#1IDFC FIRST Bank | आई डी एफ सी फर्स्ट बैंक BKC BRANCH Investor Presentation - Q1 FY24 IDFC FIRST Bank ווי#21 IDFC FIRST Bank Vision 2 Financial Highlights of Q1 FY24 3 Our Approach to building IDFC FIRST Bank 4 Products and Services TABLE OF CONTENTS 5 Deposits and Borrowings 6 Loans and Advances 7 Risk Management & Asset Quality 8 6 10 11 12 12 Profitability & Capital Credit Rating Board of Directors Shareholding Pattern Progress on ESG 13 Awards & Recognition#3IDFC FIRST Bank Vision "To build a world class bank in India, guided by ethics, powered by technology and to be a force for social good." Section 1: Vision 2 IDFC FIRST Bank#4Culture @ IDFC FIRST Bank Section 1: Vision partic "The founding years, which I call the next five years, are particularly important, as the DNA we establish now will be hard to correct later. We will make every effort to sell the right products to customers, avoid mis-selling, avoid selling such third-party products that make wonderful fees for us but at the cost of expensive products for the customer. If we make a mistake, we will apologise and correct it. After all, we do not want to take this Bank to great heights in profits and profitability while having earned any penny that truly does not belong to us." (Annual Report 2018-19) GE We want to touch the lives of millions of Indians in a positive way by providing high quality banking services to them, with particular focus on aspiring consumers and entrepreneurs of our new India, using contemporary technologies of wha correc to sell avoid produ us but pocke materi in a tra mistak it. Afte " 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. (Annual Report 2019-20) " 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 (Annual Report 2019-20) MD and CEO message to employees and shareholders (Annual Report 2019-20) Tetum UIT equity, and enjoying and admiration. We aspire to be on that list, and are passionate about building such a bank. We have already sown the seeds for such a bank. For a country as large and diverse as India, and a country set to be world's third largest economy by 2030, there are few "world- class" banks in India. (Annual Report 2019-20) 3 IDFC FIRST Bank#5Culture @ IDFC FIRST Bank Section 1: Vision After much debate, we settled in on three themes: Ethical Banking, Digital Banking and Social Good. This also goes well with our vision statement. Coding the DNA: By making this seal and sharing with employees, we are attempting to code the DNA of our employees. That's because we are an early stage bank and the DNA code we build will affect the long (Annual Report 2020-21) We will not dilute credit norms to get more business. We are very careful with our portfolio quality and we monitor indicators minutely. We rigorously subject the applications through 10 specific filters. We generally reject about 40-60% of the applications received by us based on product category as part of the above stringent filtration process. that were Don't underestimate the power I motivated of the 50% CASA Bank with a They were customers. powerful and tested lending cheme for credit to machine attached to it. ry credit to extension scholarship graduation, lowance of his greatly. stress tes 2014), de IL&FS cri Grass an average ( retail cred years, our growth ar Corporat Corporate lac crore corporate capital, te a cutting first featu products. regulatory Now coming to business, let me answer some key questions financing that may be on your mind. infra corp (Annual Report 2021-22) 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 (Annual Report 2020-21) embers are identified he Board, son only a o our focus mpare well hence the st reviews, etc. could er publicly. hortcuts to culture and the genes ur vision to I have always maintained that we are building a world class bank for the longer run and are not rushing it. We tick all boxes except one. We currently don't make the cut on only one count net profits. I believe we will address this issue in FY23 comprehensively. working seriously on the same. The cost to income ratio is coming down every year since the merger and will continue to trend materially down from hereon. (Annual Report 2021-22) MD and CEO message to employees and shareholders We are a universal bank with highly diversified sources of income. Apart from lending, we have launched several other new businesses such as cash management, Trade Forex, Wealth management, toll and transit, credit card business, segmented current accounts, start- up banking, and distribution of insurance and investment products. online purchase through a payment gateway and not insist (Annual Report 2021-22) CLOSING have always ank for the lo I boxes exce ustomer orie rowth potenti iversified by rowing marke le currently rofits. I believ xpect to see I see a strong get here to thi operating prof We look forwa schemes of to education, an combination In parallel, a r like e-gov. Di about which m our business. Our Bank, ove steps to creat forward. Befo would like to of our foundat We know that we are on to a wonderful model, and I am confident that if we stay the course and play with a straight massive long- bat, we will meet all aspirations of investors and other stakeholders. Hence, no matter the pressure, we 'communicate our strategy to all stakeholders in simple terms, stick to the plan, and deliver on the stated strategy. I am confident that with this approach, results will follow, it's only a matter of time. (Annual Report 2021-22) for focussed attention on this matter. She has written a note for us on the initiatives of the bank in this report. We believe we will have strong ROE, with the growth potential of a youthful-stage bank and strong technology orientation to leverage the future. (Annual Report 2021-22) the ban also tha services Yours si V Vaidy Managin IDFC FI GOVERNA Corporate Go model. We ma of accounting prudent risk m compliance et priority of our 4 IDFC FIRST Bank#6F Section 2: Financial Highlights of Q1 FY24#7Bank At a Glance - Q1 FY24 Loans and Advances Deposits Loans & Advances¹ Rs. 1,71,578 Cr (25% YoY) Asset Quality (Bank) GNPA% 2.17% NNPA%: 0.70% Asset Quality (Retail, Rural & SME) GNPA%: 1.53% Section 2: Financial Highlights - Q1 FY24 Customer Deposits Rs. 1,48,474 Cr (44% YoY) Diversification Retail Deposits 77% of customer deposits CASA ratio Profitability Core Operating Income Rs. 5,086 Cr (39% YoY) Core Operating Profit² Rs. 1,427 Cr (45% YoY) Profit After Tax Key Ratios Return on Assets 1.26% (Q1 FY23 -0.97%) Return on Equity 11.78% (Q1 FY23 - 8.96%) NNPA%: 0.52% 1 Note: Loans & Advances Includes credit substitutes 2 Excluding Trading Gains 46.5% Rs. 765 Cr (61% YoY) Capital Adequacy 16.96% 6 IDFC FIRST Bank#8Key Financial Highlights of Q1 FY24 (YoY movement) Section 2: Financial Highlights - Q1 FY24 Area Key Parameters Q1 FY23 Q1 FY24 Assets Loans & Advances Rs. 1,37,663 Cr Rs. 1,71,578 Cr Growth (%/bps) 25% Customer Deposits Rs. 1,02,868 Cr Rs. 1,48,474 Cr 44% Deposits CASA Ratio (%) 50.04% 46.47% -357 bps GNPA (%) - Bank level 3.36% 2.17% -119 bps - NNPA (%) Bank level 1.30% 0.70% -60 bps Asset Quality Provision Coverage Ratio - Bank 73.13% 83.12% 999 bps GNPA (%) - Retail, Rural & SME 2.12% 1.53% -59 bps NNPA (%) - Retail, Rural & SME 0.93% 0.52% -41 bps Profit/(Loss) After Tax Rs. 474 Cr Rs. 765 Cr 61% Profitability RoA% 0.97% 1.26% 29 bps RoE% 8.96% 11.78% 282 bps Capital Capital Adequacy Ratio (%) 15.77% 16.96% 119 bps 1. Total Loans & Advances (incl credit substitutes are Net of IBPC 2. Provision Coverage ratio includes technical write-offs 7 IDFC FIRST Bank#9Key Financial Highlights of Q1 FY24 (QoQ movement) Section 2: Financial Highlights - Q1 FY24 Area Key Parameters Q4 FY23 Assets Loans & Advances Rs. 1,60,599 Cr Q1 FY24 Rs. 1,71,578 Cr Growth (%/bps) 7% Customer Deposits Rs. 1,36,812 Cr Rs. 1,48,474 Cr 9% Deposits CASA Ratio (%) 49.77% 46.47% -330 bps GNPA (%) - Bank level 2.51% 2.17% -33 bps - NNPA (%) Bank level 0.86% 0.70% -15 bps Asset Quality Provision Coverage Ratio - Bank 80.29% 83.12% 283 bps GNPA (%) - Retail, Rural & SME NNPA (%) - Retail, Rural & SME 1.65% 1.53% -12 bps 0.55% 0.52% -3 bps Profit/(Loss) After Tax Profitability RoA% RoE% Capital Capital Adequacy Ratio (%) Rs. 701 Cr 3 Rs. 765 Cr 1.23% 3 12.30% 3 16.82% 9% 1.26% 3 bps 11.78% 4 16.96% -52 bps 14 bps 1. Total Loans & Advances includes credit substitutes and are Net of IBPC; 2. Provision Coverage ratio includes technical write-offs; 3. Adjusting for one-time items already called out in Q4 ‘23 4. ROE for Q1 FY24 impacted by ~60bps on account of equity capital raised of Rs. 2,196 crore during last week of March 2023. '238 IDFC FIRST Bank#10F Section 3: Our approach to building IDFC FIRST Bank#11Approach to build IDFC FIRST Bank Background . • IDFC Limited was a reputed Domestic Financial Institution which was awarded a commercial banking license, and set up IDFC Bank. As part of this process, IDFC Limited transferred its loan assets (largely corporate and infrastructure loans) and liabilities (largely infrastructure bonds and institutional borrowings) to IDFC Bank. In order to diversify into retail, IDFC Bank was looking for a successful retail franchise to merge with. Capital First Limited, was a retail & SME focused NBFC with proven track record of growth (5 year CAGR of 29%), asset quality (GNPA ~2%, NNPA ~1%) and profitability (5 year CAGR of 56%). The company grew from Rs. 94 crores in 2010 to Rs. 32000 crores in March 2018. Capital First was looking for a commercial banking license. • The two entities merged and thus IDFC FIRST Bank was created in December 2018. On merger the had the following issues in hand as reflected in the financials of 31st December 2018: a) We had a low CASA at 8.68%. Our total deposits & borrowings were Rs. 1,29,381 crores, of which only Rs. 10,400 crores (8.04%) were retail Deposits and Rs. 1,18,981 crores (91.96%) were institutional borrowing and deposits. b) As a DFI converted bank, our reported annualized NIM was 1.9% in the half year prior to the merger. Post expenses, this left little room for operating profits and PAT. c) The Bank had large and concentrated exposure in infrastructure and corporate Loans. Over the last 4 years, the bank has addressed almost all issues pertaining to legacy infrastructure assets, liabilities (CASA is now 46%), and profitability (FY 23 PAT of 2,437 crores). The Bank now looks forward to sustained growth with profitability from here on. 10 IDFC FIRST Bank#12Our approach to building IDFC FIRST Bank (1/3) Safety First Approach to build IDFC FIRST Bank In December 2018, when our Bank merged with Capital First, both institutions were asset focused firms with no retail liabilities, hence 91% of our liabilities were institutional. To address this, we prudently slowed down the loan growth to CAGR of only 5.1% for 3 years, and instead focused on increasing our retail deposit base. This approach has been successful and retail deposits are now 77% of our customer deposits. This approach of safety first helped strengthen the Bank's liability franchise and CASA ratio. Culture: Ethical The Bank believes income earned unethically is not worth earning. The Bank prioritizes ethics in all its dealings and in its product design. Accordingly, it designs all products with a "Near and Dear" Test, so that the employees of the Bank serve only such products they'd want to serve to their own loved ones. Capital The bank is well capitalized for growth with capital adequacy (including profits) of 16.96% (June 30, 2023). 11 IDFC FIRST Bank#13Our approach to building IDFC FIRST Bank (2/3) Approach to build IDFC FIRST Bank High Asset Quality In retail we have a track record of 12 years of maintaining our Gross NPA and Net NPA at around 2% and 1% respectively. During this period we have experienced multiple stress-tests, including economic slowdown (2010-2014), Demonetization (2016), GST implementation (2017), ILFS crisis (2018), Covid (2020-21) but our portfolio asset quality has remained high. Currently, our Gross NPA is 1.53% and Net NPA is 0.52% (June 30, 2023) Strong Profitability Technology Despite significant setup investments in our bank to address the issue of CASA and retail deposits, we've seen a strong rise in our PAT since the merger, increasing from near-zero to Rs. 2,437 crores in FY23. In Q1-FY24, the Bank has posted PAT of Rs. 765 crore. This is largely due to our strong incremental profitability. The bank is committed to investing in a modern and adaptable technology architecture that will support its future growth. This investment includes developing advanced capabilities for all areas of the Universal Bank such as controls, deposits, assets, cash management services, wealth management, an advanced app etc. 12 IDFC FIRST Bank#14Our approach to building IDFC FIRST Bank (3/3) Approach to build IDFC FIRST Bank Corporate Governance Our Bank has a distinguished Board of Directors comprising eminent, highly qualified, and extensively experienced individuals. All committees, with the exception of CSR, are led by independent directors. We respect the independence of control functions including risk, compliance, audit and financial controls. We believe they play an important role in building the organization and they are not given any business responsibilities. ESG and CSR We are committed to the cause of ESG. Our businesses are naturally aligned towards social good. We maintain high levels of Corporate Governance. We are making specific efforts on the Environment front in terms of going paperless, investing in green branches and offices, rationalizing travel etc. 13 IDFC FIRST Bank#15F Section 4: Products and Services Wide range of Fund and Non-Fund Based Products: The Bank launched many new products and services in building a strong, sustainable, diversified deposit and asset franchise power by digital innovations#16Section 4: Products and Services The Bank has developed a wide Product Suite of a Universal Bank Corporate Lending Working Capital demand Loans, Cash Credit, Term Loans, Corporate Bonds / NCDs, Foreign Currency Loans Retail Corporate Lending Lending Retail Lending Solutions Home Loans, vehicle Loans, Consumer Loans, Education Loans, Personal Loans, Used Car Loans, Gold Loans, Rural Finance, Tractor Finance SME Lending Solutions Supply Chain Financing Dealer finance, Vendor finance, TREDS, Factoring, Invoice discounting Treasury & Forex Solutions Correspondent banking, FX Solutions, Cross-border SWIFT, Government Bonds & Strips, Liberalized Remittance Scheme, External Commercial Borrowing, Treasury solutions incl. forwards, options, swaps etc. Supply Chain Financing Treasury & Forex Solutions IVE N ETHICAL * DIGITAL Transaction Banking & CMS NEFT/RTGS/IMPS Payments, Transfers (ACH, Direct debit), UPI & QR, Cheques, Demand drafts, Cash Delivery, Payroll Processing, BBPS Payments, Cash/ cheque collection, Cash Deposit machine Transaction Banking & CMS Trade Finance Letter of Credit & discounting, Bank Guarantee, Buyer's Credit / SBLC, Packing Credit in Foreign Currency & INR, Remittances (inward & outward), Preshipment & post shipment finance Trade Finance Solutions FASTag Tag Issuer, Toll Acquirer solution, 3-in- 1 solution including Toll, Parking & Fuel B BANKING SOCIAL-GOOD SME Lending Deposits & Accounts Loan Against Property, Business Banking, Working Capital Loans, Commercial Vehicle Loans, Micro Enterprise Loans, Trade Advance, Startup Banking CASA and Fixed Deposits Current Accounts, Savings Accounts, Fixed Deposits, Nostro/ Vostro Accounts, Overdrafts, Corporate Salary Accounts, Accounts for ONDC, Escrow Accounts, S A L ANK • NRI Banking NRI Banking NRE Accounts, NRO Accounts, Seafarer Accounts, FCNR Deposits, NRE/NRO Deposits Wealth Management & Distribution Wealth Management & Distribution Wealth Management, Distribution of Life Insurance, General Insurance, Credit Shield, Health Insurance, Mutual Funds, AIFS Credit Cards Fastag Credit Cards Wealth Credit Card, Private Credit Card, Millenia Credit Card, WoW Credit Card against Deposits, Corporate Card, Vistara Travel card, HP Fuel Card 15 IDFC FIRST Bank#17Section 4: Products and Services The Bank has a wide bouquet of products for consumers, MSMEs and Corporates Personal Banking: For salaried & self-employed individuals, the Bank provides various products to fulfill different financial needs across urban and rural India. Prime Home Loans Affordable Home Loans JLG Loans - Microfinance SME Banking: The bank provides a wide range of solutions including working capital and business loans for businesses. Loan against Property Micro Business Loans Corporate Banking: Comprehensive funded and non-funded product solutions for Corporate customers Working Capital Loans Car Loans Education Loans Gold Loans Business Loans Professional Loans Personal Loans Credit Cards Agri/Farmer Loans Commercial Vehicle Business Banking Jelect VISA LOFC FIRST BASE FAMILY Signatore Consumer Durable Loans Two Wheeler Loans Tractor Loans Trade Finance, Forex & CMS Solutions Term Loans 16 IDFC FIRST Bank#18The Bank has a wide range of Current and Savings Account Offerings Targeted for SMEs and Entrepreneurs . FIRST Booster Current Account Other Current Account Products Savings Account Products NRI Banking Products • Auto - Sweep funds into a FD above 2 lacs balance in the current account Section 4: Products and Services • • No pre-mature breakage penalty for breakage of FDs Nil average monthly balance requirement; Free VISA Platinum Debit Card with unlimited ATM transactions at IDFC FIRST Bank ATM; Free UPI QR and bulk payment; Complimentary doorstep banking; Zero transaction charges through NEFT/RTGS/IMPS Merchant Multiplier account with specific proposition for merchants, Startup Current Account for new age startups, TASC Institutional Account for specific needs of Trusts, Associations, Societies, Clubs, Educational Institutions, Hospitals World Business Accounts for the corporates with domestic & internal trades etc, Agri Multiplier Account for needs of Agri-based commodity traders • Savings accounts with attractive interest rates, health benefits, doorstep banking, higher insurance limits Zero charges for 28 services in its savings account customers with minimum balances as low as Rs. 10,000 Savings account propositions for Senior Citizens, Entrepreneurs, Defence Officials, Corporate Salary account holders Rupee denominated NRE accounts, NRO Accounts to its NRI customers; Seafarer Accounts for Marine Professionals with ease of use and contemporary banking app Fixed deposit offerings to its NRI customers like NRE & NRO Deposits, FCNR Deposits and Max Returns FD (INR) 17 IDFC FIRST Bank#19Our Digital Initiatives Significant traction on electronic platforms RTGS & NEFT payments through CMS solutions up by 27% YoY (vol.) FASISQ 95% Of the overall transactions are digital 3 ום Ranked 3rd Bharat Bill Payment System (BBPS): amongst 30 biller operating units UPI Transactions: Growth of ~104% over the last year and by ~15% over the last quarter 14.1 mn+ FASTag issued since launch Credit Card Spends: Growth of 72% YoY 1.7 mn+ Credit cards issued since launch in January 2021 POS Transactions (Q1FY24): (Vol): 62% growth YoY (Value): 49% growth YoY Section 4: Products and Services • IDFC FIRST Bank has been chosen as one of the first 8 Bank to conduct pilot of Central Bank Digital Current (CBDC). The Bank has already recorded many Retail & Wholesale transactions through CBDC. 18 IDFC FIRST Bank#20India's FIRST FASTAG with Triple Benefits - Toll, Fuel and Parking Section 4: Products and Services Largest Issuer bank Largest Acquirer Bank IDFC FIRST is the largest issuer among 38 Issuer banks in NETC with respect to FASTAG monthly activation numbers and value processed. IDFC FIRST Bank issuance business crossed 14.2 Million FASTAGS. Largest Acquirer Bank with 530+ Toll plaza and parking merchants. Issuance Value Issuance value has reached Rs. 55 crore per day in June 2023 IDFC FIRST Bank Credit Card customers can now link their card with IDFC FIRST FASTAG and enjoy seamless auto recharge Select EDFC FIRST BANK FAMILY Source: NPCI website FIRST forward NETCH Frosting FIRST forward IDFC FIRST Bark NETC FREYng A.MAYS YOU FAST Tag ek, fayde anek. FIDFC FIRST Bank ALWAYS YOU FIRST NOW SAVE FUEL AND TIME. Make cashless and contactless fuel payments. at all HPCL and select IOCL outlets with FIRSTforward FASTag FIRST forward' NETC) PRETED IDFC FIRST Bank ALWAYS YOU FIRST NOW THERE'S ONE LESS WORRY WHILE PARKING. With cashless and contactless parking payments at select parking lots through FIRST forward FASTag. F FUEL 19 19 IDFC FIRST Bank#21Wealth Management AUM up 58% YoY to Rs. 10,679 crores 1 Assisted Transactions: Digitally assisted transaction execution for Mutual Funds 2 Investment Dashboard: Assets managed by RM, including Product & Asset-Class split Section 4: Products and Services 3 Held-away Portfolio - to track client's non-IDFC First portfolio along with in-house portfolio 4 Actionable insights: FD/SIP maturity, customer cash-flows, birthday reminders, asset allocation, sectoral exposure 5 Portfolio Analytics: Customer portfolio drill down with Asset-class wise holdings & Capital Gain Reports 6 Investment Ideas: Risk adjusted curated portfolios, product discovery via collections & filters 7 Goal Based Investing: Goal creation, implementation and progress tracking 8 Detailed Product Information: scheme performance, risk profile suitability & minimum investment details THE DIGITAL BANKER Digital CX WINNER Private Banking WINNER INNOVATION AWARDS 2099 Awords N IDFC FIRST BANK IDFC FIRST BANK OUTSTANDING DIGITAL CX-INTERNET BANKING (WEALTH MANAGEMENT) BEST PRIVATE BANK FOR WEALTH CREATION & PRESERVATION Investment Workbench can now be accessed by RMs over the internet from their bank supported devices 20 20 IDFC FIRST Bank#22Section 5: Deposits and Borrowings a. CASA Deposits b. Customer Deposits C. Total Customer Deposits F d. Summary of Deposits and Borrowings e. Legacy High-Cost Borrowings#23b. Total Customer Deposits Deposits: Strong growth in Total Customer Deposits Section 5: Deposits & Borrowings Total Customer Deposits (Retail Deposits + Wholesale Deposits) has grown strongly by 4 Year CAGR (Mar-19 to Mar-23) of 36%. The Bank has 824 branches as of June 30, 2023. YoY-Jun-23 vs Jun-22 ↑44% QoQ-Jun-23 vs Mar-23^ ↑ 10% Driven by granular deposits from retail segment 4-Year CAGR: 36% 1,36,812 in Rs. crore 1,48,474 57,719 38,455 40,504 28,370 82,725 93,214 31 Mar 18 (Pre-Merger) 31 Dec 18 (At Merger) 31 Mar 19 31 Mar 20 31 Mar 21 31 Mar 22 31 Mar 23 30 Jun 23 ^ Excluding the outflow of Rs. 2,131 crore from one large government banking current account (as already called out in Q4-FY23 results) 22 IDFC FIRST Bank#24a. CASA Deposits Section 5: Deposits & Borrowings CASA Deposits - Bank has a demonstrated capability to grow CASA deposits In May 2021, we reduced deposit rates for balances upto Rs. 10 lacs by 300 bps from 7% to 4%. Despite this, our CASA deposit growth continues to be strong, growth of 27% YOY as of 30 June 2023. The Bank provides high levels of customer service and is a brand with a reputation as a clean and ethical institution, which has helped us grow our deposit base. YoY-Jun-23 vs Jun-22 ↑27% QoQ-Jun-23 vs Mar-23^ ↑ 3% Driven by granular retail CASA 4-Year CAGR: 74% 51,170 45,896 7,893 5,544 5,274 20,661 71,983 in Rs. crore 71,765 31 Mar 18 (Pre-Merger) 31 Dec 18 31 Mar 19 31 Mar 20 31 Mar 21 31 Mar 22 31 Mar 23 30 Jun 23 (At Merger) ^ Excluding the outflow of Rs. 2,131 crore from one large government banking current account (as already called out in Q4-FY23 results) 23 IDFC FIRST Bank#25a. CASA Deposits CASA Ratio at 46.5% Section 5: Deposits & Borrowings CASA Ratio stood at 46.5% as of June 30, 2023, as compared to 49.8% as of March 31, 2023, as incrementally during Q1 FY 24, the Bank raised more fixed deposits than CASA deposits. Average Daily Balance CASA deposits for the bank grew by 30% on a yearly basis. 11.5% 11.4% 8.7% 31.9% 51.7% 49.8% 48.4% 46.5% 31 Mar 18 (Pre-Merger) 31 Dec 18 31 Mar 19 31 Mar 20 31 Mar 21 31 Mar 22 31 Mar 23 30 Jun 23 (At Merger) 24 IDFC FIRST Bank#26c. Diversification of Deposits Section 5: Deposits & Borrowings Bank has Diversified its liabilities base: 77% of customer deposits are now Retail The Bank has transformed the liability profile in 4 years from wholesale to retail, in order to diversify the deposit base. The Retail wholesale Deposits mix has changed from 27 : 73 in Dec-18 to 77: 23 in Jun-23. Strong growth in retail deposits has significantly reduced dependency of the Bank on the wholesale deposits. Certificate of Deposits (short term money) has come down from Rs. 28,754 crores as of March 31, 2019 to Rs. 5,953 crores as of June 30, 2023. During this period, the customer deposit base grew from Rs. 40,504 crore to Rs. 1,48,474 crore. 73% 27% 41% 59% 23% Overall Customer Deposits 77% 27% 73% 24% 76% Dec-18 Mar-20 Mar-21 Rs. 38,455 crore Rs. 57,719 crore Rs. 82,725 crore Mar-22 Rs. 93,214 crore Mar-23 Rs. 1,36,812 crore Retail Deposits Wholesale Deposits 23% Jun-23 77% Rs. 1,48,474 crore 25 IDFC FIRST Bank#27d. Summary of Deposits & Borrowings Summary of Deposits & Borrowings Section 5: Deposits & Borrowings Particulars (in Rs Cr) Legacy Long Term Bonds Jun-22 Mar-23 Jun-23 YoY growth 6,624 6,411 6,148 -7% Legacy Infrastructure Bonds Refinance Other Borrowings Tier II Bonds Total Borrowings (A) CASA Deposits Term Deposits Total Customer Deposits (B) Certificate of Deposits (C) 7,958 6,915 6,901 -13% 17,630 20,990 19,910 13% 5,315 2,976 4,297 -19% 1,500 3,000 4,500 200% 39,026 40,292 41,756 7% 56,720 71,983 71,765 27% 46,148 64,829 76,709 66% 1,02,868 1,36,812 1,48,474 44% 10,481 7,826 5,953 -43% Money Market Borrowings (D) 16,662 16,921 13,985 -16% Borrowings & Deposits (A) + (B) + (C) + (D) 1,69,037 2,01,849 2,10,168 24% CASA Ratio (%) 50.0% 49.8% 46.5% -357 Average CASA Ratio % (On Daily Average Balance for the Quarter) 47.0% 47.7% 45.7% -125 26 IDFC FIRST Bank#28e. Legacy High Cost Borrowings Section 5: Deposits & Borrowings Bank continues to successfully run down the legacy high cost long term borrowings Balance In Rs. Cr Rol (%) As on Jun-22 As on Jun-23 FY24 FY25 FY26 Beyond FY26 Infrastructure Bonds 7,958 6,901 918 5,140 843 0 8.91% Long Term Legacy Bonds 6,624 6,149 1,310 1,226 3,611 0 9.11% Other Bonds 2,956 1,146 383 124 306 334 8.96% Refinance 4,869 1,860 930 930 0 0 8.25% Total 22,406 16,055 3,541 7,420 4,760 334 8.91% Because we have a DFI background, the legacy borrowings are costing the bank 8.91%. To simulate, if the Bank had replaced all high-cost legacy borrowings with the current cost of funds, the return on equity (annualized) for Q1-FY24 would be higher by ~100 bps. 27 IDFC FIRST Bank#29F Section 6: Loans & Advances Bank has a well diversified Credit Portfolio#30• Section 6: Loans & Advances The Bank has diversified its loan book across more than 20 business lines Emerging Enterprises. Financial Institutions 7% 8% Large Corporate 1% Other SME Loans 5% Other Corporates 3% Infrastructure Financing 2% Loan Book: June 30, 2023 Rs. 1,71,578 crore Rural Finance Gold Loan 0.2% 11% Other Retail Loans 7% Mortagages 23% ~28% of the total funded assets are backed by Business Banking 3% KCC Credit Card 2% 1% Education Loans 1% CV/CE Financing 2% Consumer Loans 13% Wheels 10% mortgage Other SME Loans consists of Loans to small business owners and entrepreneurs through products like business installment loans, micro business loans, trade advance etc with most loans < Rs. 5 crore. Loans & Advances are net of IBPC and include advances & credit substututes; Consumer Loans include personal loans, and consumer durable loan. Other Retail Loans include digital lending, revolving credit, retail portfolio buyout etc. 29 IDFC FIRST Bank#31Section 6: Loans & Advances Bank has brought down the legacy Infrastructure Project financing Book In the last 5 years, the Infrastructure financing book as % of overall Loans & Advances has come down from 36.7% to 2.2% as of June 30, 2023 36.7% Infrastructure Financing Book (Rs. Crore) % of Loans & Advances 26,832 19.4% 21,459 13.8% Decreasing trend of Infrastructure Financing Book 14,315 9.2% 10,808 5.3% 2.9% 6,891 2.2% 4,664 3,758 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Jun-23 30 IDFC FIRST Bank#32Section 7: Risk Management & Asset Quality a. Break-down of NPA across Business Segments b. Retail, Rural & SME Finance C. Wholesale Banking d. Provision Coverage Ratio e. Net Stressed Assets i) Risk Management Funnel ii) Underwriting Processes iii) Trend of Bounce rates iv) Trend of collection efficiency v) SMA (1+2) vi) Trend of NPA Ratios vii) Product wise NPA Ratios as of 31 March 2023 i) Underwriting process ii) Risk Management 31#33Break-down of asset quality by business components. Retail has least Gross NPA and Net NPA for over a decade Segment Retail, Rural and SME Finance Corporate (Non-Infrastructure) Infrastructure Financing || 3,571 Overall Bank Level Bank (Excl Infra.) 26,101 Gross Advances Breakup Section 7: Risk Management & Asset Quality Gross NPA Net NPA PCR% 1,36,066 1.53% 0.52% 83.93% 2.65% 0.03% 99.42% 23.27% 13.83% 60.94% 1,65,738 2.17% 0.70% 83.12% 1,62,167 1.71% 0.44% 87.52% The significant and growing part of the book, i.e. the Retail, Rural and SME business financing business has low NPA levels because of high-quality underwriting, credit bureaus, technology, cash-flow based lending capabilities. Asset Quality in the Corporate Book too is strong with adequate PCR of 99.42%. We expect infrastructure book to wind down in due course, hence the Bank level NPA excluding Infrastructure at 1.71% and 0.44% is relevant point to note. Provision coverage ratio is including technical write-offs. 32 IDFC FIRST Bank#34b. Retail, Rural & SME Loans Section 7: Risk Management & Asset Quality Risk Management Funnel for Retail, Rural & SME Loans We have stringent underwriting policy and processes Hence Only 40-60% of applications are approved Hence We have Low Cheque Bounces* (6.50%) We follow it up with High Collection Efficiency (99.50%) This results in low SMA % (0.85%) This leads to Low GNPA (1.53%) & NNPA And (0.52%) Low Credit Losses (~1.46%) Resulting in strong improvement of RoA/ROE This slide explains the rigorous processes we follow to maintain low Gross NPA, low Net NPA and low credit costs for over a decade. * Cheque/ECS / NACH bounces on first EMI presentation 33 IDFC FIRST Bank#35b. Retail, Rural & SME Loans Section 7: Risk Management & Asset Quality Benefit Bank has utilized the new Indian digital Ecosystem for better controls in lending Stage of Loan Processing KYC Risk Scorecards Earlier New Ecosystem • Physical copies of Passport, Ration Card, etc. Identity is Biometric • Regression and Judgement based models AI / ML Now Low seasoning of Bureau • Low awareness of credit bureau Bureau • Lesser records (300m) • Static Photo test Fraud Control •Traditional eyeballing method for Frauds Cash Flow and Financial Analysis Repayment Mandate Collections Monitoring No Fraud database, Scorecard Physical copies of financials, bank statements, salary slips, Income Tax Returns No alternative data sources Manual calculation of financial ratios basis photocopied document PDCS/SI/ NACH for repayment • Tele-calling, field collections Batch Mode, once a month Biometric KYC - eKYC, CKYC, Aadhaar OTP based KYC Advanced Scorecards based on Logistic Regression and Machine Learning algorithms • High seasoning, better data quality Bureau is evolved • More records (600m) Advanced real time fraud check mechanism Bank statements, GST records are electronic NACH is electronic UPI, BOT . • High awareness and sensitivity among customers Live Facial recognition technology, latitude-longitude marker • Automated identification of fraudulent transactions Availability of Fraud Database and Scorecards Digitized .pdf bank statement, salary slips, tax returns Digitized alternate data sources like GST, Telecom, etc. Automated calculation of financial ratios and cash flow analysis Electronic mandate through- NACH High Quality Identity check Better Risk management Reduced credit risk Better fraud management More accurate cash flow analysis Better collections • Collection through sending UPI link, calling using bots to Frictionless, lesser use customer Analytics is • Real time monitoring of portfolio by various cuts real time of tele-calling Better quality of portfolio 34 IDFC FIRST Bank#36b. Retail, Rural & SME Loans The Bank has a 10 Step Stringent Underwriting Process (1/2) 1 No-Go Criteria 2 Credit Bureau Check 3 Fraud Check + Credit Scorecard 5 Field Verification 6 Personal Discussion Section 7: Risk Management & Asset Quality The Bank evaluates certain quick no-go criteria such as deduplication against existing records, bank validation and minimum credit parameter rules. The Bank pings the Credit Bureaus to check the customer's credit behavior history, number of credit inquiries, age in bureau, limit utilization, recency of inquiries, level of unsecured debt, etc. The Bank uses certain file screening techniques, banking transaction checks and industry fraud databases to weed out possible fraudulent applications. The bank also uses Fraud Scorecards and real-time video-based checks to identify fraudulent applications The application is then put through scorecards which have been developed based on experience with similar cohort of customers in the past. It includes criteria such as leverage, volatility of average balances, cheque bounces in bank account, profitability ratios, liquidity ratios and study of working capital, etc. The Bank conducts field level verifications, including residence checks, office address checks, reference verification, lifestyle checks (to see if the product/quantum of loan correlates with lifestyle profile) and business activity checks. Based on inputs received, from our processes, a personal discussion is conducted with the customer which includes establishment of business credentials, understanding financials, seeking clarifications on financials, queries on banking habits, queries on the credit bureau report, clarification on banking entries if any, and understanding the requirement and end use of funds. Note: The underwriting process mentioned above, changes depending on product to product. 35 IDFC FIRST Bank#37b. Retail, Rural & SME Loans Section 7: Risk Management & Asset Quality 7 The Bank has a 10 Step Stringent Underwriting Process (2/2) Industry Check The Bank checks for further credit history and industry level exposure by doing CRILC checks and checks by external entities, where required, to study financials, access to group companies whether legal cases have been filed against the company, disqualification of directors, etc. 8 Cash Flow Analysis 6 10 10 Ratio Analysis Title Deeds Verification The bank statement of account is analyzed for business credits, transaction velocity, average balances at different periods of the month, EMI debits, account churning, interest servicing, etc. This helps us understand the cash flow on the basis of which we calculate the permissible EMI, loan amount, etc. Detailed financial analysis is performed covering, Ratio analysis, debt to net-worth, turnover, working capital cycle, leverage, etc. Evaluation of title deeds of the property and collateral, legality validity, enforceability etc., Repayment: Bank takes standing instructions to debit the bank account of the customers on a monthly basis and thus pulls the EMI from the customers naturally operated account. The cheque returns are low, but the returned cheques are subsequently followed up for collections. Through this stringent underwriting process, the Bank rejects nearly 40% - 60% of the Loan Applications depending on the product category. For some key products, the rejection waterfalls are provided in the annexure Note: The underwriting process mentioned above, changes depending on product to product. 36 IDFC FIRST Bank#38b. Retail, Rural & SME Loans Section 7: Risk Management & Asset Quality Cheque returns on first presentation down 34% indicating better quality of loan booked Post Covid Period Pre- Covid Period Reduction of 34% On trailing 12 months 9.9% 6.5% First EMI (FEMI) Cheque presentation is a direct indicator of the Quality of Booking. Our FEMI cheque Bounce is 34% lesser than FY 20 bookings signifying improved Credit Quality. Even with 10% cheque bounce in FY 20, our delinquency was only Gross of 2% and Net of 1% We expect GNPA and NNPA to be better than our past records, i.e. GNPA less than 2% and NNPA less than 1% in retail, rural & SME book Apr - Mar 20 Jul - Jun'23 37 IDFC FIRST Bank#39b. Retail, Rural & SME Loans Section 7: Risk Management & Asset Quality Collection Efficiency maintained at more than 99% level consistently over the last 24 months • The Current Bucket Collection % continues to be high at 99.5% . Thus only 0.5% of the portfolio moves to 0-30 bucket. • This in turn feeds into low Gross and Net NPA at the Bank Definition: Collection Efficiency % = (Total EMI Collected for the Month)*100/ Total EMI Due for the month). Note: Total EMI collections does not include any arrear collections, or prepayment collections in these calculations 99.2% 99.2% 99.2% 99.3% 99.4% 99.2% 99.3% 99.5% 99.4% 99.3% 99.4% 99.4% 99.4% 99.5% 99.5% 99.5% 99.5% 99.6% 99.5% 99.5% 99.3% 99.3% 99.3% 99.1% Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Note: Above numbers pertain to Urban portfolio which is the majority of the Book. Similar experience of improvement is observed in the Rural financing also. 38 IDFC FIRST Bank#40b. Retail, Rural & SME Loans Bank has low SMA - (SMA1 + SMA 2) at 0.85% 1.25% Reduction of 32% Section 7: Risk Management & Asset Quality 0.85% SMA 1 is the overdue portfolio in Bucket 31-60 days, and SMA 2 is the overdue portfolio in 61-90 days. SMA 1 (31-60 days overdue) and SMA 2 (61-90 days overdue), put together are around 0.85% of the Book in Retail, Rural & SME segment. Based on this, we expect a lower level of NPA formation in future. Jun-22 Jun-23 39 IDFC FIRST Bank#41b. Retail, Rural & SME Loans Section 7: Risk Management & Asset Quality Bank has maintained High Retail asset quality GNPA of ~2% and NNPA ~1% for a decade. • In this segment, asset quality maintained through Economic slowdown, demonetization, GST, ILFS Crisis. . In Retail, Rural & SME Finance portfolio, GNPA and NNPA have come down to 1.53% and 0.52% respectively -GNPA -NNPA Stress Test 5: COVID-19 Stress Test 2: Stress Test 1: Demonetization Stress Test 4: IL&FS Crisis 4.01% Economic Slowdown 2.14% 2.02% Stress 3: GST 2.18% 1.91% 1.98% 1.77% 1.66% 1.90% 2.63% 30-June-23 GNPA: 1.53% NNPA: 0.52% 0.99% 1.51% 1.41% 1.32% 0.53% 1.19% 1.24% 1.06% 0.25% 0.08% 0.67% 0.67% 1.53% 1.65% 1.15% 0.52% 0.55% 0.06% 0.00% 0.38% Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Sep-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Jun-23 Note: "Bank" and "Decade" here pertains to combined history of both Capital First and IDFC Bank. The figures till Sep-18 pertains to the retail portfolio at Capital First Limited. 40 IDFC FIRST Bank#42b. Retail, Rural & SME Loans Section 7: Risk Management & Asset Quality Key Product wise NPA detail as of June 30, 2023 Here we share the Gross and Net NPA of individual products in Retail, Rural & SME Loan book. Most of the products have GNPA ratio at less than 2% and NNPA ratio at less than 1% as a result of stringent underwriting and risk management funnel described earlier. 2.61% 1.08% Gross NPA Net NPA 1.77% 1.73% 1.70% 1.59% 1.53% 1.32% 0.99% 0.67% 0.67% 0.51% 0.41% 0.41% 0.44% 0.52% 0.39% 0.16% Loan Against Property Consumer Loans Wheels Credit Card Digital, Gold SME Loans Loan and Home Loan Rural Finance Retail, Rural & SME Loans Others 41 IDFC FIRST Bank#43c. Wholesale Financing Section 7: Risk Management & Asset Quality Stringent Underwriting Process in Wholesale Business • Customer Selection 2 Due Diligence with focus on Cash Flows 3 Smell Check • • All New-To-Bank potential borrowers (incl. promoter/directors) are checked including CIBIL, Suit filed, CFR, CRILC, etc. Further, bank has also defined minimum internal rating thresholds for onboarding any borrower, which acts as a guiding factor for loan originations. The Bank follows a conservative underwriting approach wherein primary assessment of debt servicing ability is based on underlying cash flows of the borrower. • The Bank conducts detailed due diligence of the borrower including objective financial assessment, assessment of borrower's business profile, industry, ownership & management, key risks and customer's past track record, which in turn helps determining the Bank's appetite for the exposure. • As part of underwriting process market feedback is obtained from borrower's peers, customers, suppliers, external rating agencies, banks, etc. S Granular Exposure • Focusing on granular small to medium ticket size credit exposures Risk based approvals • The Bank follows a 'risk-based' approach for credit sanctions wherein higher risk exposures (basis internal rating, quantum and tenure) require approval from higher approval authority. Note: The underwriting process mentioned above, may change depending on product to product. 42 IDFC FIRST Bank#44c. Wholesale Financing Bank has reduced concentration risk in Wholesale lending The Bank has reduced its corporate (non-infra) book from 29% in Mar- 19 to 16% in Jun-23 Section 7: Risk Management & Asset Quality Similarly, the Bank has reduced its infrastructure financing portfolio from 19% in Mar-19 to 2% in Jun-23 29% 22% 19% 18% 16% 16% iiiii 19% 14% 9% 5% 3% 2% Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Jun-23 Also, the exposure to top 20 single borrowers reduced from 16% in Mar-19 to 7% in Jun-23 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Jun-23 Further, the exposure to top 5 industries also reduced from 41% Mar-19 to 21% in Jun-23 which has further strengthened the balance sheet. 16% 13% 12% 9% 7% 7% 41% 35% 27% 24% 22% 20% Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Jun-23 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Jun-23 43 IDFC FIRST Bank#45d. Provision Coverage Ratio Section 7: Risk Management & Asset Quality Provision Coverage Ratio increased to 83.12% for the Bank Retail, Rural & SME Finance Non-Infra Corporate Book 82.43% 83.93% 69.59% 65.08% 57.53% 44.56% 99.84% 99.42% 94.50% 72.32% 58.51% 45.95% ווה Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Jun-23 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Jun-23 Total Bank Level Total Bank Level (excluding Infra financing book) 80.29% 83.12% 66.40% 70.29% 63.57% 48.67% 86.85% 87.52% 76.04% 62.34% 62.09% 44.96% Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Jun-23 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Jun-23 Note: Provision Coverage Ratio as shown above are including technical write-offs 44 IDFC FIRST Bank#46e. Net Stressed Assets Section 7: Risk Management & Asset Quality Net Stressed Assets reduced significantly to only 0.7% of total Assets Net stressed Assets = Net NPA + Net SRs + Net Restructured Assets (OTR) 1.65% Reduction of 47% 0.71% The Bank has reduced the net stressed assets, both in absolute value and as % of the total assets. This indicates lower NPA levels going forward. The restructured pool of the Bank has reduced by 54% in Since June 30, 2022 Restructured Book is 0.47% of the total funded assets as of June 30, 2023 Jun-22 Net NPA Net Restructured Assets (OTR) Net SRs Jun-23 Net Stressed Assets / Total Assets 45 IDFC FIRST Bank#47F Section 8: Profitability & Capital a. Net Interest Income b. Fee and Other Income c. Composition of Fee and Other Income d. Trend of Core Operating Profit e. Trend of Profitability and Return Ratios f. Financial Statements g. Capital Adequacy#48a. Net Interest Income 36% YoY growth in Net Interest Income during Q1 FY24 Net Interest Income (In Rs. Crore) 4,845 FY19* 25% 6,076 FY20 21% 4Y CAGR: 27% 9,706 7,380 32% FY21 FY22 30% 12,635 FY23 Section 8: Profitability & Capital 36% 3,745 2,751 Q1 FY23 Q1 FY24 Net Interest Margin for Q1-FY24 was 6.33% as compared to 5.77% in Q1-FY23 and 6.41% in Q4-FY23 * H2-FY19 actual annualized 47 IDFC FIRST Bank#49b. Fee & Other Income 49% YoY growth in Fee & Other Income during Q1 FY24 1,167 FY19* 33% * H2-FY19 actual annualized 1,550 Fee and Other Income (In Rs. Crore) 4Y CAGR: 37% 66% 1,622 5% 2,691 54% 4,142 Section 8: Profitability & Capital 899 FY20 FY21 FY22 FY23 Q1 FY23 49% 48 1,341 Q1 FY24 IDFC FIRST Bank#50b. Fee & Other Income 48% YoY growth in Retail Fee during Q1 FY24 536 122% 1,192 13% Retail Fee (In Rs. Crore) 3,783 4Y CAGR: 63% 2,399 1,342 79% 58% Section 8: Profitability & Capital 823 48% 1,217 FY19 FY20 FY21 FY22 FY23 Q1 FY23 Q1 FY24 Retail Fees as % 64% 77% 83% 89% to total fee 91% 91% 91% 49 IDFC FIRST Bank#51b. Fee & Other Income Breakup of Fee & Other Income - Q1-FY24 General Banking Fees & Others 30% Wealth Management / Third Party Distribution 14% Trade & Client Fx 9% Section 8: Profitability & Capital Loan Origination fees 30% Credit Card & Toll 17% •The Bank has launched and scaled up many fee-based products in the last 4 years. • Many of these products are in the early stage of their lifecycle and have the potential to grow significantly going forward. •91% of the fee income & other income is from retail banking operations which is granular and sustainable. 50 IDFC FIRST Bank#52c. Cost to Income Ratio Section 8: Profitability & Capital Bank has reduced Cost to Income ratio from 95% to 72% in 4 years • During the last three years the bank had to make significant investments in building liabilities and credit card franchise • Despite this, the cost income ratio has come down from 95% to 72% because of the strong incremental unit economics at the bank which is allowing the bank to make the investments to build the Bank. . Cost to income will further come down with scale 95.1% 85.2% Core Cost to Income (excluding Trading Gains) Ratio % 78.8% 77.8% 76.9% 72.5% 71.9% Q2 FY19 H2 FY19 FY20 FY21 FY22 FY23 (Pre-Merger) 51 Q1 FY24 IDFC FIRST Bank#53d. Core Pre-provisioning Operating Profit Section 8: Profitability & Capital 45% YoY growth in Core Operating Profit (excluding trading gains) during Q1 FY24 The core operating profit (excluding trading gains) increased by 45% against the overall loan book growth of 25%. This demonstrates the power of incremental profitability of the core business model. Core Pre-Provisioning Operating Profit (In Rs. Crore) (Pre-merger standalone Bank) 397 H1 FY19 (Annualized) 4Y CAGR: 43% 2,753 67% 44% (Post-merger) 1,909 1,764 8% 1,105 60% H2 FY19 (Annualized) 4,607 45% 1,427 987 FY20 FY21 FY22 FY23 Q1 FY23 Q1 FY24 52 IDFC FIRST Bank#54d. Core Pre-provisioning Operating Profit Improving Operating Profit as % of total assets Core Pre-Provisioning Operating Profit (PPOP) as a % of Average Total Assets (Pre-merger standalone Bank) 0.32% 1.56% 1.22% 1.11% (Post-merger) 0.76% Section 8: Profitability & Capital 2.34% 2.14% 2.02% H1 FY19 (Annualized) H2 FY19 (Annualized) FY20 FY21 FY22 FY23 Q1 FY23 (Annualized) Q1 FY24 (Annualized) The bank has improved the core pre-provisioning operating profit despite investment in growing the bank. This was made possible as the retail lending business is profitable with more than 20% incremental ROE. * H2-FY19 actual annualized 53 IDFC FIRST Bank#55d. Core Pre-provisioning Operating Profit Section 8: Profitability & Capital Consistent growth in crore operating profits every quarter Quarterly Core Pre-Provisioning Operating Profit (excluding the trading gains) in Rs crore 2,763 67% 4,607 1,427 1,342 1,225 1,052 987 836 745 601 540 555 571 428 468 465 484 405 328 276 275 32 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 54 IDFC FIRST Bank#56e. Net Profit Section 8: Profitability & Capital Bank has turned profitable on sustained basis based on strong Operating Profits and low credit costs Quarterly Net Profit / Loss (Rs crore) 72 701^765 556 605 474 343 281 == 94 101 130 128 152 ויייוי Provisions on Infra revaluation; Provisions on Reliance Capital, Provisions on DHFL, Infra A/Cs Infra A/Cs -1,538 Goodwill Write-off on merger -1,639 Provisions on Telecom A/C • COVID 2nd wave -630 This being early life-stage of the Bank, our core operating profits were low at only 1.6% of the total assets. Hence, we did not have the operating profit cushion to absorb COVID second wave and made only marginal profits of Rs. 145 cr in FY22. Our Credit costs were 1.8% of total assets in FY22 (COVID second wave year). Today our Operating profit has crossed 2.34% of the total assets and hence even with any pandemic like situation (COVID wave similar to last time) will keep the bank firmly in profits. This is because the Bank's Operating Profits have fundamentally strengthened substantially by a strong and profitable model Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Q1FY22 Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 ^ The Bank reported net profit of Rs. 803 crore for Q4 FY23. The Bank has already called out in Q4-FY23 that the net profit of Q4-FY23 was Rs. 701 crore adjusted for the one time items in the P&L. 55 IDFC FIRST Bank#57f. Profitability Ratios Consistent improvement in ROA and ROE 6.67% 8.96% Return on Equity (%) 12.30% 11.78% 10.72% 10.13% 0.76% Section 8: Profitability & Capital Return on Assets (%) 1.26% 1.23% 1.11% 1.07% 0.97% Λ Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 ROE for Q1 FY24 impacted by ~60bps on account of equity capital raised of Rs. 2,196 crore during last week of March 2023. RoA(%) and RoE(%) are quarterly annualized, ^ Normalised return, adjusted for one-time items. 56 IDFC FIRST Bank#58g. Financial Statements Quarterly Income Statement Section 8: Profitability & Capital Growth (%) In Rs. Crore Q1 FY23 Q4 FY23 Q1 FY24 YOY Interest Income Interest Expense Net Interest Income Fee & Other Income 4,922 6,424 6,868 40% 2,171 2,828 3,123 44% 2,751 3,597 3,745 36% 899 1,181 1,341 49% Trading Gain -44 216 73 -268% Operating Income 3,607 4,994 5,159 43% Operating Income (Excl Trading Gain) 3,650 4,778 5,086 39% Operating Expense 2,663 3,436 3,659 37% Operating Profit (PPOP) 944 1,559 1,500 59% Operating Profit (Ex. Trading gain) 987 1,342 1,427 45% Provisions 308 482 476 55% Profit Before Tax 636 1,076 1,024 61% Tax 162 274 259 60% Profit After Tax 474 803 765 61% 57 IDFC FIRST Bank#59g. Financial Statements Balance Sheet Section 8: Profitability & Capital Growth (%) In Rs. Crore Jun-22 Mar-23 Jun-23 (YoY) Shareholders' Funds 21,485 25,721 26,531 23% Deposits 1,13,349 1,44,637 1,54,427 36% - CASA Deposits -Term Deposits 56,720 71,983 71,765 27% 56,629 72,655 82,662 46% Borrowings 55,688 57,212 55,741 0% Other liabilities and provisions 10,044 12,371 12,251 22% Total Liabilities 2,00,565 2,39,942 2,48,950 24% Cash and Balances with Banks and RBI 10,761 13,898 13,207 23% Net Retail and Wholesale Loans & Advances* 1,32,555 1,56,371 1,67,374 26% Investments 47,095 57,809 56,269 19% Fixed Assets 1,456 2,090 2,285 57% Other Assets 8,698 9,773 9,815 13% Total Assets 2,00,565 2,39,942 2,48,950 24% *includes credit investments (Non-Convertible Debentures, RIDF, PTC, SRS and Loan Converted into Equity) 58 IDFC FIRST Bank#60h. Capital Adequacy Ratio Capital Adequacy Ratio is strong at 16.96% as on June 30, 2023 In Rs. Crore Common Equity Tier 2 Capital Funds Total Capital Funds Total Risk Weighted Assets CET-1 Ratio (%) Total CRAR (%) Jun-22 Section 8: Profitability & Capital Mar-23 Jun-23 20,821 24,816 25,630 2,618 4,585 6,105 23,439 29,401 31,736 1,48,600 1,74,762 1,87,133 14.01% 14.20% 13.70% 15.77% 16.82% 16.96% • The Bank is well capitalized for growth in future. • The Operational Risk is re-assessed at the beginning of every year, which impacted CET-1 ratio by ~44bps 59 IDFC FIRST Bank#61F Section 9: Credit Rating#62Section 9: Credit Rating Bank's Long Term Credit Rating has been recently upgraded by CRISIL and ICRA Rating Agency CRISIL Long Term Credit Rating Month of Rating Review AA (stable) to AA+ (stable) June '23 ICRA AA (stable) to AA+ (stable) May '23 India Ratings AA+ (negative) to AA+ (stable) Dec' 22 61 IDFC FIRST Bank#63F Section 10: Board of Directors#64Board of Directors: MD & CEO Profile Section 10: Board of Directors Vaidyanathan aspires to create "a world-class bank Indian Bank which offers high-quality affordable and ethical banking for India". He left a Board level position at ICICI group in 2010 and acquired stakes in of a small listed, loss making, real-estate financing NBFC with market cap of Rs. 780 crores ($140m) with the idea of converting it to a Bank. He did so through a leveraged buyout which was funded by personal borrowing Rs. 78 crore ($14m), which he raised by pledging the purchased stock and his home as collateral. He then changed the business model to financing micro and small entrepreneurs by use of technology with ticket sizes of $100-$100K, demonstrated the proof of concept to investors and raised fresh PE backed equity of Rs. 810 crores.. He renamed the company Capital First and became its Chairman and CEO. He turned the company around from losses of Rs. 30 crores ($5m, 2010) to profit of Rs. 358 crore ($ 50m, 2018). The share price of Capital First rose from Rs. 122 (2012) to Rs. 850 (2018) and the market cap increased >10 times from Rs. 780 crores ($120 m, 2010) to Rs. 8200 crores ($1.2 b, 2018). Per stock exchange filings, he bought the NBFC shares at Rs. 162 and sold part of his holdings at Rs. 688 in 2017 to close the loan availed to purchase the shares. Capital First's retail loan grew from Rs. 94 crores ($14m, 2010) to Rs. 29,600 crores ($4 b, 2018) with 7 million customers. Having built Capital First to scale, he looked out for a commercial banking license to convert it to a Bank. In 2018, opportunity struck in the form of an offer for merger from IDFC Bank. He led the integration and took over as the MD and CEO of the merged bank, renamed to IDFC First Bank. Since then, he has increased retail and commercial finance book to Rs. 1,26,135 crores, increased CASA from 8.7% to 50.0%, and turned the bank into profitability. The vision of IDFC First Bank is "To build a world class bank in India, guided by ethics, powered by technology and to be a force for social good." Earlier, Vaidyanathan worked with Citibank from 1990-2000. He joined ICICI Group in 2000 when the retail banking business was in its inception. He took the branch network to 1411, built a large CASA book, and built retail lending including mortgages, auto loans, and credit cards of Rs. 1.35 trillion ($30 bn) by 2009. The retail banking business he built helped transform the institution from a wholesale DFI to a retail banking institution. He joined the Board of ICICI Bank in 2006 at age 38 and became MD and CEO of ICICI Prudential Life Insurance Company at 41. He has received many domestic and international awards notably Ernst & Young "Entrepreneur of the Year Financial Services, India, 2022", ET Most inspiring CEO 2022, CNBC Awaaz "Entrepreneur of the Year" 2020, "Most Inspirational Leveraged Management Buyout, India 2018" by CFI Awards, London, CNBC Asia's "Most Innovative Company of the Year" 2017, "Entrepreneur of the Year" at Asia Pacific Entrepreneurship Award 2016 & 2017, "Most Promising Business Leaders of Asia" by Economic Times. in 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, "Outstanding contribution to Financial Inclusion, India, 2017" from Capital Finance, London, "Most Promising Business Leaders of Asia" 2016 by Economic Times. He is an alumnus of Birla Institute of Technology and Harvard Business School (Advanced Management Program). He has run 24 half-marathons and 8 full marathons. 63 IDFC FIRST Bank#65Board of Directors: COO Profile Section 10: Board of Directors MR. Madhivanan Balakrishnan - EXECUTIVE DIRECTOR Mr. Madhivanan Balakrishnan is the Chief Operating Officer (COO) of IDFC FIRST Bank. He is a customer focused and respected industry thought leader with a broad expertise across business development, operations, customer insights and technology. He brings a wealth of operational, technical and marketing experience across diverse industry segments such as banking, insurance, FMCG, durables and IT & ITES. Mr. Madhivanan Balakrishnan has established a track record of building new businesses, driving sustainable growth and realizing value in diverse and dynamic market situations. He has also been involved in successful business turnarounds and delivered engaging and insightful transformation in organizations. Prior to his role as COO at IDFC FIRST Bank, Mr. Madhivanan Balakrishnan was Chief Technology & Digital Officer (CTDO) at ICICI Bank. He has also served as a Managing Director and Global CEO of 3i Infotech Ltd., an IT product and services company with strong expertise in the ERP and BFSI segment. He was also Executive Director at ICICI Prudential Life Insurance Company. Mr. Madhivanan Balakrishnan holds a Bachelor's degree in Chemistry from Mumbai University, and PGDM in Marketing from the Indian Institute of Management, Calcutta. 64 IDFC FIRST Bank#66Board of Directors Section 10: Board of Directors 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 32 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 is a member, Banking and Finance Committee, Indian Merchants Chamber and also nominated as member, Depositor Education and Awareness (DEA) Fund Committee by the RBI. 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. 65 IDFC FIRST Bank#67Board of Directors Section 10: Board of Directors MR. HEMANG RAJA - INDEPENDENT DIRECTOR Mr. Hemang Raja, is an MBA from Abilene Christian University, Texas, with a major in finance. He has also completed an Advanced Management Programme (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. 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. 66 IDFC FIRST Bank#68Board of Directors Section 10: Board of Directors 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. DR. JAIMINI BHAGWATI - NON-EXECUTIVE NON INDEPENDENT DIRECTOR Dr. Jaimini Bhagwati is a former IFS officer, economist and foreign policy expert. He received his PhD in Finance from Tufts University, USA. He did his Master's in Physics from St Stephen's College, Delhi and a Master's in Finance from the Massachusetts Institute of Technology, USA. He was the High Commissioner to the UK and Ambassador to the European Union, Belgium and Luxembourg. Dr. Bhagwati has served in senior positions in the Government of India, including in foreign affairs, finance and atomic energy. In his earlier role at the World Bank, he was a specialist in international bond and derivatives markets and was the RBI chair professor at ICRIER. He is currently a Distinguished Fellow at a Delhi based think-tank called the Centre for Social and Economic Progress (CSEP). MR. VISHAL MAHADEVIA - NON-EXECUTIVE NON INDEPENDENT DIRECTOR Mr. Vishal Mahadevia joined Warburg Pincus in 2006 and is Managing Director, Head of India and 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. 67 IDFC FIRST Bank#69F Section 11: Shareholding#70Shareholding Pattern as of June 30, 2023 Scrip Name: IDFC FIRST Bank (BSE: 539437, NSE:IDFCFIRSTB) President of India (3.94%) Other Body Corporate (1.05%) Public (24.49%) MF/Insurance/Ba nk/FI/AIF (7.72%) Trusts and Clearing Members (0.37%) FDI/FPI/FC/FN/NRI (22.46%) Section 11: Shareholding Total # of shares as of Jun 30, 2023 Basic EPS (Q1-FY24 annualized) 662.82 Cr Rs. 4.63 Others (0.03%) Promoters (39.93%) Mr. V Vaidyanathan, MD & CEO of the Bank holds 1.93% of the Bank on fully diluted basis including the stock options • On July 3, 2023, the bank announced the scheme of amalgamation for merging IDFC Ltd with IDFC FIRST Bank with swap exchange of 100:155, subject to approvals from the regulatory bodies, exchanges and shareholders. As a result, upon completion of the merger, 264 crore shares of IDFC FIRST Bank held by IDFC Ltd will get extinguished and 248 crore new shares of IDFC FIRST Bank would be issued. 69 IDFC FIRST Bank#71Improved Price to Book ratio Book Value per Share (Rs.) BVPS reduced due to credit losses arising from legacy corporate and infrastructure loans During the last 9 quarters, the BVPS increased by 28% with the increasing profitability from the core business model 38.43 37.98 31.90 31.37 33.78 40.03 38.86 1.13 1.46 Section 11: Shareholding Price to Book ratio (x) 0.66 1.78 1.42 1.18 1.98 Dec-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Jun-23 Dec-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Jun-23 70 IDFC FIRST Bank#72F Section 12: Progress on ESG#73Our ESG Priorities Align with our Corporate Vision • • . . Guided by Ethics Highest standards of corporate governance, ethics and integrity Strong regulatory compliance E&S framework for project finance Responsible sales and marketing Highly engaged and active Board Systemic risk management Transparency, disclosures and stakeholder engagement Climate action and environmental footprint mapping Our Vision: To Build A World-Class Bank in India powered by Technology 1 FIRST Priorities (immediate and continuing) • * • Achieve best-in-class ratings for our ESG approach and performance Section 12: Progress on ESG and be a force for Social Good Product innovation Advanced analytics Digital-first and contemporary customer interfaces Streamlined, digitally-enabled people processes Data security Customer privacy Financial inclusion and credit access Customer centricity Meritocracy, diversity, equity and inclusion Responsible finance Influencing responsible customer behaviour Strong employee engagement with focus on learning and holistic wellbeing Community wellbeing through CSR and volunteering Values-led culture NORTH STAR Priorities (Medium-to-long term) •Innovate and develop ESG-centric products and services suite Implemented through our FIRST COMPASS programme to create sustained value for all stakeholders Customers Investors Employees Government Develop ESG-led KRAS for management Reserve Bank of India and other regulatory bodies Suppliers and partners Environment 72 IDFC FIRST Bank#74ESG at IDFC FIRST Bank Environmental Social Section 12: Progress on ESG Governance Infrastructure and facilities • DC EV charging infrastructure in two large offices in Mumbai, offered free for employee use • IGBC certification & LEED Certified Gold Standard for multiple large offices; HO certified by WELL. • • • IDFC FIRST Bank Tower HO (The Square, BKC) is fully powered by green energy Adopted Motion Sensors for lights and introduced Internet of Things (IoT) in our AC systems in multiple offices. Optimization of water usage in facilities in key offices, saving over 4,300 KL water every year EV financing • 1.46 lakh EV two wheelers financed • Employee learning and engagement . ~4.7 lakh learning hours in Q1 FY24 Holistic employee wellbeing programmes covering physical, mental and financial health CSR and community programmes . • • 1000+ EV 3 wheelers financed in Rural for last mile connectivity. Leading financier with maximum finance tie ups; introduced industry first end-to-end digital journey on EV financing Focus on energy and resource efficiency Fully digitized customer journeys for multiple products to save paper In-store customer awareness for purchase of energy efficient appliances Environment focused initiatives Beach cleanup programme 450 kg of waste collected in a single session 900+ saplings planted on World Environment Day, with potential of saving 21 tonnes of CO2 every year • • 3,400+ volunteers activated in Q1 FY24, positively impacting 10,000+ people Shwetdhara programme that helps create farmer livelihoods expands total footprint to 450+ villages 1001 sessions conducted for rural vocational training programme 118 entrepreneurs supported by Junoon programme Paediatric Cancer Care to support cancer treatment of children Disaster response Support to Odisha Train Crash victims via volunteering for food and water, hygiene kits etc. MBA Scholarship programme to support scholars Growing geographical coverage for customer access • Universal bank, with coverage in 25 states and 3 UTS Strong and experienced Board • • • Independence: 60% Independent Directors 11 Board Committees (majority members are IDs and chaired by IDs) Management committees are mapped to respective Board Committees. Diverse and relevant skill sets Highly competent Board with over 30 years of average experience Dynamic and engaged Board, with high frequency of Board meetings 100% average Board attendance Globally aligned disclosures • For reporting year 2022-23, Sustainability disclosures aligned to global frameworks such as GRI, SASB, Integrated Reporting; and BRSR Being customer first • Unique customer-friendly services, including fee-free services for customers Quality of portfolio • Stringent Credit and Provisioning Policy Strong Capital Adequacy, LCR, PCR, Credit Rating Risk governance Strong Risk Management Framework • Strong Vigilance Mechanism Information security IDFC FIRST Bank Certified with ISO 27001 (Information Security Management System) 73 IDFC FIRST Bank#75ESG Governance, Commitments and Ratings ESG Governance Structure Section 12: Progress on ESG ESG Commitments • Official Participant of United Nations Global Compact (UNGC) Board Level Committee Board Committee: Stakeholder, ESG and Customer Relationship Committee - Chaired by Independent Board member Management Level Committee Chaired by MD & CEO • Drives the strategic integration of sustainability • 12 executive members including heads of Group functions Steering Committee and Working Group • Specific working groups with cross-functional composition and expertise responsible for delivering on the ESG agenda • Facilitated by a dedicated ESG team • One of the initial official supporters of Task Force on Climate-Related Financial Disclosures (TCFD) in the Indian Banking sector • . One of the first financial institutions in India to be signatory to the Equator Principles FY 2023 annual disclosures to be published through the Bank's first Integrated Report, aligned with Int'l IR Framework, GRI and SASB ESG ratings SUSTAINALYTICS 26.6 (2023) Lower the 38.3 (2022) better REFINITIV 60 (B) (2022) 50 (B-) (2021) CRISIL 66 (B) (2022) DJSI 44 (2022) 19 (2021) 74 IDFC FIRST Bank#76ESG Awards SUSTAINABILITY SUMMIT & AWARDS SUSTAINABILITY SUMMET & AWARDS Buy 23 ESG WINNER BEST BANK LEADING THE WAY IN ESG IDFC FIRST BANK transformance ESG Summit & Awards 2013 WINNER BEST ESG INTILATIVE TO IMPROVE ACCESS TO SANITATION IDFC FIRST BANK transforma EXCELLENCE AANA OS CONGRATULATIONS IDFC PIST BANK BEST CER SUSTAINABILITY AWARDS ANKS Section 12: Progress on ESG नवभारत REI ESG Rising Star Award & Sustainability Impact Award May 2023, UBS Forums Best Bank Leading the way in ESG Apr 2023 Best ESG Initiative to Improve Access to Sanitation Apr 2023 Best CSR Sustainability Award-Economic Times BFSI Excellence Awards Feb 2023 Navabharat BFSI Award Best Sustainable Bank Strategy Oct 2022 Social Impact Bank of the Year WORLD FINANCE CORPORATE GOVERNANCE AWARDS 2 2 HSBC Prunie 2021 13th Social Impact Bank of the Year Sep 2022 World Finance Organisation Best Corporate Governance, India Jun 2022 Inclusive Finance India Awards - Breaking Ground in WASH Financing Dec 2021 Water.org & Sa-Dhan Awards Oct 2021 WINNER cfi.co FISANTE PANADE Ban 2021 CFI Award Best Sustainable Banking Strategy 2021 75 IDFC FIRST Bank#77F Section 13: Awards and Recognition#78Section 13 Awards & Recognitions Awards and Recognition FR great plece of news Mont Conmarmar Digital Mans in Sedia Best Consumer Digital Bank in India, Sept 2021 - Received from Global Finance Magazine Digital CX Awards ex Outstanding Digital CX- Internet Banking (Wanith Management) IDFC First Bank WINNER THE LIBOUTIRA BANKER THE ECONOMIC TIMES Peb BFSI BEST BRANDS 2022 WORLD FINANCE Best Corporate Govemarce, IDFC FIRST Bank Best Corporate Governance 2023 - World Finance Global Private Banking Innovation Awards 2022. WINNER G WINNER Monreative Vieath HIGHLY ACCLAIMED Best Privite Best Pr Bank for Westh Management SHEVER HNW Clients Creation & Pervation Bank for Best Corporate Governance 2023 - World Finance Innovative Payment Solution of the Year for FIRSTAP 2023 - Gadgets Now Excellence in BFSI 2023 - by Fun & Joy at Work Dream company to work for HR 2023 - by Fun & Joy at Work Best Corporate Governance, India 2022 - World Finance Corporation Most Innovative Digital Transformation Bank 2022 - The European Most Promising Brand Awards 2022 - ET BFSI Social Impact Bank of the Year 2022 - The European Best Payments & Collections Solution Award 2021 - Asset Asian Awards Best Innovative Payment Solution - Phi Commerce Best Consumer Digital Bank in India - 2021 - Global Finance Magazine Best Wealth management provider for Digital CX - Digital CX Excellence in User Experience – Website - Digital CX Asia Private Banking Award - Asia Money Best BFSI Brands in Private Bank Category - ET BFSI Most Trusted Brands of India 2021 - CNBC TV18 Most Harmonious Merger Award - The European Most Innovative Banks - IFTA 2021 Most Trusted Companies Awards 2021 - IBC Outstanding Digital CX - Internet Banking (WM) - Digital CX ET Most Inspiring CEO Award - by Economic Times 77 IDFC FIRST Bank#79ETHICAL IDFC FIRST Bank DIGITAL BANKING * SOCIAL-GOOD We are building a world class bank with: - Highest levels of corporate governance - Stable balance sheet growth of ~20-25%, - - - Robust asset quality of GNPA less than 2% and net NPA of < 1% High teens ROE - Contemporary technology and - High levels of Customer Centricity. 78 IDFC FIRST Bank#80Disclaimer 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. 79 IDFC FIRST Bank#81Thank You IDFC FIRST Bank#82Annexure 1 Performance of the Bank against the stated goals 81 IDFC FIRST Bank#83We are happy to say that the Bank is performing well on the guidance given at the time of the merger. Dec-18 Jun-23 Particulars Guidance for FY24-FY25 Status (At Merger) Last quarter CET - 1 Ratio Capital 16.14% >12.5 % 13.70% On Track Liability Capital Adequacy (%) CASA as a % of Deposits (%) Branches (#) CASA + Term Deposits<5 crore (% of Customer Deposits) Certificate of Deposits of % of total deposits & borrowings Quarterly Avg. LCR (%) Retail, Rural and SME Finance (Net of IBPC) 16.51% >13.0 % 16.96% On Track 8.7% 30% (FY24), 50% thereafter 46.5% On Track 206 800-900 824 On Track 39% 85% 81% On Track 17% <10% of liabilities 3% Achieved 123% >110% 125% On Track Rs. 36,927 Cr Rs. 100,000 Cr Rs. 1,36,066 Cr Achieved Retail, Rural and SME Finance as a % of Total Loans & Advances 35% 70% 79% Achieved Assets Wholesale Loans & Advances¹ Rs. 56,770 Cr < Rs. 40,000 Cr Rs. 31,421 Cr Achieved Rs. 22,710 Cr Nil in 5 years Rs. 3,758 Cr On Track - of which Infrastructure loans 1. Excluding Security Receipts, Loan converted into Equity, RIDF and PTC. 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 82 IDFC FIRST Bank#84We are happy to say that the Bank is performing well on the guidance given at the time of the merger. Dec-18 Jun-23 Particulars Guidance for FY24-FY25 Status (At Merger) Last quarter Top 10 borrowers as % of Total Loans & Advances (%) 12.8% < 5% 2.7% Achieved GNPA (%) 1.97% 2.0% -2.5% 2.17% On Track Asset Quality NNPA (%) 0.95% 1.0% 1.2% 0.70% On Track Provision Coverage Ratio³ (%) 53% ~70% 83% On Track Net Interest Margin (%) Cost to Income Ratio² (%) 81.56% 55% Profitability Return on Asset (%) -3.70% 1.4-1.6% 1.26% 3.10% 5.0% - 5.5% 6.33%¹ Achieved 71.94% Estimated to drop to 65% by Q4-FY25 On Track Return on Equity (%) -36.81% 13-15% 11.78% On Track 1. Gross of IBPC & Sell-down 2. Excluding Trading Gains 3. Including technical write-offs. Note: Earnings for Dec-18 are for the quarter, NIM, ROA, ROE are annualized for the corresponding quarter. 83 IDFC FIRST Bank#85Annexure 2 Breakup of the loans & advances with YoY growth 84 IDFC FIRST Bank#86Analysis of Loans & Advances by nature of business (Personal vs Business finance) Gross Loans & Advances (In Rs. Crore) Consumer Finance (Personal Finance) Jun-22 Mar-23 Jun-23 YoY (%) QoQ (%) 76,407 91,027 97,327 27% 7% - Home Loan - Loan Against Property - Wheels - Consumer Loans - Education Loans - Credit Card - Gold Loan* 15,352 19,552 20,139 31% 3% 18,631 20,199 20,103 8% 0% 11,263 14,823 16,365 45% 10% 19,410 19,886 22,329 15% 12% 269 933 1,285 378% 38% 2,315 3,510 3,893 68% 11% 88 256 363 312% 41% - Others 9,078 11,867 12,850 42% 8% Rural Finance* 14,223 19,181 20,744 46% 8% SME & Corporate Finance (Business Finance) 40,294 45,728 49,749 23% 9% - of which CV/CE Financing* 2,040 3,668 4,247 108% 16% - of which Business Banking* 3,516 5,073 5,354 52% 6% - of which Corporate Loans 23,970 25,894 27,662 15% 7% Infrastructure Total Gross Loans & Advances 6,739 137,663 4,664 160,599 3,758 -44% -19% 171,578 25% 7% * Rural Finance, CV/CE Financing, Business Banking, Gold Loans, Home Loans (< Rs. 30 Lacs) largely contribute to the PSL requirements of the Bank and hence are focus areas 1. 2. 3. The figures above are net of Inter-Bank Participant Certificate (IBPC) transactions & includes credit substitutes Lending to commercial banking businesses and SMEs through working capital loans, business banking, commercial vehicle, trade advances, term loans, security receipts, loan converted to equity etc. have been combined with corporate banking as these are all pertaining to financing businesses. Home Loans, vehicle finance, education loans, gold loans, credit cards, car loans etc have been combined under Retail banking as this represents financing to individuals. Loan against property has been retained as part of retail banking as is the convention in the banking system reporting. 4. Others include digital lending, revolving credit, retail portfolio buyout etc. 85 IDFC FIRST Bank#87F Annexure 3 Background of IDFC FIRST Bank - Merger of IDFC Bank and Capital FIRST#88IDFC FIRST Bank was created by merger of IDFC Bank and Capital First • IDFC FIRST Bank was created by the merger of Erstwhile IDFC Bank and Erstwhile Capital First on December 18, 2018. • • • Erstwhile IDFC Bank started its operation as a Bank after demerger from IDFC Ltd, a premier, successful infrastructure Financing Domestic Financial Institution since 1997. The loan assets and borrowings of IDFC limited were transferred to IDFC Bank at inception of IDFC Bank. Erstwhile Capital First was a successful consumer and MSME financing entity since 2012 with strong track record of growth, profits and asset quality. On merger, the Bank was renamed IDFC FIRST Bank. IDFC + IDFC BANK CAPITAL FIRST IDFC FIRST Bank On merger, 13.9 shares of IDFC Bank were issued for every share of Capital First as part of the merger scheme in December 2018 87 IDFC FIRST Bank#89Annexure 4 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. 88 IDFC FIRST Bank#90Successful Trajectory of Growth and Profits at Capital First Financial Performance: The Asset Under Management has consistently grown at 5-Year CAGR of 29% 935 2,751 Asset Under Management (In Rs. Crore) 8 year CAGR of 52%, 5 year CAGR of 29% 19,824 16,041 11,975 9,679 7,510 6,186 26,997 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 89 32,623 H1-FY19 IDFC FIRST Bank#91Successful Trajectory of Growth and Profits at Capital First Financial Performance: Yearly Trend of Profit After Tax In FY 08 and 09, the Company had made losses. Even after the new leadership took over, for two years the company continued to post losses as the building blocks for new age retail lending were prepared. Once the company got scale, Capital First posted a CAGR growth in profits of 56% for last 5 years. Profit After Tax (Normalized) – Rs. crore - ■ New Leadership takes over in 2010. ■ New Retail Product Lines launched. ■ Retail Team, Systems, Processes designed. ■Closed down subsidiaries, prepared company for PE equity backing ■ Platform set for Business growth and Profitability. ■Company turned profitable in FY12 and since then consistently increased profit for the next 6 years with a CAGR of 45% -15.7 -46.2 3.8 53.2 35.1 5 Year CAGR - 56% 238.9 166.2 114.3 327.4 * For Half Year H1-FY19 206.1* FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 H1-FY19 90 IDFC FIRST Bank#92Successful 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. The Cost to Income ratio, which was high at ~130% in the early stages of the company, reduced to <50% once the business model stabilized over the years. Cost to Income ratio (%) 128% 115% ~ 70-80% 78% 80% 72% 74% 71% < 50% 59% 53% 51% 51% 48% FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 H1-FY19 91 IDFC FIRST Bank#93Capital 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. All figures are annualised 4.93% Raised equity in Q4-FY14 at Rs. 152 per share 8.33% FY15 FY14 11.09% 2.28% 2.96% 4.15% 7.02% Raised equity in Q4-FY15 at Rs. 390 per share 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 equity in Q3-FY17 at Rs. 712 per 11.93% FY17 share 13.31% 14.51% H1-FY18 FY18 14.82% 14.47% 14.46% 14.08% 13.06% 12 87% 12.49% 12.10% 11.46% 92 Q2 FY19* IDFC FIRST Bank#94Successful 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. During this phase, the Company - . built the Retail Platform, technologies for chosen segments, divested/closed down non-core businesses like broking, property services, Forex services etc, Merged NBFC subsidiary with the parent brought down high NPA levels (GNPA 5.28% and NNPA 3.78%) 1,174 31-Mar-10 Market Capitalization (Rs. crore) 1,478 1,152 902 782* 31-Mar-11 31-Mar-12 31-Mar-13 1000% growth 3,937 3,634 8,282# 7,628 Post-Merger Announcement 6,096 31-Mar-14 31-Mar-15 31-Mar-16 31-Mar-17 12-Jan-18 31-Mar-18 * Market Cap as on 31-March-2012, the year of Management Buyout # Market Cap on the day before the announcement of merger with IDFC Bank (Jan 13, 2018). 93 IDFC FIRST Bank#95Successful 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. Stock Price increased 7x from Rs. 120.55 to Rs. 845.60 in 6 years 7 X increase in stock price in under 6 years 178.90 162.20 120.55 431.55 399.40 845.60 782.50 3/31/2012 3/31/2013 3/31/2014 3/31/2015 3/31/2016 3/31/2017 94 1/15/2018 IDFC FIRST Bank#96Annexure 5 Proforma Financials before merger (H1-FY19) 95 IDFC FIRST Bank#97Pre merger - Proforma Financials of IDFC Bank and Capital First - P&L (H1 FY19) In Rs. Crore Loans & Advances / 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 96 IDFC FIRST Bank