To capitalise on upcoming growth opportunities, IDFC First Bank Board has approved raising around Rs 3,200 crore through a preferential issue.
Under the scheme, the bank will allot around 39.68 crore shares to some of the biggest institutional investors in India, including LIC, HDFC Life, ABSL Insurance, Bajaj Allianz Life, ICICI Lombard, and SBI General Insurance.
The fresh equity capital raised from these investors is being done at Rs 80.63 per share, a premium of 4.51% to the closing price of the last trading day before the Board meeting.
With this proposed capital raise of Rs 3,200 crore, the bank’s overall capital adequacy will further increase to 17.49%, as computed on the risk-weighted assets as of March 2024, which will put the bank in a strong position to participate in future growth. The bank’s capital adequacy is at 16.11% as of March 2024.
The lender said it has built a strong deposit franchise with a growing branch network, contemporary digital systems and analytics capabilities, a strong brand identity, customer-friendly products and processes as well as a high standard of corporate governance standards.
Its customer deposits have been growing strongly at a 5-year CAGR of 37% and the growth in the customer deposits has accelerated to 42% in FY24 over FY23. Similarly, the lender’s overall loan book (including credit substitutes) grew by 25% year-on-year in FY24.
The bank has also launched a number of new products such as credit cards, gold loans, tractor loans, car financing, affordable housing, etc., which it plans to grow strongly. It has a very well-diversified portfolio across consumer, rural, MSME, and corporate customer segments.
The bank’s asset quality is healthy with gross NPA and Net NPA at 1.88% and 0.60% respectively as of March 2024. With respect to retail, rural, and SME finance books, the gross and Net NPAs continue to be quite low at 1.38% and 0.44% respectively as of March 2024.
Excluding the infrastructure financing book, which is a legacy portfolio in run-down mode, the gross and net NPAs of the Bank were only 1.55% and 0.42% respectively at the end of FY24.
“The unique ability of the Bank is to grow the loan book sustainably while maintaining the high asset quality standards,” it said in a statement.
