BUSINESS AND FINANCIAL PERFORMANCE 76 SECTION 6: BOARD OF DIRECTORS & KEY SHAREHOLDERS IDFC FIRST Bank#41= SECTION 5: BUSINESS & FINANCIAL PERFORMANCE OF THE BANK 5A. Management Commentary on Q3 FY22 Results 5B. Update on Liabilities 5C. Assets Update 5D. Asset Quality ✓ 5E. Key Financial Parameters Balance Sheet Income Statement Capital Adequacy IDFC FIRST Bank#42Q3-FY22 results - Gross Funded Assets Sustainable Growth in Overall Funded Assets Funded Assets: ◉ ☐ Section 5A Management Commentary on Q3 FY22 Results Gross Funded Assets increased by 11% to Rs. 1,22,219 crore as on December 31, 2021 from Rs. 1,10,469 crore as on December 31, 2020 Effective December 31, 2021, the Bank has reclassified businesses into retail loans, commercial finance, infrastructure book and corporate book for greater visibility of underlying portfolio. A. Retail Funded Assets: Retail loans constitutes 62% of the overall funded asset book at December 31, 2021. The bank has developed deep specialization in this business and this will be the mainstay of our profitability growth going forward. ■ The Retail funded book increased 28% YoY to Rs. 75,556 crore as on December 31, 2021 from Rs. 58,988 crore as on December 31, 2020. • Housing loans book grew by 44% YOY to Rs. 11,968 crore as of December 31, 2021. Mortgage-backed businesses grew 26% YoY as of December 31, 2021. The Bank sees strong growth in housing loans going forward. B. Commercial Finance: ■ Commercial Finance Book of the Bank increased by 16% YoY to Rs. 10,496 crore as on December 31, 2021 from Rs. 9,072 crore as on December 31, 2020. This book constitutes 9% of funded loan assets as on December 31, 2021. The Bank sees this as a strong driver of growth going forward. 41 IDFC FIRST Bank#43Q3-FY22 results - Gross Funded Assets Sustainable Growth in Overall Funded Assets C. Corporate (Non-infra) Financing: ■ Section 5A Management Commentary on Q3 FY22 Results Corporate funded book decreased by 3% YOY to Rs. 21,647 crore as on December 31, 2021 from Rs. 22,374 crore as on December 31, 2020. However, it increased by 4% on a sequential basis. The Bank would attempt to sustain or grow the corporate book from here in a measured manner based on risk reward dynamics, with close watch on credit quality. Others (Incl Security Receipts, Loans converted into Equity, RIDF and PTC) decreased by 23% YOY to Rs. 6,470 crore as on December 31, 2021 from Rs. 8,433 crore as on December 31, 2020. The Bank intends to reduce this in due course. D. Infrastructure Financing: Infrastructure Financing reduced by 31% on a Y-o-Y basis and constitutes only 6.6% of total funded assets as on December 31, 2021 as compared to 10.5% as on December 31, 2020. As stated earlier The Bank will continue to run down this legacy infrastructure financing book. 42 IDFC FIRST Bank#44Q3-FY22 results - Deposits Incremental Liabilities driven by growth in Deposits Deposits: Section 5A Management Commentary on Q3 FY22 Results ■ The Branch Network of the Bank stands at 599 branches, 727 ATMs (including 103 recyclers) across the country as on December 31, 2021. ☐ Customer Deposits increased by 11% YOY to Rs. 85,818 crore at December 31, 2021 from Rs. 77,289 crore at December 31, 2020. The Bank has a demonstrated capability to raise deposits. CASA Deposits of the Bank increased by 18% YOY to Rs. 47,859 crore at December 31, 2021 from Rs. 40,563 crore at December 31, 2020. We have demonstrated capability to grow CASA over the last 2 years. CASA Ratio improved to 51.59% at December 31, 2021 from 48.31% at December 31, 2020. Average CASA calculated on daily basis was healthy at 50.54% for Q3 FY22 ■ The bank has substantially granularized the liabilities base since merger and is placed comfortably on this account as CASA and TD <5 crore stands at 87% as on Dec 31. 2021 Liquidity Coverage Ratio (LCR): Average LCR for Q3-FY22 was strong at 149% against the regulatory requirement of 100%. 43 IDFC FIRST Bank#45Q3-FY22 results: Profitability Section 5A Management Commentary on Q3 FY22 Results Profitability ■ Pre-Provisioning Operating Profit (excl. Trading gains) increased by 54% YOY to Rs. 745 crore for Q3-FY22 from Rs. 484 crore Q3-FY21. Profit After Tax of the Bank increased by 117% YOY to Rs. 281 crore in Q3-FY22 from Rs. 130 crore in Q3-FY21. Income • Net Interest Income increased by 36% YoY. Net Interest Margin (quarterly annualized) of the Bank improved to 5.90% for Q3-FY22 from 4.80% in Q3-FY21 and 5.76% in Q2-FY22. In one large telecom account the interest income was accounted on cash basis. Above- mentioned NIM for Q3 FY22 and Q3 FY21 excludes interest income pertaining to prior periods for the said large telecom company. Including the same the actual NIM is 6.18% for Q3 FY22 and 5.04% for Q3 FY21. Fee and Other Income grew by 28% YoY to reach Rs. 744 crore in Q3 FY22 as compared to Rs. 582 crore in Q3 FY21. . Fee Income growth was contributed primarily by the fees related to loan sourcing, higher transaction fees, distribution and wealth management fees etc. Retail fees constitutes 82% of the overall fees for the quarter. Core operating income (net of interest expense and excluding trading gains) increased by 34% YOY to Rs. 3,324 crore in Q3-FY22 from Rs. 2,474 crore in Q3-FY21 aided by strong NII and Fee Income growth. Contd... 44 IDFC FIRST Bank#46Q3-FY22 results: Profitability Section 5A Management Commentary on Q3 FY22 Results Contd.. Trading gains were lower at Rs. 25 crores during Q3-FY22 on account of increase in yields and market volatility, as compared to Rs. 269 crores during Q3-FY21 and Rs. 122 crores in the previous quarter. Operating Expenses ◉ Operating Expense grew 30% YOY at Rs. 2,579 crore for Q3-FY22 as compared to Rs. 1,991 crore for Q3-FY21 on account of increased business activities and lower base last year due to subdued economic activity due to COVID. Provisions Provisions was lower by 32% on a Y-o- Y basis at Rs. 392 crore in Q3-FY22 as compared to Rs. 574 crore in Q3-FY21. • During the quarter, the Bank has released entire provision of Rs. 487 crore held on one large telecom account pursuant to timely bond redemptions of Rs. 2,000 crore made by the account which were due in Dec 21/ Jan 22. • During the quarter, Provision Coverage Ratio of the Bank has been increased from 52.06% as on September 30, 2021 to 57.06% as on December 31, 2021 which will strengthen the Balance sheet. • The Bank has made additional provisions on legacy corporate / infrastructure account amounting to ~Rs. 250 crores . During the quarter, the bank has not utilized any Covid provision created earlier and carries forward Covid Provisions of Rs. 165 crore as on December 31, 2021. 45 IDFC FIRST Bank#47Q3-FY22 results - Asset Quality Asset Quality Parameters improved during the quarter • • • • • • Section 5A Management Commentary on Q3 FY22 Results Bank's Gross NPA has reduced from 4.27% as on September 30, 2021 to 3.96% as on December 31, 2021. The Net NPA has reduced from 2.09% as on September 30, 2021 to 1.74% as on December 31, 2021. The above mentioned NPA figures includes one large toll road Account of Rs. 819 crore which is an operating toll account and we expect no material economic loss to the principal. Excluding this account, the Gross NPA and Net NPA of the Bank would have been 3.24% and 1.14% as of December 31, 2021. The Provision Coverage Ratio of the Bank improved from 52% as on September 30, 2021 to 57% as of December 31, 2021. Excluding the abovementioned account and including the technical write-offs, the Provision Coverage Ratio would have been 75%. Our Gross NPA and Net NPA on Retail and Commercial Loans has reduced to 2.92% and 1.28% respectively (GNPA of 3.45% and NNPA of 1.66% as on September 30, 2021). GNPA and NNPA in Retail is decreasing and we maintain our outlook that this will further reduce to 2% and 1% respectively in due course based on current trends. On the Wholesale side (Corporate and Infrastructure), most of the legacy accounts has been accounted for and we are left with very few troubled accounts on this count. Our Gross NPA on Infrastructure Book is 20.07% and Net NPA of 11.58%. Since merger, we have already brought down the book from Rs. 22,710 crore to Rs. 8,051 crore (degrowth of 65%). 46 IDFC FIRST Bank#48= ✓ SECTION 5: BUSINESS & FINANCIAL PERFORMANCE OF THE BANK 5A. Management Commentary on Q3 FY22 Results 5B. Update on Liabilities 5C. Assets Update 5D. Asset Quality 5E. Key Financial Parameters Balance Sheet Income Statement Capital Adequacy IDFC FIRST Bank#491 The Bank now has a strong and well diversified deposits base Demonstrated Capability to raise deposits CASA Deposits has grown by Rs. 42,585 crore since merger with YoY growth of 18% based on strong service levels, attractive 2 Section 5B: Update on Liabilities As a result, the CASA Ratio (%) of the Bank has grown from 8.68% (Dec-18) at merger to 51.59% (Dec-21) pricing, strong brand and excellent customer first products. in Rs. crore 31 Mar 18 31 Mar 19 31 Mar 20 31 Mar 21 31 Dec 21 31 Dec 21 יון ייוןן 51.75% 51.59% 31 Mar 18 31 Mar 19 31 Mar 20 31 Mar 21 The Average CASA Ratio of the Bank has increased to 50.54% as on December 31, 2021 as compared to 44.66% as on December 31, 2020. 48 IDFC FIRST Bank#503 The Bank now has a strong and well diversified deposits base Demonstrated Capability to raise deposits Core Deposits (Retail CASA and Retail Term Deposits) also shows strong improvement over the years based on strong service levels, attractive pricing, and strong brand and excellent customer first products. 4 Section 5B: Update on Liabilities Customer Deposits has grown strongly since merger. It has grown by 11% during the last year to reach Rs. 85,818 crore 5,693, 13,214 33,924 63,894 64,510 28,370 40,504 57,719 85,818 82,725 31 Mar 18 31 Mar 19 31 Mar 20 31 Mar 21 31 Dec 21 31 Mar 18 31 Mar 19 31 Mar 20 31 Mar 21 31 Dec 21 49 IDFC FIRST Bank#51Strong growth in retail deposits has reduced the dependence on wholesale deposits and has provided greater stability to the liability side Section 5B: Update on Liabilities In Rs. Crore Legacy Long Term Bonds Legacy Infra Bonds Refinance Other borrowings Total Borrowings (A) CASA Term Deposits Total Customer Deposits (B) Certificate of Deposits (C) Money Market Borrowings (D) Dec-20 Sep-21 Dec-21 YOY% 9,460 7,588 7,311 -23% 9,514 9,395 9,357 -2% 8,297 17,345 16,561 100% 8,997 6,265 5,749 -36% 36,267 40,592 38,978 7% 40,563 46,269 47,859 18% 36,726 37,620 37,959 3% 77,289 83,889 85,818 11% 6,673 6,346 6,947 4% 4,538 12,011 11,814 160% 124,768 142,838 143,557 15% 48.31% 51.28% 51.59% 44.66% 49.45% Borrowings + Deposits (A)+(B)+(C)+(D) CASA % of Deposits Average CASA % of Average Deposits 50.54% During the last one year, the Bank has grown its borrowings through Refinance as it was available at attractive rates for the longer tenor 50 IDFC FIRST Bank#52Status of Legacy High Cost Long Term Borrowing as on December 31, 2021 Bank continues to bring down the legacy high cost borrowings Section 5B: Update on Liabilities In Rs. Cr Infra Bonds Maturity As of Dec 31, 2021 Rol (%) Wtd. Res. Tenor (Yrs) Upto FY22 FY23 FY24 FY25 Beyond FY 25 9,357 1,465 1,386 5,575 931 8.9% 2.35 Long Term Legacy Bonds 7,311 582 Other Bonds Refinance Total 3,545 5,951 1,710 1,308 3,710 9.0% 2.72 1,934 767 150 694 8.8% 1.75 == 84 3,053 1,884 930 8.0% 1.20 26,163 666 6,452 5,747 7,963 5,335 8.7% As we replace these high cost borrowings with our incremental cost of funds of less than 5%, it will add about ~Rs. 1,000 crore to the net interest income of the bank on an annualized basis in due course. 2.11 51 IDFC FIRST Bank#53SECTION 5: BUSINESS & FINANCIAL PERFORMANCE OF THE BANK 5A. Management Commentary on Q3 FY22 Results 5B. Update on Liabilities 5C. Assets Update 5D. Asset Quality 5E. Key Financial Parameters ✓ Balance Sheet Income Statement Capital Adequacy IDFC FIRST Bank#54The Bank's Book is well diversified in large number of businesses Section 5C: Assets Update Infra HL 8% 8% Infra 7% LAP 12% Wheels 7% Corporate and others 23% Corporate and others 33% Commercial Finance 7% HL 10% LAP 14% Consumer Loans 11% Commercial Credit Card Finance Others 5% 1% 9% Rural Finance Rural Finance 10% Others 5% Credit Card 1% Consumer Loans 13% 8% Breakup as a % of Total Funded + Non Funded Book Breakup as % of Funded Book Wheels 8% 53 IDFC FIRST Bank#55Strong & consistent growth in Retail and Commercial Book over the last decade. Section 5C: Assets Update The bank has a rich history of growing the loan book in retail and commercial finance with low NPA levels of Gross and Net NPA of ~2% and 1% respectively including the experience of both institutions put together. We have developed deep expertise in this business. Retail & Commercial Book (Rs crore) 59,507 8,582 42,209 6,407 86,052 75,404 10,496 10,104 75,556 65,300 50,925 (Pre-merger) 7,693 35,802 1,185 6,508 Mar-18 Mar-19 Mar-20 Mar-21 Dec-21 Retail Commercial 54 IDFC FIRST Bank#56Further, the Loan book in Retail segment is well diversified across many business lines and now constitutes 62% of total Funded Assets Section 5C: Assets Update Dec-20 Digital, Gold loan and Others Credit Card Rural Finance Consumer Loans 22% Retail Book 18% Retail Book (% of Total Funded Assets) 5% 0% Rs. 58,988 Cr 53% Dec-21 Digital, Gold loan and Others 9% Credit Card 2% HL 16% HL 14% Rural Finance 16% Wheels 16% LAP 25% Consumer Loans 21% Rs. 75,556 Cr 62% Wheels 13% LAP 23% 55 IDFC FIRST Bank#57The Bank has reduced concentration risk on the asset side since merger; Top 10 borrowers' concentration reduced significantly Section 5C: Assets Update The non-infra corporate funded assets were reduced by 3% in the Infrastructure financing (Rs crore) has reduced by 31% in the last year 2 in Rs. crore 1 in Rs. crore last year 32,155 26,832 27,039 23,207 22,499 21,459 21,647 14,840 10,808 8,051 Mar-18 Mar-19 Mar-20 Mar-21 Dec-21 3 The Bank reduced Infrastructure financing portfolio as % of total funded assets from 37% (Mar-18) to 6.6% (Dec-21) 4 36.7% 19.4% 13.9% 9.2% 6.6% Mar-18 Mar-19 Mar-20 Mar-21 Dec-21 The Bank also proactively reduced the concentration risk by improving top 10 borrowers' concentration from 18.8% (Mar-18) to 4.3% (Dec-21) 18.8% 9.8% 7.2% 5.9% 4.3% Mar-18 Mar-19 Mar-20 Mar-21 Dec-21 Mar-18 Mar-19 Mar-20 Mar-21 Dec-21 56 IDFC FIRST Bank#58Section 5C: Assets Update Funded Assets Breakup Funded Assets (In Rs. Crore)¹ - Home Loan - Loan Against Property - Wheels Dec-20 Sep-21 Dec-21 Growth YoY% 8,307 10,671 11,968 44% 15,012 16,945 17,412 16% 9,268 9,164 10,033 8% - Consumer Loans 13,159 14,564 15,818 20% - Rural Finance² 10,304 11,315 11,934 16% - Digital, Gold Loan and Others 2,852 5,292 6,729 136% - Credit Card 86 1,233 1,662 1833% Retail Book 58,988 69,185 75,556 28% Commercial Finance³ 9,072 9,865 10,496 16% - Corporate 22,374 20,822 21,647 -3% - Infrastructure - Others4 Wholesale Funded Assets Total Funded Assets Note: 11,602 10,142 8,051 -31% 8,433 7,256 6,470 -23% 42,409 38,220 36,167 -15% 110,469 117,270 122,219 11% 1. The figures above are gross of Inter-Bank Participant Certificate (IBPC) transactions. 2 Rural Finance includes funding to Self Help Groups, Kisan Credit Cards and Small Enterprise loans. 3. Commercial Finance includes Business Loans, Commercial Vehicle loans and Trade Advances. 4. Others include Security Receipts, Loan converted into Equity, PTC and RIDF. 57 IDFC FIRST Bank#59SECTION 5: BUSINESS & FINANCIAL PERFORMANCE OF THE BANK 5A. Management Commentary on Q3 FY22 Results 5B. Update on Liabilities 5C. Assets Update 5D. Asset Quality 5E. Key Financial Parameters Balance Sheet Income Statement Capital Adequacy IDFC FIRST Bank#60Q3-FY22 results - Asset Quality Asset Quality Parameters improved during the quarter Particulars Dec-21 QoQ Change (in bps) Retail & Commercial Loans GNPA 2.92% (53) NNPA 1.28% (37) Corporate GNPA 2.52% (33) NNPA 0.39% (45) Infrastructure GNPA 20.07% 424 NNPA 11.58% 169 Total GNPA 3.96% (31) NNPA 1.74% (35) Comments Section 5D: Asset Quality The Gross and Net NPA of the Bank has come down significantly by 109 bps since Mar-21. We expect this to further come down to ~2% and ~1% in due course. The Provision Coverage Ratio stood at 57% as on December 31, 2021. The quality of the accounts which are getting added incrementally to the Corporate book is excellent. The PCR% on NPA Book stood at 85% as on December 31, 2021. The legacy infrastructure book is already reduced to 6.6% of the total funded assets from 21.7% since merger. We feel that there are no significant legacy accounts that would bother us going forward. At Bank Level, the Provision Coverage Ratio stood at 57%. Excluding the one toll account where we expect to recover our dues, and gross of technical write-offs, our PCR would have been 75%. 59 IDFC FIRST Bank#61Asset quality of the Bank continues to improve sequentially GNPA NNPA 2.83% Bank 4.61% 4.27% 4.15% 3.96% 2.32% 2.09% 1.86% 1.74% 1.23% Dec-19 (Pre-Covid) PCR% 57.34% Section 5D: Asset Quality • The Asset Quality of the Bank has improved as compared to last quarter driven by the improvements in retail, commercial and corporate segments. • PCR including technical write-offs and excluding one large legacy road infrastructure account (toll) which moved to NPA in Q1-FY22 was at 75% as on December 31, 2021 Mar-21 Jun-21 Sep-21 (Post Covid 1.0) (During Covid 2.0) (During Covid 2.0) 56.23% 50.86% 52.06% Dec-21 (Pre-Covid 3.0) 57.06% • Without the one legacy infrastructure (toll) NPA account as mentioned earlier, the GNPA and NNPA would have been 3.24% and 1.14% with PCR at 66% as on December 31, 2021 60 IDFC FIRST Bank#62Η Asset Quality - Retail And Commercial Finance IDFC FIRST Bank#63Retail and Commercial Segment asset quality continues to improve sequentially. -GNPA NNPA 2.26% 1.06% Dec-19 (Pre-Covid) PCR% 53.67% Section 5D: Asset Quality 4.01% 3.86% 3.45% 2.92% 1.90% 1.82% 1.66% 1.28% Mar-21 Jun-21 Sep-21 Dec-21 (Post Covid 1.0) (During Covid 2.0) (During Covid 2.0) (Pre-Covid 3.0) The GNPA and NNPA of Retail and Commercial Finance has improved by 53 bps and 37 bps respectively during the quarter. The lead indicators, including improvement in cheque bounces on first presentation, collection efficiency, and recovery rates point to lower NPA and lower credit losses going forward. Based on the portfolio analysis of the key indicators, the Bank expects to reduce Gross NPA and Net NPA to pre- COVID levels. 53.68% 53.84% 52.90% 56.86% 62 IDFC FIRST Bank#64Key input Indicators are showing improvement, which points to lower delinquency and credit losses in future. Section 5D: Asset Quality The bank has Improved quality of Sourcing as a result, New to Credit customers as % incremental bookings have reduced from 17% to 10%, indicating improved quality. Similarly, the Customers having Bureau score > 700 has sharply improved from 61% to 84%. 17% 16% 13% 12% 10% 10% 68% 61% 60% 83% 84% 80% Jan'19 to Jul'19 to Jan'20 to Jul'20 to Jun'19 Dec'19 Jun'20 Dec'20 Jan'21 to Jun'21 Jul'21 to Dec'21 Jan'19 to Jun'19 Jul'19 to Dec'19 Jan'20 to Jun'20 Jul'20 to Dec'20 Jan'21 to Jun'21 Jul'21 to Dec'21 63 IDFC FIRST Bank#65Improved indicators of Credit Quality Section 5D: Asset Quality The Bank tracks its Asset Quality on a) Cheque Bounces on Portfolio b) Cheque bounces on new book c) collection on Cheque Bounces d) Recovery on NPA accounts e) Vintage Analysis of the Book Key quality Indicators showing improvement which points to lower delinquency and credit losses in future. We are improving on all these points. The Bank is confident of meeting the guidance of 2:1:2, i.e. 2% GNPA, 1% NNPA and 2% of Credit Loss, in due course. Early Bucket cheque Bounce Rates (on Principal Outstanding) is back to Pre-Covid (Mar-20) Levels (x) for urban retail. 2.53 Early Bucket Collection Efficiency (urban retail) has surpassed pre COVID levels (Feb 2020). 1.16 1.18 1.00 1.12 1.01 98.9% 89.2% dur Mar-20 Sep-20 Mar-21 Jun-21 Sep-21 Dec-21 98.4% 99.2% 98.7% 99.3% 99.4% Feb-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 64 IDFC FIRST Bank#66Η Asset Quality - Corporate and Infrastructure Financing IDFC FIRST Bank#67Asset Quality of Corporate book (Non-Infra) continues to improve -GNPA NNPA Corporate 3.08% 1.58% 3.98% 2.91% 2.85% 2.52% 1.92% 1.25% 0.39% 0.84% Dec-19 (Pre-Covid) Mar-21 (Post Covid 1.0) PCR% 49.35% 52.73% Sep-21 Jun-21 (During Covid 2.0) (During Covid 2.0) 57.60% 71.02% Dec-21 (Pre-Covid 3.0) 84.83% Section 5D: Asset Quality The Book in the corporate segment has seen improvement in asset quality on a consistent basis since the spike due to COVID-19. We follow prudent underwriting, reduction of concentration risk, proper industry and customer selection processes. The PCR on this segment is 85% as on December 31, 2021. 66 IDFC FIRST Bank#68NPA in Infrastructure book is high, but constituted only 6.6% of the Total Funded Assets as on Dec 31, 2021. Section 5D: Asset Quality -GNPA NNPA Infrastructure 15.65% 15.83% 20.07% During the current quarter, a toll account of Rs. 248 crore slipped into NPA which was part of the reported identified standard asset pool in previous quarters. Infrastructure book continues to decline as planned. The infrastructure book has shrunk to just Rs. 8,051 crore from Rs. 22,710 crores at merger. 11.58% 9.84% 9.89% 5.76% 4.69% 1.23% 1.35% Dec-19 (Pre-Covid) Mar-21 (Post Covid 1.0) Jun-21 (During Covid 2.0) (During Covid 2.0) Sep-21 Dec-21 (Pre-Covid 3.0) PCR% 74.64% 77.66% 41.13% 41.67% 47.87% 67 IDFC FIRST Bank#69In addition to the declared NPAs, the Bank has proactively identified stressed accounts out of the standard accounts, and provided for the same. Section 5D: Asset Quality PCR Client Description (Rs. Crore) O/S Exposure Provision % Thermal Power Project in Orissa 501 501 100% Housing Finance Arm of a large Corporate Conglomerate 215 215 100% headquartered in Mumbai Wind Power Projects in AP, GJ, KN, RJ 150 40 40 Logistics Company in Karnataka Solar Projects in RJ 100 100 79 Comments 26% 100% 0% Account suffers from delayed payments from Discoms. We expect the account to be resolved leading to a positive economic value to the Bank, as the account is fully provided for. Our exposure is to Housing Finance Company belonging to this distressed Conglomerate engaged in infrastructure, financial services, media etc. Lending banks are running a process for management change, where a new potential owner has been identified by the CoC. We expect to get partial recovery which will be P&L accretive to us, as the account is fully provided. Account servicing was earlier delayed. The project is now showing improved financial performance and is servicing debt regularly from cash flows from the project, with DSRA getting built up. However, the sponsor is still undergoing a resolution process. The group is a Bengaluru based Coffee Group, and has been under financial stress. The Bank has initiated legal proceedings against the company. An RP has been appointed to manage the company affairs and look for potential bidders. RP along with the COC is working towards identifying appropriate resolution plan. The projects are performing well and have serviced debt regularly. However, the sponsor entity is undergoing resolution process leading to a deteriorating maintenance of the project. Lenders have put together a maintenance plan – we expect economic value to be preserved. The account has been servicing debt. However, the sponsor entity is undergoing resolution process and the project requires additional cash flows for pending maintenance work. The project is generating required cashflows and is servicing debt. However, the sponsor is undergoing resolution. Repayments have been regular so far. Toll Road Projects in TN 27 10 37% Wind Power Projects in KN and RJ 11 11 100% Total Stressed Pool Identified 1,083 877 81% The Identified Stressed Book of Rs. 1,083 crore has a Provision Coverage of 81% as on December 31, 2021. 68 IDFC FIRST Bank#70Identified Stressed Assets pool (apart from declared NPAs) significantly reduced from Rs. 4,138 crore at merger to only Rs. 1,083 crore as on December 31, 2021. Section 5D: Asset Quality 23% 47% 47% 50% 49% 52% 48% 51% 48% O/s Exposure Provision Provision coverage All amounts are in Rs. crore unless specified 67% 67% 81% The Bank expects no significant impact of legacy loan book going forward. 4,138 3,804 3,544 3,518 3,205 3,195 2,717 2,528 2,264 957 Mar-19 1,786 1,663 1,773 1,569 1,668 1,303 1,285 1,371 1,352 1,082 1,083 915 903 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 877 Dec-21 Note: The Bank has received the repayment of Bonds of one large telecom account (not forming part of the above pool) on schedule which was due in Dec-21 and Jan-22. Also, a toll account of Rs. 248 crore slipped into NPA which was part of the reported identified standard asset pool in previous quarters. 69 IDFC FIRST Bank#71= SECTION 5: BUSINESS & FINANCIAL PERFORMANCE OF THE BANK 5A. Management Commentary on Q3 FY22 Results 5B. Update on Liabilities 5C. Assets Update 5D. Asset Quality 5E. Key Financial Parameters Balance Sheet ✓ ✓ Income Statement Capital Adequacy IDFC FIRST Bank#72Balance Sheet Section 5E: Key Financial Parameters Balance Sheet Growth (%) In Rs. Crore Shareholders' Funds Deposits Dec-20 Sep-21 Dec-21 (Y-o-Y) 17,668 20,350 20,649 17% 84,294 90,235 92,765 10% - Retail Deposits 58,435 64,140 64,510 10% - Wholesale Deposits (including CD) 25,859 26,095 28,255 9% Borrowings 40,805 52,603 50,792 24% Other liabilities and provisions 12,909 9,314 10,027 -22% Total Liabilities 155,676 172,502 174,232 12% Cash and Balances with Banks and RBI 7,141 17,019 17,567 146% Net Funded Assets 106,263 111,353 116,422 10% - Net Retail Funded Assets 67,966 76,838 83,837 23% - Net Wholesale Funded Assets* 38,297 34,515 32,585 -15% Investments 33,037 34,881 31,550 -4% Fixed Assets 1,233 1,329 1,333 8% Other Assets 8,003 7,920 7,360 -8% Total Assets 155,676 172,502 174,232 12% *includes credit investments (Non-Convertible Debentures, RIDF, PTC, SRS and Loan Converted into Equity) 71 IDFC FIRST Bank#73Quarterly Income Statement Section 5E: Key Financial Parameters Income Statement In Rs. Crore Interest Income¹ Interest Expense Q3 FY21 Growth (%) Q2 FY22 Q3 FY22 Y-o-Y 4,101 4,101 4,429 8% 2,209 1,828 1,849 -16% Net Interest Income 1,892 2,272 2,580 36% Fee & Other Income 582 658 744 28% Operating Income (Excl Trading Gain) 2,474 2,930 3,324 34% Trading Gain² 269 122 25 -91% Operating Income 2,743 3,052 3,349 22% Operating Expense¹ 1,991 2,359 2,579 30% Pre-Provisioning Operating Profit (PPOP) 753 693 770 2% Core PPOP(Ex. Trading gain) 484 571 745 54% Provisions² 574 475 392 -32% Profit Before Tax Tax 179 218 378 111% 49 66 97 97% Profit After Tax 130 152 281 117% 1. Loan Servicing Fees paid to Business correspondents (incl IFBL) has been re-classified from interest income to operating expenses effective Q4 FY21, prior period numbers are also reclassed accordingly. 2. As per the RBI guidelines dated 30th Aug, 2021, provisions/write-back for mark-to market depreciation on investments in AFS and HFT has been classified under "Other Income", prior period numbers are reclassed accordingly 72 IDFC FIRST Bank#74Nine Months - Income Statement In Rs. Crore Interest Income¹ Interest Expense Net Interest Income Fee & Other Income Operating Income (Excl Trading Gain) Trading Gain² Operating Income Operating Expense¹ Pre-Provisioning Operating Profit (PPOP) Core Pre-Provisioning Operating Profit (Ex. Trading gain) Provisions² Profit Before Tax Tax Profit After Tax Section 5E: Key Financial Parameters Income Statement 9M FY21 Growth (%) 9M FY22 Y-o-Y 11,975 12,619 5% 6,555 5,582 -15% 5,420 7,037 30% 1,022 1,851 81% 6,442 8,887 38% 944 540 -43% 7,386 9,428 28% 4,938 6,970 41% 2,448 2,457 0% 1,504 1,917 27% 2,015 2,739 36% 433 (282) 108 (85) 324 (197) 1. Loan Servicing Fees paid to Business correspondents (incl IFBL) has been re-classified from interest income to operating expenses effective Q4 FY21, prior period numbers are also reclassed accordingly. 2. As per the RBI guidelines dated 30th Aug, 2021, provisions/write-back for mark-to market depreciation on investments in AFS and HFT has been classified under "Other Income", prior period numbers are reclassed accordingly 73 IDFC FIRST Bank#75Section 5A Management Results Q3-FY22 results: Our Profits are subdued due to 3 reasons, which will be addressed Commentary on Q3 FY22 in due course • • • • • Legacy High Cost Borrowings to run off: The Bank is carrying Rs. 26,163 crore of legacy high cost borrowings which is currently dragging the P&L by around Rs. 250 crore every quarter(if replaced at our incremental cost of funds of less than 5%). These liabilities have residual average maturity of 2.1 years. As they mature and are replaced by incremental low cost liabilities, the Bank expects to add Rs. 1,000 crore at PBT level. Loss on Retail Liabilities to reduce as we scale up: Since merger in Dec-18, the Bank has opened 393 branches and have installed 615 ATMs apart from investing in necessary digital capabilities. The Bank is currently incurring losses of ~Rs. 325-350 crore every quarter from the Retail Liabilities business segment. As the Bank scales up its retail liability businesses and effectively start cross-sell, then losses will reduce/fade away and this will add to profit to that extent. Investment in setting up the Credit Cards business: The Credit Cards business had highly successful launch. Credit Card business usually has high setup and technology costs. Profitability is achieved when the outstanding book achieves the required scale. The Bank has already issued more than 5.3 lakh credit cards since launch in January 2021. Our business is directly originated and we have yet not had to engage DSAs for our business. We expect this business to break even and become profitable at scale. Loss from this business at this stage is around Rs. 75 crore per quarter at this stage. We believe that all the above three items mentioned above which are currently yielding negative returns for the will get addressed in due course. We feel that as these three items are addressed, ROA and ROE will naturally get addressed and we will move towards RoE of around 15-16%. Finally, we have excess liquidity and have LCR of 149% against the regulatory requirement of 100%. This is a -ve drag to the P&L and the Bank would work forward to reducing the excess liquidity so as to reduce the drag on the P&L in the upcoming quarters. 74 IDFC FIRST Bank#76Capital Adequacy Ratio is strong at 15.38% as on December 31, 2021 Section 5E: Key Financial Parameters Capital Adequacy In Rs. Crore Common Equity Tier 2 Capital Funds Total Capital Funds Total RWA CET 1 Ratio (%) Total CRAR (%) The regulatory requirement for the Capital Adequacy Ratio is 11.5%. Dec-20 Sep-21 Dec-21 17,287 19,606 19,921 629 993 740 17,917 20,600 20,661 1,25,052 1,32,057 1,34,296 13.82% 14.85% 14.83% 14.33% 15.60% 15.38% 75 IDFC FIRST Bank#77Table of 11 1 SECTION 1: EXECUTIVE SUMMARY FOR Q3 FY22 SECTION 2: CREATION OF IDFC FIRST BANK 19 SECTION 3: VISION & MISSION OF IDFC FIRST BANK Contents 24 SECTION 4: PRODUCT OFFERING ווי 39 SECTION 5: BUSINESS AND FINANCIAL PERFORMANCE 76 SECTION 6: BOARD OF DIRECTORS & KEY SHAREHOLDERS IDFC FIRST Bank#78Board of Directors: MD & CEO Profile Section 6: Board of Directors & Key Shareholders Vaidyanathan worked with Citibank from 1990-2000 in retail banking, then set up ICICI Group's retail banking from 2000-2009. He built ICICI Bank's branch network to 1411 branches and 28 million customers, built a large retail deposits & CASA business, and built retail loans including mortgages, auto loans, credit cards and personal credit businesses to Rs. 1.35 trillion ($30 bn). He was appointed at the Board of ICICI Bank in 2006 at age 38. In 2009, he became the MD and CEO of ICICI Prudential Life Insurance Company in India. In 2010, he quit ICICI Group for an entrepreneurial opportunity to acquire an NBFC with an idea to convert it to a bank focused on consumer and MSME lending. On acquiring equity stakes, he shut down all non-core businesses like broking and real estate financing, and instead used the NBFC platform to build MSME and Consumer Financing businesses, based on new technologies and algorithms. Between 2010 to 2018, he grew the loan book from Rs. 94 crores to Rs. 29,600 crores (US$4.05b), grew the equity capital from Rs. 691 crores (US$118 m) to Rs. 3,993 crores (US$600 m), reduced Gross NPA from 5.3% to 1.9%, reduced Net NPA from 3.6% to 1%, acquired 7 million customers, got the long-term credit rating upgraded from A+ to AAA, turned around the company from losses of US$5 m (2010) to profit of US$50 m (2018), and increased the market cap 10 times from Rs. 780 crores (US$120 m) to Rs. 8,200 crores (US$1.2 b) between 2012 to 2018. Capital First was growing at a 5-year CAGR of loan growth of 30%, and 55% in PAT between 2013-2018. Then, in order to secure a commercial banking license, he agreed to merge Capital First with IDFC Bank in December 2018 and took over as the MD and CEO of the merged entity. Since then he has increased retail loan book to Rs. 85,337 crores, and grown retail from 36% at merger to 70% of loans, increased NIM from 2.9% at merger to 5.90%, increased CASA from 8.7% to 51.5%, turned the bank into profitability, and is currently busy converting the bank into a world-class retail bank in India. The bank now has over 10 million customers and loan book of Rs. 1.2 lac crores (~US$16 bn). He believes India provides unlimited opportunity in financial services in India. During his career, he and his organization have received a number of domestic and international awards including the prestigious CNBC Awaaz Entrepreneur of the year 2020, CNBC Asia's "Innovative company of the year" India Business Leader Awards-2017, "Most Inspirational Leveraged Management Buyout, India 2018" by CFI Awards, "Entrepreneur of the Year" Award at Asia Pacific Entrepreneurship Awards 2017, "Transformational Leader 2018" by CFI Awards UK, "Financial Services Company of the Year, 2018 - VC Circle", "Outstanding contribution to Financial Inclusion, India, 2017" from Capital Finance, London, "Most Promising Business Leaders of Asia" 2016 by Economic Times, 'Outstanding Entrepreneur Award' in Asia Pacific Entrepreneurship Awards 2016, Business Today - India's Most Valuable Companies 2016 & 2015, Economic Times 500 India's Future Ready Companies 2016, Fortune India's Next 500 Companies 2016, Dun & Bradstreet India's Top 500 Companies & Corporates 2016 & 2015. During his prior stint, awards included "Best Retail bank in Asia 2001", "Excellence in Retail Banking Award" 2002, "Best Retail Bank in India 2003, 2004, and 2005" from the Asian Banker, "Most Innovative Bank" 2007, 77 "Leaders under 40" from Business Today in 2009, and was nominated for "Retail Banker of the Year" by EFMA Europe for 2008. He is an alumnus of Birla Institute of Technology and Harvard Business School (Advanced Management Program). He has run 23 half-marathons and 8 full marathons.#79Board of Directors Section 6: Board of Directors & Key Shareholders MR. SANJEEB CHAUDHURI - PART-TIME NON-EXECUTIVE CHAIRPERSON (INDEPENDENT DIRECTOR) Mr. Sanjeeb Chaudhuri is a Board member and Advisor to global organizations across Europe, the US and Asia. He has most recently been Regional Business Head for India and South Asia for Retail, Commercial and Private Banking and also Global Head of Brand and Chief Marketing Officer at Standard Chartered Bank. Prior to this, he was CEO for Retail and Commercial Banking for Citigroup, Europe, Middle East and Africa. He is an MBA in Marketing and has completed an Advanced Management Program. MR. AASHISH KAMAT - INDEPENDENT DIRECTOR Mr. Aashish Kamat has over 30 years of experience in the corporate world, with 24 years being in banking & financial services & 6 years in public accounting. He was the Country Head for UBS India, from 2012 until his retirement in January 2018. Prior to that he was the Regional COO/CFO for Asia Pacific at JP Morgan based out of Hong Kong. Before moving to Hong Kong, he was in New York, where is was the Global Controller for the Investment Bank (IB) at JP Morgan in New York; & at Bank of America as the Global CFO for the IB, and, Consumer and Mortgage Products. Mr. Kamat started his career with Coopers & Lybrand, a public accounting firm, in 1988 before he joined JP Morgan in 1994. DR. (MRS.) BRINDA JAGIRDAR - INDEPENDENT DIRECTOR Dr. (Mrs.) Brinda Jagirdar, is an independent consulting economist with specialization in areas relating to the Indian economy and financial intermediation. She is on the Governing Council of Treasury Elite, a knowledge sharing platform for finance and treasury professionals. She retired as General Manager and Chief Economist, SBI, based at its Corporate Office in Mumbai. She has a brilliant academic record, with a Ph.D. in Economics from the Department of Economics, University of Mumbai, M.S. in Economics from the University of California at Davis, USA, M.A. in Economics from Gokhale Institute of Politics and Economics, Pune and B.A. in Economics from Fergusson College, Pune. She has attended an Executive Programme at the Kennedy School of Government, Harvard University, USA and a leadership programme at IIM Lucknow. MR. HEMANG RAJA - INDEPENDENT DIRECTOR Mr. Hemang Raja, is an MBA from Abeline Christian University, Texas, with a major in finance. He has also done an Advance Management Program (AMP) from Oxford University, UK. He has vast experience in the areas of Private Equity, Fund Management and Capital Markets in companies like Credit Suisse and Asia Growth Capital Advisers in India as MD and Head - India. He has served on the executive committee of the board of the National Stock Exchange of India Limited; also served as a member of the Corporate Governance Committee of the BSE Limited. 78 IDFC FIRST Bank#80Board of Directors Section 6: Board of Directors & Key Shareholders MR. PRAVIR VOHRA - INDEPENDENT DIRECTOR Mr. Pravir Vohra is a postgraduate in Economics from St. Stephen's College, University of Delhi & a Certified Associate of the Indian Institute of Bankers. He began his career in banking with SBI where he worked for over 23 years. He held various senior level positions in business as well as technology within the bank, both in India & abroad. The late 1990s saw Mr. Vohra as Vice President in charge of the Corporate Services group at Times Bank Ltd. In January 2000, he moved to the ICICI Bank group where he headed a number of functions like the Retail Technology Group & Technology Management Group. From 2005 till 2012 he was the President and Group CTO at ICICI Bank. MR. S GANESH KUMAR - INDEPENDENT DIRECTOR Mr. S Ganesh Kumar was the Executive Director of the Reserve Bank of India. He was with the Reserve Bank of India for more than three decades. His most recent responsibilities included the entire gamut of Payment and Settlement Systems, creation and development of strategic plans for the Bank and to take care of the external investments and manage the foreign exchange reserves with the central bank. Mr. Kumar is a post graduate in Management having experience in varied fields such as marketing, market research, banking, finance, law, and Information Technology. MR. AJAY SONDHI - NON-EXECUTIVE NON INDEPENDENT DIRECTOR Mr. Ajay Sondhi, is a 2017 Fellow, Harvard Advanced Leadership Initiative, MBA - Finance from JBIMS, Mumbai University, and B.A. in Economics (Honors) from St. Stephens College, Delhi University. He is a seasoned Financial Services and Board professional with extensive Indian and global experience. Most recently he was Founder & CEO of Sentinel Advisors Pte Ltd, Singapore, a boutique business and strategy advisory firm. He was previously MD and Regional Manager for PWM at Goldman Sachs, Singapore. He has had a long career in banking, and has held several senior leadership roles in the industry in India and overseas. MR. VISHAL MAHADEVIA - NON-EXECUTIVE NON INDEPENDENT DIRECTOR Mr. Vishal Mahadevia joined Warburg Pincus in 2006 & is a member of the firm's executive management group. Previously, he was a Principal at Greenbriar Equity Group, a fund focused on private equity investments in the transportation sector. Prior to that, Mr. Mahadevia worked at Three Cities Research, a New York-based PE fund, & as a consultant with McKinsey & Company. He received a B.S. in economics with a concentration in finance & B.S. in electrical engineering from the University of Pennsylvania. 79 IDFC FIRST Bank#81Shareholding Pattern & Key Shareholders as of December 31, 2021 Scrip Name IDFC FIRST Bank (BSE: 539437, NSE:IDFCFIRSTB) President of India, 4.2% Other Body Corporate, 1.1% Trusts and Clearing Members, 0.1% Key Shareholders Section 6: Board of Directors & Key Shareholders (through their respective various funds and affiliate companies wherever applicable) IDFC Financial Holding Company Limited % Holding Public (Incl. NRIs), 25.3% MF/Insurance/B ank/AIF/FI, 10.4% 36.51 Warburg Pincus through its affiliated entities 9.07 President of India Odyssey 44 4.21 3.68 ICICI Prudential Life Insurance 3.30 Promoters, 36.5% Baillie Gifford 2.83 Aditya Birla Asset Management 1.81 Vanguard 1.78 Bajaj Allianz Life Insurance 1.20 City of New York Group Trust 0.74 Ishares 0.71 FII/FPI/Foreign Corporate, 22.4% Total # of shares as of December 31, 2021: 621.21 Cr Book Value per Share as of December 31, 2021: Rs. 33.24 Market Cap. as on December 31, 2021: Rs. 30,036 Crore On a fully diluted basis, including shares and options, Mr. Vaidyanathan holds 2.25% of the equity of the Bank including shares held in his social welfare trust. 80 IDFC FIRST Bank#82IDFC FIRST Bank With our Customer Centric Approach, the Bank is ✓ Set for Growth. ✓ Set for Scale. ✓ Set for Profitability. ETHICAL DIGITAL F BANKING SOCIAL * GOOD 81 IDFC FIRST Bank#83Disclaimer This presentation has been prepared by and is the sole responsibility of IDFC FIRST Bank (together with its subsidiaries, referred to as the "Company"). By accessing this presentation, you are agreeing to be bound by the trailing restrictions. This presentation does not constitute or form part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer or recommendation to purchase or subscribe for, any securities of the Company, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contractor commitment therefore. In particular, this presentation is not intended to be a prospectus or offer document under the applicable laws of any jurisdiction, including India. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained in this presentation. Such information and opinions are in all events not current after the date of this presentation. There is no obligation to update, modify or amend this communication or to otherwise notify the recipient if information, opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. Certain statements contained in this presentation that are not statements of historical fact constitute "forward-looking statements." You can generally identify forward-looking statements by terminology such as "aim", "anticipate", "believe", "continue", "could", "estimate", "expect", "intend", "may", "objective", "goal", "plan", "potential", "proforma", "project", "pursue", "shall", "should", "will", "would", or other words or phrases of similar import. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other projections. Important factors that could cause actual results, performance or achievements to differ materially include, among others: (a) material changes in the regulations governing our businesses; (b) the Company's inability to comply with the capital adequacy norms prescribed by the RBI; (c) decrease in the value of the Company's collateral or delays in enforcing the Company's collateral upon default by borrowers on their obligations to the Company; (d) the Company's inability to control the level of NPAs in the Company's portfolio effectively; (e) certain failures, including internal or external fraud, operational errors, systems malfunctions, or cyber security incidents; (f) volatility in interest rates and other market conditions; and(g) any adverse changes to the Indian economy. This presentation is for general information purposes only, without regard to any specific objectives, financial situations or informational needs of any particular person. The Company may alter, modify, regroup figures wherever necessary or otherwise change in any manner the content of this presentation, without obligation to notify any person of such change or changes. IDFC FIRST Bank#84GANT ווי THANK YOU IDFC FIRST Bank#85Annexure Since the business model of Capital First is an important part of the business being built in the merged bank, the brief history and the progress of Capital First is being provided for ready reference to investors. 84 IDFC FIRST Bank#86Successful Trajectory of Growth and Profits at Capital First History of Capital First Limited Business Model of Capital First The Company was first listed on Stock Exchanges in January 2008. Between 2010 to 2012, Mr Vaidyanathan acquired a stake in the company and executed a Management Buyout (MBO) of the Company with equity backing of Rs. 810 crore from Warburg Pincus, and created a new brand and entity called Capital First. As part of the MBO, the company raised fresh equity, reconstituted a new Board and got new shareholders, including open offer to public. A brief history of the company is as follows: 2008-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 The Company was largely in the business of Wholesale Financing, PE, Asset Management, Foreign Exchange and Retail Equity Broking. The total AUM of the Company was Rs. 935 crore of which Retail AUM was 10%, Rs. 94 crore. Mr. V Vaidyanathan joined the Company and prepared the ground for executing a Management Buyout by taking significant corporate actions including divesting Forex JV to JV partner, merging a subsidiary NBFC with itself, by winding down other non core businesses and launching retail businesses in the Company. The Company launched technology driven financial businesses for the consumer and SME segments. The Retail loan book crossed Rs. 700 crore by March 2011. The Company presented this as proof of concept to many global private equity players for Buyout. The company continued to present the concept to prospective PE players throughout the year. The Company undertook additional corporate actions and further wound down non-core business subsidiaries and launched more retail financing businesses. The concept, model and volume of retail financing businesses gained traction and reached to Rs. 3,660 crore, 44% of the overall AUM. Mr. Vaidyanathan secured equity backing of Rs. 810 crore from Warburg Pincus for an MBO and thus Capital First was founded. As part of the transaction an open offer was launched, the Company raised Rs. 100 crore of fresh equity capital, a new Board was reconstituted and a new brand and entity "Capital First" was created. The Company further raised Rs. 178 crore as fresh equity at Rs. 153/ share. It acquired HFC license from NHB and launched housing finance business under its wholly owned subsidiary. Company's Assets under Management reached Rs. ~12,000 crore and the number of customers financed since inception crossed 10 lacs. The Company raised Rs. 300 crore through QIP at Rs. 390 per share from marquee foreign and domestic investors. The Company received recognition as "Business Today - India's most Valuable Companies 2015" and "Dun & Bradstreet - India's top 500 Companies, 2015". The Company scrip was included in S&P BSE 500 Index. Company's Assets under Management reached Rs. 20,000 crore and the number of customers financed since inception crossed 4.0 million. The Company raised fresh equity capital of Rs. 340 crore from GIC, Singapore through preferential allotment @ Rs. 712 per share. The Company received recognition as "CNBC Asia Innovative Company of the Year, IBLA, 2017", "Economic Times - 500 India's Future Ready Companies 2016" and "Fortune India's Next 500 Companies, 2016". The Company's Asset Under Management touch ~Rs. 27,000 crore and number of customers financed crossed 6.0 million. The Company received "Best BFSI Brand Award 2018" at The Economic Times Best BFSI Brand Awards 2018 and "Financial Services Company of the Year 2018" at VC Circle Awards 2018. In January 2018, the Company announced the merger with IDFC Bank subject to regulatory approvals. 85 IDFC FIRST Bank#87Successful Trajectory of Growth and Profits at Capital First. This page is an extract from Capital First investor Presentation of September 2018, which is the last quarter prior to merger. Presented here to demonstrate the capability of the core loan book and the track record of growth and profitability. From 31-March-2010 to 31-Mar-2018, the company has transformed across all key parameters including: Business Model of Capital First • The total Capital has grown from Rs. 691 crore to Rs. 3,993 crore 8-Yr CAGR % % Growth - FY18 • The Assets under Management increased from Rs. 935 crore to Rs. 26,997 crore Total Capital 25% 17% • The Retail Assets Under Management increased from Rs. 94 crore to Rs. 25,243 crore . The long term credit rating has upgraded Total AUM 52% 36% • The number of lenders increased Retail AUM 101% 38% • The Gross NPA reduced • The Net NPA reduced • Cumulative customers financed reached • The Net Profit/(Loss) increased from A+ to AAA from 5 to 297 from 5.28% to 1.62% from 3.78% to 1.00% over 7 million from loss of Rs. 32.2 crore in FY 09 to Profit of Rs. 327.4 crore (FY18) The 5 year CAGR for key parameters are as follows: Total Asset Under Management has grown at a CAGR of O Total Income has grown at a CAGR of Profit After Tax has grown at a CAGR of Earning Per Share has grown at a CAGR of 29% from Rs. 7,510 crore (FY13) to Rs. 26,997 crore (FY18) 47% from Rs. 357.5 crore (FY13) to Rs. 2429.6 crore (FY18) 56% from Rs. 35.1 crore (FY13) to Rs. 327.4 crore (FY18) 46% from Rs. 4.94 (FY13) to Rs. 33.04 (FY18) 86 IDFC FIRST Bank#88Capital First: the Return on Equity continuously improved over the quarters... This page is an extract from Capital First investor Presentation of September 2018, which is the last quarter prior to merger. Presented here to demonstrate the capability of the core loan book and the track record of growth and profitability. Business Model of Capital First All figures are annualised Raised Rs. 178 crore (Pref) in Q4-FY14 Raised Rs. 300 crore (QIP) in Q4-FY15 8.33% 4.93% FY15 FY14 11.09% 4.15% 2.96% 2.28% Q1 FY14 7.02% 10.29% 9.58% 8.89% 8.32% 10.14% FY16 11.20% 10.68% 10.08% *Highlighted figures are based on Indian AS in comparison to quarterly figures for earlier periods based on Indian GAAP. 11.39% Raised Rs. 350 crore (Pref) in Q3-FY17 13.31% FY18 11.93% FY17 12 87% 12.49% 12.10% 11.46% 14.51% H1-FY18 14.82% 14.47% 14.46% 14.08% 13.06% 87 Q2 FY19* IDFC FIRST Bank