India's IDFC Bank sees bad loans rising, no impact on earnings

IDFC

27/01/2016 14:37

MUMBAI, Jan 27 (Reuters) - IDFC Bank Ltd  IDFB.NS , one of 
India's two newest banks, expects its gross bad loans to 
increase in the coming quarters although that will not hit 
earnings as it has made adequate provisions, it said on 
Wednesday. 
    IDFC Bank, a unit of infrastructure lender IDFC Ltd 
 IDFC.NS , started operations last October after receiving a 
permit from the Reserve Bank of India in what was the first bank 
licensing process in a decade. 
    It reported on Wednesday a net profit of 2.42 billion Indian 
rupees ($36 million) for the December quarter, its first 
full-quarter of operations. Gross bad loans as of Dec. 31 were 
14.62 billion rupees, or 3.1 percent of total loans.  
    The bank, which was spun off from IDFC Ltd, had total 
troubled assets of about 88 billion rupees, which it 
"self-identified" and made a "substantial provisioning cover" 
before migration of the balance sheet, Chief Executive Rajiv 
Lall said. 
    The bank's parent had previously said it would make 25 
billion rupees of additional provisions for its fiscal second 
quarter to September. 
    "Our gross NPLs (non-performing loans) in the next six 
months or 12 months could go up in absolute terms... as a share 
of loan book it need not," Lall told a news conference on 
Wednesday. 
    "But it will not require additional provisions, it will not 
affect my earnings, it will not affect the risk or the quality 
of my overall book." 
    The bank aims to ramp up its retail lending and fee income, 
Lall said, adding they would launch a mortgage finance product 
soon.  
    IDFC Bank, which has 36 branches, will continue to expand 
the branch network, but focus was more on providing banking 
services using technology.         
    "We would much rather over-invest in technology and 
under-invest in branches. Our belief is that customer behaviour 
in India is changing so fast that it is now possible to build a 
bank which is very branch light," Lall said. 
($1 = 67.9828 Indian rupees) 
 
 (Reporting by Devidutta Tripathy; editing by Susan Thomas) 
 ((devidutta.tripathy@thomsonreuters.com; +91 84518 40430; 
Reuters Messaging: 
devidutta.tripathy.thomsonreuters.com@reuters.net)) 
 
Keywords: IDFC BANK RESULTS/