Highlights of Q3 FY22 Results

Key Strengths of IDFC FIRST Bank 8. Legacy wholesale account issues largely behind us Section 1: Executive Summary for Q3 FY22 Over the last three years, we have decisively dealt with, and accounted for almost all legacy infrastructure and corporate accounts. The quality of incremental corporate loans has been excellent in the last three years. 9. Contemporary Technology The bank continues to invest in laying a strong, modular and contemporary technology architecture that will help the bank to simultaneously enable efficiency, resilience, and growth. Our newly launched mobile app based on these technologies is top rated and provides several unique services and experiences to our customers. The Bank continues to strengthen its superior capabilities of predictive analytics in the area of credit underwriting, portfolio management, collection strategy, fraud risk mitigation and other such areas. 10. Strong unit economics on an incremental basis Our retail lending is giving us strong ROE of 18 to 20% on an incremental basis. Its not hard to see how. The NBFC, whose business is now subsumed in the bank was posting ROE of 15% and rising, with ~9% cost of funds. Therefore, with cost of funds now under 5%, we can comfortably generate ROE of ~18 to 20% on retail lending. Even though we have additionally started doing lesser margin products like prime home loans and new car loans, the overall returns are strong because of lower cost of funds. Currently, we are incurring cost of legacy borrowing of the DFI background @ 8.7% for Rs. 26,163 crores of borrowings. Further, since the bank is in set-up stage, we are incurring cost of launching/scaling many new businesses. These factors are masking these strong underlying economics and ROE, but this will get addressed in due course with scale and repayment of legacy liabilities. 9 IDFC FIRST Bank

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