IDFC FIRST Bank Risk Management & Asset Quality
Section 3: Guidance 2.0
Guidance 2.0 (FY24 - FY29): Background
1. 5 Years: As of 31/12/2023, IDFC FIRST Bank has completed exactly 5 years post the merger of IDFC Bank and Capital First.
2. Guidance 1.0: At the time of the merger, the Bank had put out certain guidance (Guidance 1.0) for FY 25.
3. Limited Visibility: When we announced the guidance, we did not have much visibility into what the next five years would
entail. As it turned out, the Bank faced many unexpected headwinds upon merger, as follows:
a.
2019-2020: Many legacy wholesale loans like Dewan Housing Finance, Reliance Capital, Cox & Kings and infrastructure
accounts where the Bank had to write-off significant amounts of around Rs. 2,000 crore. This eroded net-worth, book
value per share, and reduced income of about Rs. 200 crores in annuity. Bank raised capital to recapitalize the Bank.
b. Losses: Due to such unforeseen events, the Bank posted six quarters of losses consecutively from Q2 FY 19 to Q3 FY 20.
2020-2022: The unprecedented COVID situation affected growth and earnings further during these two years.
C.
d. News Flow: Disturbed news flow due to outsized exposure of Rs. 3244 crores to Vodafone Idea (eventually paid Jan 22)
e. Low Core Pre-Provisioning Operating Profits (PPOP): The Core PPOP of the Bank was only 1% of loans, leaving little
room to absorb normal credit provisions.
4. Met most guidance: Under such difficult conditions and unprecedented events, the Bank has exceeded/met/ most likely to
meet most targets as provided under Guidance 1.0. Please refer Guidance vs Performance of Guidance 1.0 in Annexure.
5. Guidance 2.0 (FY 24-FY 29). Based on the trends and momentum, we now have greater visibility into our future and
profitability and plans, and provide Guidance 2.0
13
IDFC FIRST
BankView entire presentation