Capitaline

Analyst Meet / AGM 30-Jan-15

Conference Call

IDFC

30% of eligible loans to receive CRR-SLR-PSL exemption benefit

IDFC conducted concall on 30 January 2015 to discuss financial results for the quarter ended September 2015. Vikram Limaye, MD&CEO, Sunil Kakar, Group Chief Financial Officer addressed the call:
Highlights:

The Reserve Bank of India (RBI) has clarified on regulatory benefits for bank lending to the infrastructure sector as announced in the Union Budget 2014-15. RBI has informed that 30% of the outstanding eligible loans as on the date of demerger i.e. 01 October 2015 would be able to receive the benefit of CRR-SLR-PSL exemptions provided the loans are funded though issuance of long-term infrastructure bond issued after July 2014.
Company has continued with prudent policy of building counter-cyclical provisions. It has stepped up overall provisions outstanding to 3.9% of loans at end December 2014 from 3.6% of loans a quarter ago.
Company would continue to build provisions till September 2015 with a view to avoid any surprising provision requirement in a first year of banking operation. However, the current provision raising view may change only if the economic situation improves significantly.
The proposed bank will follow normal provisioning policy
The current balance sheet of the company meets the Liquidity Coverage Ratio (LCR) guidelines for the banks.
GNPA ratio stood at 68 bps and NNPA ratio at 47 bps at end December 2014. Net restructured loans of the company were flat at 6.1% at end December 2014. About 87% of the restructured advances related to the energy sector, of which 31% related to gas based sector.
The company expects restructured advance book to rise in Q4FY2015.
Securities receipts book of the company remained flat 0.3% of the loans book at end December 2014.
Treasury book of the company qualifying for SLR status has increased to Rs 16000 crore at end December 2014 from Rs 13000 crore a quarter ago.
As per the company, the macroeconomic environment is improving, while the revival in infrastructure spending will be few quarters away.
Company expects the loan book to be flat in FY2015. The company is optimizing its loan book composition, while avoiding faster loan growth that would create Priority Sector Lending (PSL) pressure once company turns into a bank.

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