IDFC recorded sharp 47% dip in the net profit to Rs 254.21 crore for the quarter ended June 2015 (Q1FY2016). The subdued revenue growth and surge in operating expenses hit the bottomlines of the company in Q1FY2016. The decline in loan book and narrowing of margins impacted the revenue growth of the company. Average spreads eased to 1.5% from 1.8% in FY2015, while NIM dipped to 3.2% from 3.4% in FY2015. Meanwhile, the company has also exhibited sharp deterioration in asset quality in Q1FY2016.

The company has continued to step up provision for bad loans with provisions as percentage of gross loan book rising to 4.5% at end June 2015 from 4.2% a quarter ago and 2.9% a year ago. The operating expenses jumped 76% in Q1FY2016 over Q1FY2015, as the company continues to spend on banking venture.

The total income from operations rose 2% to Rs 2226.77 crore for the quarter ended June 2015, while interest expenses increased 17% to Rs 1519.42 crore. Other expenses moved up 76% to Rs 235.55 crore. The operating profits dipped 37% to Rs 471.8 crore in Q1FY2016.

Provisions and contingencies declined 69% to Rs 62.46 crore in Q1FY2016 from Rs 203.93 crore in Q1FY2015. Depreciation provisions jumped to Rs 6.78 crore in Q1FY2016 against write-back of Rs 79.67 crore in Q1FY2015. The PBT declined 36% to Rs 402.56 crore in the quarter ended June 2015. Tax rate jumped to 32% in Q1FY2016 from 22.5% in Q1FY2015. PAT plunged 47% to Rs 254.21 crore for Q1FY2016.

Net Interest Income (NII) declined 8% to Rs 627 crore in Q1FY2016 over Q1FY2015. NII from loans dipped 18% to Rs 506 crore, while the NII from treasury operations surged 78% to Rs 121 crore in the quarter ended June 2015. The strong growth in treasury NII was driven by two-fold surge in treasury book to Rs 28955 crore at end June 2015 over Rs 14662 crore at end June 2015.

Non-interest Income dipped 40% yoy to Rs 80 crore in Q1FY2016, as losses on principal investments surged to Rs 32 crore in Q1FY2016 from Rs 9 crore in Q1FY2015. Fixed income segment witnesses losses of Rs 84 crore, while other income dipped 94% to Rs 4 crore in Q1FY2016. However, the loan related fees nearly trebled to Rs 21 crore, the asset management fees increased 15% to Rs 114 crore in Q1FY2016 and investment banking and broking fees moved up 36% to Rs 19 crore in Q1FY2016.

Business performance

The balance sheet increased 19% from Rs 75,655 crore to Rs 90,367 crore as on 30 June 2015.

Gross Loan book decreased 1% from Rs 53,848 crore as on 30 June 2014 to Rs 53,359 crore as on 30 June 2015.

Gross Approvals increased by 26% from Rs 1,339 crore in Q1FY15 to Rs 1,692 crore in Q1FY16.

Gross Disbursements increased by 26% from Rs 2,463 crore in Q1FY15 to Rs 3,104 crore in Q1FY16.

Cumulative Outstanding Approvals was Rs 72,027 crore as on 30 June 2015.

Net Restructured Loans as on 30 June 2015 - 7.0% of loans.

Average spreads for rolling 12 month period ending Jun 2015 - 1.5% (FY15 – 1.8%).

NIMs for rolling 12 month ending Jun 2015 - 3.2% (FY15 - 3.4%).

Capital Adequacy at 23.8% as on 30 June 2015 (of which Tier I at 22.6%).

Gross NPLs at 1.5% and Net NPLs at 1.0% of outstanding loans.

Average Assets under management - Rs 69,271 crore.

Asset Quality

The asset quality deteriorated sharply in the quarter ended June 2015. GNPA ratio increased 87 bps qoq to 1.52% at end June 2015. Meanwhile, the NNPA ratio jumped 77 bps qoq to 0.99% at end June 2015.

Restructured loans declined to 7% of loan book at end June 2015 from 7.8% at end March 2015, while increased from 5.3% at end June 2014.

Book value of the company stood at Rs 110 per share, while the adjusted book net of NNPA and 10% of restructured advances stood at Rs 104.4 per share at June 2015.

Annual Financial Performance

Total Income grew 11% yoy to Rs 9722.47 crore in the year ended March 2015 (FY2015). Interest expenses increased 12% to Rs 5657.75 crore and the other expenses increased 49% to Rs 766.5 crore in FY2015. Operating profits increased 2% to Rs 3298.22 crore in FY2015. Provisions and contingencies surged 61% to Rs 1013.38 crore. PBT, as a result, declined 8% to Rs 2346.14 crore. Tax Provisions eased 19% yoy to Rs 596.27 crore in FY2015. Finally, the PAT declined 5% to Rs 1706.95 crore in FY2015 over FY2014.

Net Interest Income (NII) declined 3% to Rs 2633 crore. NII from loans declined 8% to Rs 2291 crore, while NII from treasury operations increased 59% to Rs 343 crore in FY2015.

Non-Interest Income rose 32% to Rs 1323 crore, as the income from principal investments advanced 75% to Rs 557 crore. Fees from IDFC's asset management business moved up 13% to Rs 440 crore in FY2015. Income from Investment banking and broking rose 4% to Rs 80 crore. Fixed income jumped 75% to Rs 179 crore, but loan related fees fell 41% to Rs 68 crore in FY2015 over FY2014.