IDFC First Bank Limited

Was comparing IDFC First Bank and Federal Bank Q2 Business Updates

Both IDFC First Bank and Federal Bank have released provisional business updates for Q2 FY25. Here’s a comparison based on available data:

Key Metrics:

IDFC First Bank (IDFCFB):
● Strong Growth: IDFCFB witnessed robust growth in both loans and deposits during Q2 FY25
●CASA Focus: The bank’s CASA deposits surged by 37.6% YoY, contributing to a higher CASA ratio. This indicates a shift towards a more favorable deposit mix.
●Legacy Debt Repayment: IDFCFB is actively raising funds to repay existing borrowings, explaining the higher deposit growth compared to loan growth.This strategy aims to improve the bank’s financial health in the long run.
●Recent Merger: The merger of IDFC Limited with IDFC First Bank concluded on October 1, 2024, resulting in zero promoter holding. This transition positions IDFCFB as an independent entity, which could influence investor perception.

Federal Bank:
●Steady Growth: Federal Bank also exhibited healthy growth in advances and deposits, though at a slightly lower rate than IDFCFB.
●Retail Focus: The bank’s internal classification reveals a higher growth rate in retail credit (23%) compared to wholesale credit (13%). This focus on retail lending could imply lower risk and potentially higher profitability.
●Stronger Credit Rating: Federal Bank currently enjoys a slightly higher credit rating of AAA from CRISIL compared to IDFCFB’s AA+ Stable. A higher credit rating suggests lower credit risk for investors.

Conclusion:
●IDFCFB’s strong growth and improving CASA ratio are positive signs, as expected legacy debt repayment and the recent merger might introduce uncertainties.
●Federal Bank’s steady performance, retail lending focus, and stronger credit rating present a more stable picture.