Capital First Investor Presentation September 2018
Approach to build IDFC FIRST Bank
Background
•
IDFC Limited was a reputed Domestic Financial Institution which was awarded a commercial banking license, and set up IDFC
Bank. As part of this process, IDFC Limited transferred its loan assets (largely corporate and infrastructure loans) and liabilities
(largely infrastructure bonds and institutional borrowings) to IDFC Bank. In order to diversify into retail, IDFC Bank was looking
for a successful retail franchise to merge with.
Capital First Limited, was a retail & SME focused NBFC with proven track record of growth (5 year CAGR of 29%), asset quality
(GNPA ~2%, NNPA ~1%) and profitability (5 year CAGR of 56%). The company grew from US$ 11.5 Mn in 2010 to US$ 3,902 Mn
in March 2018. Capital First was looking for a commercial banking license.
The two entities merged and thus IDFC FIRST Bank was created in December 2018.
On merger the had the following issues in hand as reflected in the financials of 31st December 2018:
a)
We had a low CASA at 8.68%. Our total deposits & borrowings were US$ 15,778 Mn, of which only US$ 1,268 Mn (8.04%) were retail
Deposits and US$ 14,510 Mn (91.96%) were institutional borrowing and deposits.
b) As a DFI converted bank, our reported annualized NIM was 1.9% in the half year prior to the merger. Post expenses, this left little room for
operating profits and PAT.
c)
The Bank had large and concentrated exposure in infrastructure and corporate Loans.
Over the last 4 years, the bank has addressed almost all issues pertaining to legacy infrastructure assets, liabilities (CASA is now
46%), and profitability (FY 23 PAT of US$ 297 Mn).
The Bank now looks forward to sustained growth with profitability from here on.
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IDFC FIRST
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