#1IDFC FIRST Bank | आई डी एफ सी फर्स्ट बैंक BKC BRANCH Investor Presentation - Q2 FY24 IDFC FIRST Bank ווי#21 IDFC FIRST Bank Vision 2 Financial Highlights - Q2 FY24 3 Our Approach to building IDFC FIRST Bank 4 Market Opportunity 5 Products and Services 6 Deposits and Borrowings TABLE 7 Loans and Advances OF 8 Risk Management & Asset Quality CONTENTS 9 Profitability & Capital 10 Credit Rating 11 Board of Directors 12 Shareholding Pattern 13 Progress on ESG 14 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#6Section 1: Vision Culture @ IDFC FIRST Bank There is a push from the regulator towards financial inclusion and they insist on high asset quality at the same time. It is more possible to address this paradox today than before because India has created a unique digital infrastructure, including credit bureaus, biometrics, e-KYC... (Annual Report 2022-23) the my Indian and cu And ho new fe Servic and F Bankin We share with our employees that income from customers enters our homes through are bu salary, incentives, or stock appreciation, and hence should be ethically earned. Where we charge, the fee structure should be easy to understand. When explained this way, the rank and file become sensitive about how we design simple our products, terms & conditions, and how and Contr what they sell. (Annual Report 2022-23) Risk, F We are building a solid foundation for the long run. I request you to be patient and stay with us in the journey of building this institution. If we hurry, we will make mistakes. (Annual Report 2022-23) RP In summary, we are building a world class bank with high levels of corporate governance, good risk management practices, consistent growth of 20-25% with high asset quality, contemporary technology, customer friendliness, a positive work culture and can reach high teens ROE in a sustainable manner. We are making steady progress in this direction. MD and CEO message to employees and shareholders (Annual Report 2022-23) LO 5 IDFC FIRST Bank#7- Section 2: Financial Highlights – Q2 FY24#8Section 2: Financial Highlights - Q2 FY24 Bank At a Glance, as of September 2023 ATM ap Loans & Advances¹ Rs. 1,83,236 Cr (26% YoY) Customer Deposits Rs. 1,64,726 Cr (44% YoY) Diversification Retail Deposits 77% of customer deposits CASA Ratio 46.4% ilre Asset Quality (Overall Bank level) GNPA%: 2.11% | NNPA%: 0.68% Core Operating Income² (H1-FY24) Rs. 10,411 Cr (37% YoY) Core Operating Profit² (H1-FY24) Rs. 2,883 Cr (41% YoY) g↑ Profit After Tax (H1-FY24) Rs. 1,516 Cr (47% YoY) Return on Assets (H1-FY24) 1.20% (H1-FY23 -1.02%) Return on Equity (H1-FY24) 11.36% (H1-FY23 - 9.54%) Asset Quality (Retail, Rural & SME) GNPA%: 1.53% | NNPA%: 0.52% Capital Adequacy 18.06%³ 1 Note: Total Loans & Advances (including credit substitutes) are Net of IBPC; 2 Excluding Trading Gains; 3. Includes the fresh equity capital raise of Rs. 3000 crore in first week of Oct 2023; excluding this, reported Capital Adequacy was 16.54% as of Sep 30, 2023 7 IDFC FIRST Bank#9Empty#10Section 3: Our approach to building IDFC FIRST Bank#11Approach to build IDFC FIRST Bank Background • • IDFC Limited, a reputed Domestic Financial Institution, was awarded a commercial banking license and thus set up IDFC Bank. As part of this process, IDFC Limited transferred its corporate/infrastructure loan assets, infrastructure bonds, institutional borrowings and other liabilities to IDFC Bank. IDFC Bank looked out for a profitable retail franchise to merge with to diversify away from Infrastructure and Corporate Loans. Capital First Limited, was an NBFC that specialized in Retail & MSME financing based on new technologies. The company grew from Rs. 94 crores in 2010 to Rs. 32,000 crores in March 2018. It had a NIM of 8.0%. Capital First had grown the loan book at a 5 year CAGR of 29%, had maintained high asset quality of GNPA of 2% and NNPA 1%, and had grown profits at a 5 year CAGR of 56%. Capital First was looking for a commercial banking license. The two entities merged for their respective reasons and thus IDFC FIRST Bank was created in December 2018. On merger the Bank had the following issues. As per the financials of 31st December 2018: a) We had a low CASA at 8.68%. b) Our total deposits & borrowings were Rs. 1,29,381 crores, of which only Rs. 10,400 crores (8.04%) were retail Deposits. c) Our reported annualized NIM was low at 1.9% because of the Infrastructure DFI background. d) The Bank had large and concentrated exposure in infrastructure and corporate Loans. Between FY 19-FY 24, the bank has addressed almost all issues including (a) Troubled infrastructure assets (exposure reduced from Rs. 21,459 crore to Rs. 3,356 crore), CASA (grown to 46%), and profitability (FY 23 PAT of 2,437 crores). With a strong foundation, 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 Culture: Ethical Capital 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. 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. The bank is well capitalized for growth with capital adequacy (including profits) of 16.54% (September 30, 2023). Bank raised Rs. 3000 crore of fresh equity Capital in October 2023. Including the same, the total capital adequacy ratio would be 18.06% with CET-1 ratio at 15.01%. 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% (September 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 H1-FY24, the Bank has posted PAT of Rs. 1,516 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#15Section 4: Market Opportunity#16Section 4: Market Opportunity Market Opportunity (Deposits) Total Deposit for all scheduled banks in India currently is Rs. 200.48 lac crore which is growing at 13.3% YOY as per the RBI data (06-Oct-2023) IDFC FIRST Bank is 0.85% of the overall bank deposits and has significant room for growth going forward. Total Deposits (September 2023) In Rs. Crore Source: RBI data, Internal Estimate IDFC FIRST Bank 1,71,236 0.85% Banking Industry 200,47,885 15 IDFC FIRST Bank#17Section 4: Market Opportunity Market Opportunity (Retail, Rural & SME Loans) Personal credit in India has grown by 15-20% in the last 5 years. Personal Credit to GDP in India is only 19% which has significant room for growth going forward along with rural finance and small business credit. Retail credit refers to credit availed for personal use like home loans, vehicle loans, personal loans etc. Projected Growth of Bank Credit to Personal and Small Business Segment (Rs. Lac crore) 1,288.8 86.0 16% CAGR 15% CAGR 15x growth (20 Years) 13% CAGR 14% CAGR FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 FY35 FY36 FY37 FY38 FY39 FY40 FY41 FY42 FY43 Source: RBI data on sectoral credit deployment, Internal Estimate, CIBIL Bureau data 16 IDFC FIRST Bank#18Section 4: Market Opportunity Retail, Rural & SME Loans: Growth Opportunity for IDFC FIRST Bank IDFC FIRST Bank has built the requisite capabilities with continuous innovation going forward for capturing this large opportunity provide by the Indian Banking Credit for the Personal and SME business segments Simulated growth of IDFC FIRST Bank's Retail, Rural and SME Book at different growth rate in the next 20 years (Rs Lac cr) @ 18% CAGR, Loan Book growth 27x @ 20% CAGR, Loan Book growth 38x 27.95 23.30 19.41 16.18 @ 15% CAGR, Loan Book growth 16x 9.36 13.48 11.23 7.80 1.26 1.51 2.18 1.81 2.61 3.14 3.76 4.51 5.42 6.50 33.55 40.25 48.31 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 FY35 FY36 FY37 FY38 FY39 FY40 FY41 FY42 FY43 34.52 20.62 17 IDFC FIRST Bank#19Section 5: 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#20Section 5: Products and Services The Bank has developed a wide Product Suite of a Universal Bank Corporate Lending Retail Lending Solutions Home Loans, vehicle Loans, Consumer Loans, Education Loans, Personal Loans, Used Car Loans, Gold Loans, Rural Finance, Tractor Finance Working Capital demand Loans, Cash Credit, Term Loans, Corporate Bonds / NCDs, Foreign Currency Loans Corporate Lending Retail Lending Supply Chain Financing 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. Treasury & Forex Solutions 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 VER ETHICAL SME Lending Solutions 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 DIGITAL BANKING SOCIAL-GOOD ANK. NRI Banking NRI Banking NRE Accounts, NRO Accounts, Seafarer Accounts, FCNR Deposits, NRE/NRO Deposits Wealth Management & Distribution Credit Cards Wealth Management & Distribution Wealth Management, Distribution of Life Insurance, General Insurance, Credit Shield, Health Insurance, Mutual Funds, AIFS Wealth Credit Card, Private Credit Card, Millenia Credit Card, WoW Credit Card against Deposits, Corporate Card, Vistara Travel card, HP Fuel Card Credit Cards Fastag 19 IDFC FIRST Bank#21Section 5: Products and Services The Bank has a wide bouquet of products for consumers, MSMEs and Corporates Retail 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 20 IDFC FIRST Bank#22The 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 5: 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) 21 IDFC FIRST Bank#23Our Digital Initiatives Significant traction on electronic platforms RTGS & NEFT payments through CMS solutions up by 11% YoY (vol.) FASISQ 95% Of the overall transactions are digital 15.0 mn+ FASTag issued since launch Credit Card Spends (H1FY24): Growth of 64% YoY 3 ום Ranked 3rd Bharat Bill Payment System (BBPS): amongst 30 biller operating units UPI value: Growth of ~63% over the last year 1.9 mn+ Credit cards issued since launch in January 2021 POS Transactions (Q2FY24): (Vol): 30% growth YoY (Value): 29% growth YoY Section 5: 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. 22 IDFC FIRST Bank#24India's FIRST FASTAG with Triple Benefits - Toll, Fuel and Parking Section 5: 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 15.0 Million FASTAGS. Largest Acquirer Bank with 530+ Toll plaza and parking merchants. Issuance Value Issuance value has reached Rs. ~58 crore per day in Sep 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 23 F IDFC FIRST Bank#25Section 5: Products and Services Wealth Management AUM up 47% YoY to Rs. 11,681 crores 1 Assisted Transactions: Digitally assisted transaction execution for Mutual Funds 2 Investment Dashboard: Assets managed by RM, including Product & Asset-Class split 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 16 7 80 6 Investment Ideas: Risk adjusted curated portfolios, product discovery via collections & filters Goal Based Investing: Goal creation, implementation and progress tracking Detailed Product Information: scheme performance, risk profile suitability & minimum investment details Digital Bancassurance Platform (1st Bank in India): Seamless assisted insurance digital journeys launched for Life Insurance products 10 Digital Journeys for Government Insurance & Pension schemes: Offering an end-to-end digital purchase experience for PMSBY, PMJJBY & APY THE DIGITAL BANKER Digital CX OUTSTANDING DIGITAL CX-INTERNET BANKING (WEALTH MANAGEMENT) WINNER Private Banking WINNER INNOVATION AWARDS 2099 Awords N IDFC FIRST BANK IDFC FIRST BANK BEST PRIVATE BANK FOR WEALTH Investment Workbench can now be accessed by RMs over the internet from their bank supported devices CREATION & PRESERVATION 24 24 IDFC FIRST Bank#26Section 6: Deposits and Borrowings a. CASA Deposits b. Customer Deposits C. Total Customer Deposits d. Summary of Deposits and Borrowings e. Legacy High-Cost Borrowings#27IDFC FIRST Bank - Drivers for Deposit Growth Section 6: Deposits & Borrowings The Bank has built strong capabilities to consistently grow its Deposit Franchisee. Some of the key factors are mentioned below - IDFC first bank is seen as an 'Institution' High focus on customer service • Customer friendly and attractive product propositions Strong Digital capabilities • Ethical Banking High level of corporate governance 26 26 IDFC FIRST Bank#28b. Total Customer Deposits Deposits: Strong growth in Total Customer Deposits . Section 6: Deposits & Borrowings Total Customer Deposits (Retail Deposits + Wholesale Deposits) has grown strongly by 4 Year CAGR (Mar-19 to Mar-23) of 36%. YoY-Sep-23 vs Sep-22 ↑44% QoQ-Sep-23 vs Jun-23 ↑ 11% Driven by granular deposits from retail segment 4-Year CAGR: 36% 82,725 93,214 (Pre-Merger) 28,370 (At Merger) 38,455 57,719 40,504 in Rs. crore 1,64,726 1,48,474 1,36,812 31 Mar 18 31 Dec 18 31 Mar 19 31 Mar 20 31 Mar 21 31 Mar 22 31 Mar 23 30 Jun 23 30 Sep 23 27 IDFC FIRST Bank#29a. CASA Deposits Section 6: Deposits & Borrowings CASA Deposits - Bank has a demonstrated capability to grow CASA deposits The bank has reduced interest rates on savings account to only 3% for balances upto Rs. 1 lac. The CASA deposit growth continues to be strong, growth of 26% YOY as of 30 September 2023. YoY Sep-23 vs Sep-22 ↑26% QoQ-Sep-23 vs Jun-23 ↑ 11% 7,893 5,544 5,274 31 Mar 18 (Pre-Merger) Driven by granular retail CASA 4-Year CAGR: 74% 20,661 45,896 51,170 in Rs. crore 79,468 71,983 71,765 31 Dec 18 31 Mar 19 31 Mar 20 31 Mar 21 31 Mar 22 31 Mar 23 30 Jun 23 30 Sep 23 (At Merger) 28 IDFC FIRST Bank#30a. CASA Deposits CASA Ratio at 46.4% CASA Ratio stable at 46.4% as of September 30, 2023. Average Daily Balance CASA Deposits for the bank grew by 27% YoY during the first half of the year. 11.5% 11.4% 8.7% 31.9% Section 6: Deposits & Borrowings 51.7% 49.8% 48.4% 46.5% 46.4% 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 30 Sep 23 (At Merger) 29 IDFC FIRST Bank#31c. Diversification of Deposits Section 6: Deposits & Borrowings Bank has a highly Diversified liabilities base with 77% Retail Customer Deposits • 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 Sep-23. Strong growth of 50% YoY 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 Mar 31, 2019 to Rs. 6,510 crores as of Sep 30, 2023. 73% 27% 41% 59% 23% Overall Customer Deposits 77% 27% 73% Dec-18 Rs. 38,455 crore Mar-20 Rs. 57,719 crore Mar-21 Rs. 82,725 crore Mar-22 Rs. 93,214 crore Retail Deposits Wholesale Deposits 24% 76% 23% 77% Mar-23 Rs. 1,36,812 crore Sep-23 Rs. 1,64,726 crore 30 IDFC FIRST Bank#32d. Summary of Deposits & Borrowings Section 6: Deposits & Borrowings Deposits & Borrowings Details The Bank has grown its deposits by 44% YOY driven by the retail deposits which was utilized for growth of assets and repayment of the legacy borrowings. Borrowings (excluding money market borrowings) reduced by 11% YOY. Particulars (in Rs Cr) Legacy Long Term Bonds Legacy Infrastructure Bonds Sep-22 Jun-23 Sep-23 YoY growth 6,508 6,148 6,129 -6% 7,742 6,901 5,908 -24% Refinance Other Borrowings Tier II Bonds Total Borrowings (A) CASA Deposits Term Deposits Total Customer Deposits (B) Certificate of Deposits (C) 20,109 19,910 18,694 -7% 4,749 4,297 1,109 -77% 1,500 4,500 4,500 200% 40,609 41,756 36,340 -11% 63,305 71,765 79,468 26% 50,700 76,709 85,258 68% 1,14,004 1,48,474 1,64,726 44% 9,438 5,953 6,510 -31% Money Market Borrowings (D) 16,034 13,985 16,826 5% Borrowings & Deposits (A) + (B) + (C) + (D) 1,80,085 2,10,168 2,24,401 25% CASA Ratio (%) 51.3% 46.5% 46.4% -487bps Average CASA Ratio % (On Daily Average Balance for the Quarter) 49.2% 45.7% 45.0% -420bps 31 IDFC FIRST Bank#33e. Legacy High Cost Borrowings Section 6: Deposits & Borrowings Bank continues to successfully run down the legacy high cost long term borrowings Balance In Rs. Cr Rol (%) As on Sep-22 As on Sep-23 H2-FY24 FY25 FY26 Beyond FY26 Infrastructure Bonds 7,742 5,908 0 5,071 837 0 8.94% Long Term Legacy Bonds 6,508 6,129 1,310 1,226 3,593 0 9.11% Other Bonds 2,392 1,105 349 124 301 331 8.95% Refinance 3,807 1,860 930 930 0 0 8.25% Total 20,449 15,002 2,589 7,351 4,731 331 8.92% Because we have a DFI background, the legacy borrowings are costing the bank 8.92%. The Bank plans to replace this with low- cost deposits. To simulate, if the Bank had replaced all high-cost legacy borrowings with the current cost of funds, the return on equity (annualized) for Q2-FY24 would be higher by ~100 bps. 32 IDFC FIRST Bank#34Section 7: Loans & Advances Bank has a well diversified Credit Portfolio#35Section 7: Loans & Advances The Bank has diversified its loan book across more than 20 business lines Emerging Enterprises Large Corporate 1%. 6% Financial Institutions Other Corporates 2% 8% Infrastructure Financing Loan Book: September 30, 2023 Rs. 1,83,236 crore 2% Other SME Loans 5% Gold Loans 0.31% Other Retail Loans 8% Credit Card 2% Education Loans 1%. Consumer Loans 13% Rural Finance 11% Vehicles 10% Commercial Vehicles 3% 28% Mortgage^ backed Loans ^ Mortgage constitutes 12% Home loans, 12% Loan Against Property, 3% Business Banking loans and 1% KCC. • 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 substitutes; Consumer Loans include personal loans, and consumer durable loan. • Other Retail Loans include digital lending, revolving credit, retail portfolio buyout etc. • Commercial Vehicles Financing includes Construction Equipment 34 IDFC FIRST Bank#36Section 7: Loans & Advances Bank has run down Infrastructure Project financing Book to below 2% of funded assets Infrastructure Financing Book (Rs. Crore) 36.7% 26,832 19.4% 21,459 13.8% Decreasing trend of Infrastructure Financing Book % of Loans & Advances 14,315 9.2% 10,808 5.3% 2.9% 6,891 1.8% 4,664 3,356 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 35 Sep-23 IDFC FIRST Bank#37Section 8: Risk Management & Asset Quality a. Break-down of NPA across Business Segments b. Retail, Rural & SME Finance C. Wholesale Banking d. Provision Coverage Ratio 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 30 September 2023 i) Underwriting process ii) Risk Management e. Net Stressed Assets 36#38The Bank has developed unique capabilities for Risk Management Cash Flow Assessment (Bank statements, GST filings, Bureau Data etc.) + Debit Instruction to Bank Asset Quality Section 8: Risk Management & Asset Quality • • . . The Bank lends on the basis of cash flow assessment - A. Where the cash flow of the borrower is assessed B. This is coupled with right to debit the bank account of the customer for repayment of EMI. Our experience is that this combination of A+B put together practically works as an escrow. This is a key reason for the bank portfolio continues to do well through the credit cycles. The credit model has been tested for over 12 years. During this time, the asset quality of the credit book remained pristine with GNPA at less than 2% and NNPA at less than 1% (except the COVID impact) Post COVID impact, the GNPA and NNPA in the retail, rural and SME credit has improved to 1.53% and 0.52% respectively as of September 30, 2023. 37 IDFC FIRST Bank#39b. Retail, Rural & SME Loans Section 8: 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 of tele-calling Better quality of portfolio Analytics is • Real time monitoring of portfolio by various cuts real time 38 IDFC FIRST Bank#40Break-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 || 3,168 Overall Bank Level Bank (Excl Infra.) 27,802 Gross Advances Breakup Section 8: Risk Management & Asset Quality Gross NPA Net NPA PCR% 1,46,783 1.53% 0.52% 85.06% 2.56% 0.11% 97.73% 25.07% 14.58% 62.81% 1,77,754 2.11% 0.68% 84.09% 1,74,585 1.69% 0.46% 87.71% • 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. • Without this infrastructure financing portfolio, the Bank level PCR (excluding technical write-off) is at 73.34%. Provision coverage ratio is including technical write-offs. 39 IDFC FIRST Bank#41b. Retail, Rural & SME Loans Section 8: 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* (6.60%) We follow it up with High Collection Efficiency (99.50%) This results in low SMA % (0.77%) This leads to High Asset Quality This slide explains the rigorous processes we follow to maintain low Gross NPA, low Net NPA and low credit costs for over a decade. Low Credit Losses Resulting in strong improvement of RoA/ROE * Cheque/ECS / NACH bounces on first EMI presentation 40 IDFC FIRST Bank#42b. 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 8: 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. 41 IDFC FIRST Bank#43b. Retail, Rural & SME Loans Section 8: 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. 42 IDFC FIRST Bank#44b. Retail, Rural & SME Loans Section 8: Risk Management & Asset Quality Bank has tightened underwriting norms which has resulted in low cheque bounces on presentation 9.9% Apr - Mar'20 Reduction of 33% 6.6% First EMI (FEMI) represents Cheque returns in the FIRST month after Booking. It is thus a direct indicator of the Quality of Booking. These returns are collected from customers in the remainder of the month (see next slide for collection efficiency). Our First EMI cheque Bounce has consistently remained low indicating high quality of bookings. Note: Numbers pertain to urban retail portfolio on trailing 12 months basis Oct - Sep'23 43 IDFC FIRST Bank#45b. Retail, Rural & SME Loans Section 8: Risk Management & Asset Quality Low cheque bounces is further supported by high collection efficiency at 99.5% Definition: Collection Efficiency % = (EMI Collected for the Month)/ (EMI Due for the month)* 100 Note: Total collections does not include any arrear collections, or prepayment collections in these calculations, and hence represents the true picture of collections efficiency. 99.3% 99.4% 99.2% 99.3% 99.4% 99.3% 99.4% 99.4% 99.5% 99.4% 99.5% 99.5% 99.5% 99.5% 99.6% 99.5% 99.5% 99.5% 99.5% 99.5% 99.3% 99.3% 99.3% 99.1% 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 Jul-23 Aug-23 Sep-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. 44 IDFC FIRST Bank#46b. Retail, Rural & SME Loans High collection efficiency leads to low SMA Section 8: Risk Management & Asset Quality SMA-1 & SMA-2 portfolio as % of total Retail, Rural & SME Loan Book 0.89% 0.85% 0.77% 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 0.77% of the Book in Retail, Rural & SME segment. Based on this, we expect a lower level of NPA formation in future. Sep-22 Jun-23 Sep-23 45 IDFC FIRST Bank#47b. Retail, Rural & SME Loans Section 8: Risk Management & Asset Quality Bank has maintained High Retail asset quality GNPA of ~2% and NNPA ~1% for a decade across cycles • 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 Economic Slowdown Stress 3: GST 4.01% 2.63% 2.14% 2.18% 2.02% 1.91% 1.98% 1.77% 1.66% 1.90% 30-Sep-23 GNPA: 1.53% NNPA: 0.52% 1.65% 1.53% 1.53% 0.99% 1.51% 1.41% 1.32% 0.53% 1.19% 1.24% 1.06% 0.25% 0.08% 0.67% 0.67% 1.15% 0.52% 0.55% 0.52% 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 Sep-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. 46 IDFC FIRST Bank#48b. Retail, Rural & SME Loans Section 8: Risk Management & Asset Quality All Product of the Bank have low Gross and Net NPA 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%, a result of stringent underwriting and risk management funnel described earlier. Gross NPA Net NPA 2.35% 1.96% 1.87% 1.76% 1.58% 1.42% 1.02% 0.89% 0.73% 0.68% 0.52% 0.46% 0.39% 0.47% 0.39% 0.15% 1.53% 0.52% Loan Against Property Consumer Loans Vehicles Credit Card Digital, Gold SME Loans Home Loan Rural Finance Loan and Others Retail, Rural & SME Loans Portfolio of unsecured Personal Loans with less than Rs. 50,000 ticket size stood at only Rs. 540 crore as of September 30, 2023 which is only 0.29% of the overall funded assets of the Bank and 0.37% of the retail, rural and SME book. • The Bank has maintained strong asset quality in this portfolio with GNPA at 1.4%. 47 IDFC FIRST Bank#49c. Wholesale Financing Section 8: 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. 48 IDFC FIRST Bank#50c. 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 Sep-23 Section 8: Risk Management & Asset Quality Similarly, the Bank has reduced its infrastructure financing portfolio from 19% in Mar-19 to 1.8% in Sep-23 29% 22% 19% 18% 16% 16% 19% 14% 9% 5% 3% 2% Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Sep-23 Also, the exposure to top 20 single borrowers reduced from 16% in Mar-19 to 6% in Sep-23 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Sep-23 Further, the exposure to top 5 industries also reduced from 41% Mar-19 to 20% in Sep-23 which has further strengthened the balance sheet. 16% 13% 12% 9% 7% 6% Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 41% 35% 27% 24% 22% 20% Sep-23 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Sep-23 49 IDFC FIRST Bank#51d. Provision Coverage Ratio Provision Coverage Ratio increased to 84.09% for the Bank Retail, Rural & SME Finance 82.43% 85.06% 69.59% 65.08% 57.53% 44.56% Section 8: Risk Management & Asset Quality Non-Infra Corporate Book 99.84% 94.50% 97.73% 72.32% 58.51% 45.95% Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Sep-23 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Sep-23 Total Bank Level Total Bank Level (excluding Infra financing book) 80.29% 84.09% 70.29% 66.40% 63.57% 48.67% 86.85% 87.71% 76.04% 62.34% 62.09% 44.96% Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Sep-23 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Sep-23 Note: Provision Coverage Ratio as shown above are including technical write-offs 50 IDFC FIRST Bank#52e. Net Stressed Assets Section 8: Risk Management & Asset Quality Net Stressed Assets reduced significantly to only 0.66% of total Assets Net stressed Assets = Net NPA + Net SRs + Net Restructured Assets (OTR) 1.28% Sep-22 Net NPA Net Restructured Assets (OTR) 0.71% 0.66% Jun-23 Net SRs Sep-23 Net Stressed Assets / Total Assets 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 ~53% since September 30, 2022 Standard restructured Book is 0.38% of the total funded assets as of September 30, 2023 51 IDFC FIRST Bank#53F Section 9: 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#54a. Net Interest Income 34% YoY growth in Net Interest Income during H1 FY24 Net Interest Income (In Rs. Crore) 4,845 25% 6,076 21% 4Y CAGR: 27% 9,706 7,380 12,635 Section 9: Profitability & Capital 34% increase in NII in H1 FY24 on YoY basis against balance sheet growth of 24% YoY 7,695 30% 5,753 32% FY19* FY20 FY21 FY22 FY23 H1 FY23 H1 FY24 • * H2-FY19 actual annualized Net Interest Margin (NIM) on AUM for Q2-FY24 was 6.32% as compared to 5.83% in Q2-FY23 and 6.33% in Q1-FY24. Net Interest Income (NII) for Q2-FY24 increased 32% YoY from Rs. 3,002 crore to Rs. 3,950 crore as on September 30, 2023. 53 IDFC FIRST Bank#55b. Fee & Other Income 47% YoY growth in Fee & Other Income during H1 FY24 Fee and Other Income (In Rs. Crore) • 1,167 33% 4Y CAGR: 37% 2,691 4,142 Section 9: Profitability & Capital 47% increase in Fee and Other income in H1 FY24 on YoY basis 54% 1,844 1,550 1,622 66% 5% 2,716 FY19* FY20 FY21 FY22 FY23 H1 FY23 H1 FY24 Fee and Other Income for Q2-FY24 increased 46% YoY from Rs. 945 crore to Rs. 1,376 crore as on September 30, 2023. * H2-FY19 actual annualized 54 IDFC FIRST Bank#56b. Fee & Other Income H1 FY24 Breakup of Fee & Other Income - H1 FY24 General Banking Fees & Others 28% Section 9: Profitability & Capital Loan Origination fees 32% 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. •92% of the fee income & other income is from retail banking operations which is granular and sustainable. Wealth Management / Third Party Distribution 14% Trade & Client Fx Credit Card & Toll 17% 9% 55 IDFC FIRST Bank#57c. Cost to Income Ratio Section 9: Profitability & Capital Cost to Income ratio - Investment Requirements . At merger, the Bank 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. . To address this issue and raise retail deposits, the Bank opened 656 branches and 999 ATMs since merger • The Bank also had to incorporate the new technology wave in its business model Branches ATMs (Including Recyclers) 1,111 206 4.2x 862 112 9.9x Dec-18 Sep-23 Dec-18 Sep-23 56 IDFC FIRST Bank#58c. Cost to Income Ratio Section 9: Profitability & Capital Bank has launched and scaled up many new products in the last 2 years Retail Assets Prime Home Loans Commercial Credit & Wholesale Banking Commercial Vehicle Loans Rural Products Gold Loans New Car Loans Construction Equipment Loans KCC Cash Management Credit Card Retail Fee Businesses Wealth Management FASTag Agri/Farmer Loans Forex Card Trade Finance Tractor Loans Digital Loans Forex Solutions Education Loans Transaction Banking 57 IDFC FIRST Bank#59c. Cost to Income Ratio Section 9: 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% 76.9% 77.8% 72.5% 72.3% Q2 FY19 H2 FY19 FY20 FY21 FY22 FY23 (Pre-Merger) 58 H1 FY24 IDFC FIRST Bank#60d. Core Pre-provisioning Operating Profit Section 9: Profitability & Capital 41% YoY growth in Core Operating Profit (excluding trading gains) during H1 FY24 The core operating profit (excluding trading gains) of the Bank is growing higher than the overall balance sheet growth. This demonstrates the power of incremental profitability of the core business model. Core Pre-Provisioning Operating Profit (In Rs. Crore) Balance Sheet growth Core operating profit growth 4Y CAGR: 43% 4,607 41% YOY growth in Core Operating Profit in H1-FY24 against 24% Balance sheet growth 26% 2,753 2,883 17% (Post merger) 1,764 9% 1,909 2,040 67% (Pre-merger standalone Bank) -11% 44% 1,105 8% 397 60% H1 FY19 H2 FY19 (Annualized) (Annualized) FY20 FY21 FY22 FY23 H1 FY23 H1 FY24 Core operating profit for Q2-FY24 increased 38% YoY from Rs. 1,052 crore to Rs. 1,456 crore as on September 30, 2023. 59 IDFC FIRST Bank#61d. 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 9: Profitability & Capital 2.29% 2.14% 2.02% H1 FY19 (Annualized) H2 FY19 (Annualized) FY20 FY21 FY22 FY23 H1 FY23 (Annualized) H1 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 60 IDFC FIRST Bank#62e. Net Profit Section 9: Profitability & Capital Bank has turned profitable on sustained basis based on strong Operating Profits and low credit costs Quarterly Net Profit / Loss (Rs crore) 701^ 765 751 605 556 474 343 281 101 130 128 152 72 94 4 ןיייוי Provisions on Infra Provisions on revaluation; 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 2.26% 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 Q2FY24 ^ 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. 61 IDFC FIRST Bank#63f. Profitability Ratios Consistent improvement in ROA and ROE 2.73% Section 9: Profitability & Capital Return on Equity (%) Return on Assets (%) 11.36% 0.75% 10.43% 9.54% 0.29% 0.08% 1.20% 1.13% 1.02% FY21 FY22 FY23 H1 FY23 H1 FY24 FY21 FY22 FY23 H1 FY23 H1 FY24 ROA(%) and ROE(%) are annualized for Half Year 62 IDFC FIRST Bank#64g. Financial Statements Quarterly Income Statement Section 9: Profitability & Capital In Rs. Crore Q2 FY23 Growth (%) Q1 FY24 Q2 FY24 YOY Interest Income Interest Expense Net Interest Income Fee & Other Income 5,470 6,868 7,356 34% 2,468 3,123 3,406 38% 3,002 3,745 3,950 32% 945 1,341 1,376 46% Trading Gain 116 73 54 -53% Operating Income 4,064 5,159 5,380 32% Operating Income (Excl Trading Gain) 3,947 5,086 5,326 35% Operating Expense 2,895 3,659 3,870 34% Operating Profit (PPOP) 1,169 1,500 1,510 29% Operating Profit (Ex. Trading gain) 1,052 1,427 1,456 38% Provisions 424 476 528 25% Profit Before Tax 745 1,024 982 32% Tax 189 259 231 22% Profit After Tax 556 765 751 35% 63 IDFC FIRST Bank#65g. Financial Statements Half Yearly Income Statement Section 9: Profitability & Capital Growth (%) In Rs. Crore H1 FY23 H1 FY24 YOY Interest Income Interest Expense Net Interest Income 10,391 14,224 37% 4,638 6,529 41% 5,753 7,695 34% Fee & Other Income 1,844 2,716 47% Trading Gain 73 127 75% Operating Income 7,670 10,539 37% Operating Income (Excl Trading Gain) 7,598 10,411 37% Operating Expense 5,558 7,528 35% Operating Profit (PPOP) 2,113 3,011 43% Operating Profit (Ex. Trading gain) 2,040 2,883 41% Provisions 732 1,005 37% Profit Before Tax Tax Profit After Tax 1,380 2,006 45% 350 490 40% 1,030 1,516 47% 64 IDFC FIRST Bank#66g. Financial Statements Balance Sheet Section 9: Profitability & Capital Growth (%) In Rs. Crore Sep-22 Jun-23 Sep-23 (YoY) Shareholders' Funds 22,052 26,531 27,675 26% Deposits - CASA Deposits -Term Deposits 1,23,442 1,54,427 1,71,236 39% 63,305 71,765 79,468 26% 60,138 82,662 91,768 53% Borrowings 56,643 55,741 53,166 -6% Other liabilities and provisions 10,639 12,251 12,642 19% Total Liabilities 2,12,776 2,48,950 2,64,718 24% Cash and Balances with Banks and RBI 14,847 13,207 13,106 -12% Net Retail and Wholesale Loans & Advances* 1,40,239 1,67,374 1,79,173 28% Investments 46,580 56,269 59,838 28% Fixed Assets 1,615 2,285 2,468 53% Other Assets 9,495 9,815 10,134 7% Total Assets 2,12,776 2,48,950 2,64,718 24% *includes credit investments (Non-Convertible Debentures, RIDF, PTC, SRS and Loan Converted into Equity) 65 IDFC FIRST Bank#67h. Capital Adequacy Ratio Section 9: Profitability & Capital Capital Adequacy Ratio is strong at 16.54% as on September 30, 2023 In Rs. Crore Common Equity Tier 2 Capital Funds Total Capital Funds Total Risk Weighted Assets CET-1 Ratio (%) Sep-22 Jun-23 Sep-23 21,478 25,630 26,777 2,642 6,105 6,051 24,120 31,736 32,828 1,57,128 1,87,133 1,98,425 13.67% 13.70% 13.49% 15.35% 16.96% 16.54% Total CRAR (%) • Including the fresh equity capital of Rs. 3,000 crore raised in 1st week of October 2023, total CRAR as on September 30, 2023 would be 18.06% with CET-1 ratio at 15.01%. • The Bank is well capitalized for growth in future. 66 IDFC FIRST Bank#68Section 10: Credit Rating#69Section 10: Credit Rating Bank's Long Term Credit Rating has been recently upgraded by CARE, CRISIL and ICRA Rating Agency Long Term Credit Rating CARE Ratings AA (stable) to AA+ (stable) Month of Rating Review October' 23 CRISIL AA (stable) to AA+ (stable) June '23 ICRA AA (stable) to AA+ (stable) India Ratings AA+ (negative) to AA+ (stable) May '23 December' 22 68 IDFC FIRST Bank#70Section 11: Board of Directors#71Board of Directors: MD & CEO Profile Section 11: Board of Directors Vaidyanathan aspires to create "a world-class 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. 1,46,783 crores, increased CASA from 8.7% to ~45.0%, and turned the bank into profitability. - 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. 70 IDFC FIRST Bank#72Board of Directors: COO Profile Section 11: 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. 71 IDFC FIRST Bank#73Board of Directors Section 11: 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. 72 IDFC FIRST Bank#74Board of Directors Section 11: 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. 73 IDFC FIRST Bank#75Board of Directors Section 11: Board of Directors Mr. Mahendra N. Shah - NON-EXECUTIVE NON INDEPENDENT DIRECTOR Mr. Mahendra N. Shah was the Group Company Secretary & Group Chief Compliance Officer of IDFC Bank Limited and had been the Group Head - Governance, Compliance & Secretarial and Senior Advisor- Taxation at IDFC Limited for more than two decades. In this role, Mr. Shah was responsible for Secretarial, Governance and Compliance functions for over 26 companies/entities of IDFC Group. Mr. Shah was the Company Secretary & Compliance Officer of IDFC Limited since May 24, 2019 and currently has been the Managing Director of IDFC Limited with effect from August 24, 2022. Prior to joining IDFC in 2001, Mr. Shah worked with International Paper Limited for a period of six years as Director Finance and Company Secretary. He has worked as Head of Taxation in SKF Bearings India Limited. He also worked for a short period with Pfizer Ltd as Finance Officer. He completed his articleship training for CA with M/s. Bansi S. Mehta & Co, CA for 3 years. He is a qualified member of the Institute of Chartered Accountants of India (ICAI), the Institute of Cost & Management Accountants of India (ICWA) and the Institute of Company Secretaries of India (ICSI) 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. 74 IDFC FIRST Bank#76Section 12: Shareholding#77Shareholding Pattern as of September 30, 2023 Scrip Name: IDFC FIRST Bank (BSE: 539437, NSE:IDFCFIRSTB) President of India (3.89%) Other Body Corporate (0.89%) Trusts and Clearing Members (0.51%) Others (0.03%) Public (23.72%) MF/Insurance/Bank/ FI/AIF (5.59%) FDI/FPI/FC/FN/NRI (26.01%) Promoters (39.37%) Section 12: Shareholding Total # of shares as of Sep 30, 2023 672.24 Cr Basic EPS (Q2-FY24 annualized) Rs. 4.43 • During the first week of October 2023, the Bank successfully raised Rs. 3,000 crore from set of Marquee investors via qualified institutional placement (QIP) at an issue price of Rs. 90.25 per share. 76 IDFC FIRST Bank#78Section 12: Shareholding Growth in book value per share Book Value Per Share reduced during the first few years after merger 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 38.86 Dec-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 ^ The Bank raised fresh equity of Rs. 3,000 crore in October 2023 via QIP. Including the same, BVPS would be Rs. 43.48 per share 41.17^ Sep-23 77 IDFC FIRST Bank#79F Section 13: Progress on ESG#80Our ESG Priorities Align with Our Corporate Vision Guided by Ethics Our Vision: To Build A World-Class Bank in India powered by Technology IIII I High standards of corporate governance I I ESG @ IDFC FIRST Bank Dedicated ESG governance Globally aligned disclosures and commitments FIRST EN SURE Enabling Sustainability Responsibly Reducing environmental footprint Section 13: Progress on ESG and be a force for Social Good Creating social impact I I I ESG-aligned business lines Progressively improving ESG ratings 79 ☆ IDFC FIRST Bank#81ESG at IDFC FIRST Bank - Environmental and Green initiatives Green infrastructure B EV charging infra for employees Customer awareness Section 13: Progress on ESG EV financing Green buildings IGBC & LEED certification for four of our large offices across Mumbai, Delhi and Hyderabad IDFC FIRST Bank Tower HO (The Square, BKC) has been recertified with highest rating of IGBC Platinum • EV charging infrastructure for employees in three offices Green energy IDFC FIRST 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 Water efficiency Optimization of water usage in facilities in key offices, saving over 4,300 KL water every year E-waste management 8.67 tonnes e-waste processed responsibly in FY23 • . EV financing 1.47 lakh EV two wheelers financed (live portfolio) 3400+ EV 3 wheelers financed in Rural areas for last mile connectivity Leading financier with maximum finance tie ups; introduced industry first end-to- end digital journeys ☐ Customer awareness Fully digitized customer journeys for multiple products to save paper In-store customer awareness for purchase of energy efficient appliances Environment focused CSR initiatives Beach cleanup programme – 1150 kg of waste collected in two sessions (one session in each quarter) • 1,300+ saplings planted till date Swachh Worli Koliwada programme - Over 113 tonnes dry and wet waste processed in Q1 + Q2 FY24 80 IDFC FIRST Bank#82ESG at IDFC FIRST Bank - Social and Governance initiatives Social Governance Employee engagement Community impact Employee learning and engagement ~9.9 lakh learning hours in H1 FY24 Customer-first Diverse leadership Strong governance Strong and experienced Board Holistic employee wellbeing programmes covering physical, mental and financial health Responsible and inclusive lending Consciously increasing lending to socially inclusive and environmentally responsible sectors ~60% of all rural borrowers are women CSR and community programmes* 4492 volunteers activated in H1 FY24, positively impacting 11481 people Shwetdhara programme that helps create farmer livelihoods expands total footprint to 550 villages 23 children supported under Paediatric Cancer Care Program 694 scholars awarded MBA Scholarships 51 young adults with autism supported for special education 52 municipal school students provided with Social Emotional Learning sessions 10 female football players supported for sports scholarships 23 women with intellectual disabilities supported under stipend program 109 children with intellectual disability supported for early intervention program 9690 households serviced under waste management and sanitation program *Impact numbers cumulative for Q1 + Q2 FY 2024 Growing geographical coverage for customer access Universal bank with 862 branches (and growing) • • Section 13: Progress on ESG Information security Independence: Independent Directors constitute 55% of the Board 11 Board Committees; majorly chaired and constituted by Independent Directors Management committees are mapped to respective Board Committees • Diverse and relevant skill sets of Board members • Highly competent Board with over 30 years of average experience • Dynamic and engaged Board, with high frequency of Board meetings • 100% average Board attendance • Being customer first Unique customer-friendly services, including fee-free services for savings account 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) 81 IDFC FIRST Bank#83Section 13: Progress on ESG ESG Commitments, Ratings and Governance • ESG Commitments FY 2023 annual disclosures published through the Bank's first Integrated Report, aligned with Int'l IR framework, GRI and SASB Official Participant of United Nations Global Compact (UNGC) One of the initial official supporters of Task Force on Climate-Related Financial Disclosures (TCFD) in the Indian Banking sector ESG Ratings Sustainalytics MSCI 26.6 2023 2023 A Lower is better ↑ ↑ 2022 38.3 2021 BBB Refinitiv ★ CRISIL DJSI 2022 60 (B) 2022 66 (B) 2022 44 Started 2022 ↑ 2021 50 (B-) 2021 2021 19 e H ESG Governance Structure Board Level Committee • Board Committee: Stakeholders Relationship, ESG and Customer Chaired by an Service Committee Independent Board member Management Level Committee ⚫Chaired by MD & CEO • Drives the strategic integration of sustainability within the Bank • Constitutes 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 82 IDFC FIRST Bank#84Section 13: Progress on ESG Recognitions for ESG Efforts GOLDEN PEACOCK WINNER AWARD Institute of Directors India Golden Peacock Award in ESG Sep 2023 (National) 2023 cfi.cz OUTSTANDING COMMITMENT TO ESG PERFORMANCE IN INDIA CFI.co - Capital Finance International Outstanding Commitment to ESG Performance in India Sep 2023 Our Bank has achieved a remarkable feat of securing not one but TWO prestigious awards at the esteemed UBS Forums Awards, These acculades serve as a testament to our unwavering commitment towards sustainabity and responsible practices UBS Forums ESG Rising Star & Sustainability Impact Award May 2023 ESG WINNER BEST BANK LEADING THE WAY IN ESC IDFC FIRST BANK sasama Transformance Forums Best Bank Leading the Way in ESG Apr 2023 EXOBLENCE Economic Times BFSI Excellence Awards Best CSR Sustainability Award Feb 2023 नवभारत RE Social Impact Bank of the Year Navabharat BFSI Award Best Sustainable Bank Strategy Oct 2022 WORLD FINANCE CORPORATE GOVERNANCE AWARDS 2 The European World Finance Organisation Social Impact Bank of the Year Sep 2022 Best Corporate Governance, India Jun 2022 13th 121 Inclusive Finance India Awards Breaking Ground in WASH Financing Dec 2021 Water.org & Sa-Dhan Awards Excellence in Water and Sanitation Financing Oct 2021 83 IDFC FIRST Bank#85F Section 14: Awards and Recognition#86Section 14: 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 Bank for Best Pr Bank for Westh Creation & Pervation Management SHEVER HNW Clients Best Corporate Governance 2023 - World Finance Best Digital Bank 2023 - Financial Express India's Best Banks Awards 2023 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 85 IDFC FIRST Bank#87ETHICAL 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. 86 IDFC FIRST Bank#88Disclaimer 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. 87 IDFC FIRST Bank#89Thank You IDFC FIRST Bank#90Annexure 1 Performance of the Bank against the stated goals 89 IDFC FIRST Bank#91The Bank is performing well on the guidance given for FY 25 at the time of the merger Dec-18 Particulars Guidance for FY24-FY25 (At Merger) Sep-23 Last quarter Status CET - 1 Ratio Capital Capital Adequacy (%) 16.14% >12.5 % 13.49%¹ On Track 16.51% >13.0 % 16.54%¹ On Track Liability 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) 8.7% 30% (FY24), 50% thereafter 46.4% On Track 206 800-900 862 On Track 39% 85% 81% On Track 17% <10% of liabilities 3% Achieved 123% >110% 122% On Track Rs. 36,927 Cr Rs. 100,000 Cr Rs. 1,46,783 Cr Achieved Retail, Rural and SME Finance as a % of Total Loans & Advances 35% 70% 80% Achieved Assets Wholesale Loans & Advances² Rs. 56,770 Cr < Rs. 40,000 Cr Rs. 32,679 Cr Achieved - of which Infrastructure loans Rs. 22,710 Cr Nil in 5 years Rs. 3,356 Cr On Track 1. Including the equity from capital raised in 1st week of October 2023, CET-1 and total CRAR would be 15.01% and 18.06% respectively. 2. 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 90 IDFC FIRST Bank#92The Bank is performing well on the guidance given for FY 25 at the time of the merger Dec-18 Sep-23 Particulars Guidance for FY24-FY25 Status (At Merger) Last quarter Top 10 borrowers as % of Total Loans & Advances (%) 12.8% < 5% 2.5% Achieved GNPA (%) 1.97% 2.0% -2.5% 2.11% On Track Asset Quality NNPA (%) 0.95% 1.0% 1.2% 0.68% On Track Provision Coverage Ratio³ (%) 53% ~70% 84% On Track Net Interest Margin (%) 3.10% 5.0% - 5.5% 6.32%¹ Achieved Cost to Income Ratio² (%) 81.56% 65% ^ 72.66% Behind Schedule Profitability Return on Asset (%) Return on Equity (%) 1. Gross of IBPC & Sell-down 2. Excluding Trading Gains -3.70% 1.4-1.6% 1.16% On Track -36.81% 13-15% 11.03% On Track 3. Including technical write-offs. Note: Earnings for Dec-18 are for the quarter, NIM, ROA, ROE are annualized for the corresponding quarter. ^ guidance for Q4-FY25 91 IDFC FIRST Bank#93Annexure 2 Breakup of the loans & advances with YoY growth 92 IDFC FIRST Bank#94Analysis of Loans & Advances by nature of business (Personal vs Business finance) Gross Loans & Advances (In Rs. Crore) Retail Finance Sep-22 Jun-23 Sep-23 YoY (%) QoQ (%) 81,354 97,327 1,04,603 29% 7% - Home Loan 16,925 20,139 21,257 26% 6% - Loan Against Property 18,740 20,103 21,629 15% 8% - Vehicle Loans - Consumer Loans - Education Loans - Credit Card - Gold Loan* - Others Rural Finance SME & Corporate Finance - of which CV/CE Financing* - of which Business Banking* - of which Corporate Loans Infrastructure 12,615 16,365 17,842 41% 9% 19,000 22,329 23,235 22% 4% 578 1,285 1,761 205% 37% 2,706 3,893 4,282 58% 10% 124 363 563 353% 55% 10,665 12,851 14,034 32% 9% 15,142 20,744 22,828 51% 10% 42,874 49,749 52,448 22% 5% 2,520 4,247 4,934 96% 16% 3,994 5,354 6,102 53% 14% 24,883 27,662 29,324 18% 6% Total Gross Loans & Advances 5,992 1,45,362 3,758 1,71,578 3,356 -44% -11% 1,83,236 26% 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. The figures above are net of Inter-Bank Participant Certificate (IBPC) transactions & includes credit substitutes 2. 3. 4. 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, 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. Others include digital lending, revolving credit, retail portfolio buyout etc. 93 IDFC FIRST Bank#95F Annexure 3 Background of IDFC FIRST Bank - Merger of IDFC Bank and Capital FIRST#96IDFC 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 95 IDFC FIRST Bank#97Annexure 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. 96 IDFC FIRST Bank#98Successful 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 97 32,623 H1-FY19 IDFC FIRST Bank#99Successful 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 98 IDFC FIRST Bank#100Successful 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 99 IDFC FIRST Bank#101Capital 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% 100 Q2 FY19* IDFC FIRST Bank#102Successful 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). 101 IDFC FIRST Bank#103Successful 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 102 1/15/2018 IDFC FIRST Bank#104Annexure 5 Proforma Financials before merger (H1-FY19) 103 IDFC FIRST Bank#105Pre 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 104 IDFC FIRST Bank