In Q2 the bank had liquidated the SRs inherited from pre merger IDFC bank and the consequent release of 200 crores worth of provisioning was transferred to retail provisioning otherwise the profit would have been higher by 200 crore. The bank nifty is moving ahead and would provide tailwinds to positive triggers. It would be prudent for IDFCFB to avoid excess provisioning in Q3 and Q4. This would help the bank improve its results and consequently its market capitalisation.
The bank would need to raise additional tier 1 capital after another couple of quarters. At that juncture a good market price would help in keeping the equity dilution to a minimum. This would be a medium term and long term positive. It appears that the bank management is going in the same direction.
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