Peer Bank Benchmarking of Liquidity Risk Expeiential Learning Project

Abstract

IDFC FIRST Bank was formed in December 2018 as a result of the merger between the IDFC Bank and Capital First. IDFC FIRST Bank follows the culture of customer first, innovations, transparency, collaboration, integrity, trust and action oriented. Its mission was to provide high quality banking products and services with focus on aspiring customers and entrepreneurs through technologies. IDFC FIRST Bank’s net interest margin as on 31.3.2021 was 5.10%. This net interest margin increased from 4.24% as on 31.3.2020. IDFC FIRST Bank’s net interest margin of 5.10% as on 31.3.2021 is the highest amongst its peers. IDFC FIRST Bank’s ROE as on 31.3.2021 was 2.73%. This ROE increased from -17.10% as on 31.3.2020. IDFC FIRST Bank can compare itself with ICICI Bank whose ROE of 12.30% as on 31.3.2021 is the highest amongst its peers. IDFC FIRST Bank’s CASA Ratio as on 31.3.2021 was 51.75%. This CASA Ratio increased from 31.87% as on 31.3.2020. IDFC FIRST Bank can compare itself with KOTAK MAHINDRA Bank whose CASA Ratio of 60.40% as on 31.3.2021 is the highest amongst its peers. IDFC FIRST Bank’s Gross NPA as on 31.3.2021 was 4.15%.This Gross NPA increased from 2.60% as on 31.3.2020. IDFC FIRST Bank can compare itself with KOTAK MAHINDRA Bank whose Gross NPA of 1.32 % as on 31.3.2021 is the lowest amongst its peers. IDFC FIRST Bank’s Net NPA as on 31.3.2021 was 1.86%. This Net NPA increased from 0.84% as on 31.3.2020.. IDFC FIRST Bank can compare itself with KOTAK MAHINDRA Bank whose Net NPA of 0.40 % as on 31.3.2021 is the lowest amongst its peers. IDFC FIRST Bank’s Capital Adequacy Ratio (CAR) as on 31.3.2021 was 13.77%. This Capital Adequacy Ratio (CAR) increased from 13.38% as on 31.3.2020. IDFC FIRST Bank can compare itself with KOTAK MAHINDRA Bank whose Capital Adequacy Ratio (CAR) of 22.30 % as on 31.3.2021 is the highest amongst its peers. IDFC FIRST Bank’s Provision Coverage Ratio (PCR) as on 31.3.2021 was 64.95%. This Provision Coverage Ratio (PCR) increased from 64.53% as on 31.3.2020. IDFC FIRST Bank can compare itself with KOTAK MAHINDRA Bank whose Provision Coverage Ratio (PCR) of 95.00 % as on 31.3.2021 is the highest amongst its peers. IDFC FIRST Bank’s ROA (in %) as on 31.3.2021 was 0.33%. This ROA (in %) increased from 0.18% as on 31.3.2020. IDFC FIRST Bank can compare itself with ICICI Bank whose ROA (in %) of 1.51 % as on 31.3.2021 is the highest amongst its peers. LCR of IDFC FIRST Bank as on 31.3.2021 was 153.34% which increased from 132.11% and 111.03% as on 31.12.2020 and 31.3.2020 respectively. This ratio of 153.34% is above that of the minimum LCR requirement of 100%. IDFC FIRST Bank can compare itself with RBL Bank and KOTAK MAHINDRA Bank whose LCR as on 31.3.2021 was at 177.67% which I consider it safe for the banks. The proportion of retail deposits in total deposits for IDFC FIRST Bank as on 31.3.2021 was 58.72%. Such proportion increased from 52.29% and 39.82% as on 31.12.2020 and 31.3.2020 respectively. IDFC FIRST Bank can compare itself with KOTAK MAHINDRA Bank whose retail deposits to total deposits ratio is the highest amongst its peers at 63.97% as on 31.3.2021. The proportion of RWA in Total Assets for IDFC FIRST Bank as on 31.3.2021 was 78.46%. IDFC FIRST Bank can compare itself with that of SBI whose proportion of RWA in Total Assets as on 31.3.2021 were 48.56%. % of Credit RWA in Total RWA for IDFC FIRST Bank as on 31.3.2021 were 80.11%. IDFC FIRST Bank can compare itself with AXIS Bank whose proportion of Credit RWA in Total RWA is 86.22% as on 31.3.2021. % of Credit RWA in Total Assets for IDFC FIRST Bank as on 31.3.2021 were 62.85%. IDFC FIRST Bank can compare itself with SBI whose proportion of Credit RWA in Total RWA is 38.12% as on 31.3.2021. % of Market RWA in Total RWA for IDFC FIRST Bank as on 31.3.2021 were 10.29%. IDFC FIRST Bank has the highest proportion of market RWA in Total RWA amongst its peers as on 31.3.2021. % of Market RWA in Total Assets for IDFC FIRST Bank as on 31.3.2021 were 10.16%. IDFC FIRST Bank can compare itself with AXIS Bank which has the lowest proportion of market RWA in Total Assets at 2.46% amongst its peers as on 31.3.2021. % of Operational RWA in Total RWA for IDFC FIRST Bank as on 31.3.2021 were 4.12%. IDFC FIRST Bank can compare itself with INDUSIND Bank which has the highest proportion of operational RWA in Total RWA at 9.23% amongst its peers as on 31.3.2021. % of Operational RWA in Total Assets for IDFC FIRST Bank as on 31.3.2021 were 5.45%. IDFC FIRST Bank can compare itself with SBI which has the lowest proportion of market RWA in Total Assets at 4.90% amongst its peers as on 31.3.2021. IDFC FIRST Bank experienced the highest increase in the Net Interest Income of 30.96% from 31.3.2020 to 31.3.2021 in comparison to its peers. % change in gross revenue for IDFC FIRST Bank was 3.59% from 31.3.2020 to 31.3.2021. IDFC FIRST Bank can compare itself with ICICI Bank which experienced a highest increase in % change in gross revenue of 16.58% from 31.3.2020 to 31.3.2021. % change in operating profit for IDFC FIRST Bank was 31.18% from 31.3.2020 to 31.3.2021. IDFC FIRST Bank can compare itself with YES Bank which experienced a highest increase in % change in operating profit of 41.50% from 31.3.2020 to 31.3.2021. % change in profit after tax for IDFC FIRST Bank was 115.79% from 31.3.2020 to 31.3.2021. IDFC FIRST Bank can compare itself with AXIS Bank which experienced a highest increase in % change in profit after tax of 304.89% from 31.3.2020 to 31.3.2021. IDFC FIRST Bank has a concentration of deposits ratio of 22.73% as on 31.3.2021 which declined from 34.58% as on 31.3.2020. SBI has the best concentration to deposits ratio amongst all the peers at 2.94% as on 31.3.2021. This ratio declined from 3.11% as on 31.3.2020. I have personally considered 70%-85% as safe ratio for the banks. Credit-Deposits Ratio of IDFC FIRST Bank declined to 113.37% as on 31.3.2021 from 131.47% as on 31.3.2020. The best peer that this ratio can be compared with is that of SBI. Its credit-deposits ratio as on 31.3.2021 is 66.54%. This ratio is comparatively safe to that of IDFC FIRST Bank but still it is an early warning indicator as it is outside of the range. This ratio of 66.54% declined from 71.73% as on 31.3.2020. % of FCY in Total Borrowings for IDFC FIRST Bank as on 31.3.2020 was 8.13% which declined from 9.81% as on 31.3.2019. % of FCY in Total Borrowings as on 31.3.2020 for IDFC FIRST Bank was the least amongst its peers. % of FCY in Total Borrowings as on 31.3.2020 for SBI at 69.72% was the highest amongst its peers. % of INR in Total Borrowings for IDFC FIRST Bank as on 31.3.2020 was 91.87% which increased from 90.89% as on 31.3.2019. % of INR in Total Borrowings as on 31.3.2020 for IDFC FIRST Bank was the highest amongst its peers. % of INR in Total Borrowings as on 31.3.2020 for SBI at 30.28% was the least amongst its peers. Leverage Ratio of IDFC FIRST Bank as on 31.3.2021 was 8.99. This ratio of 8.99% as on 31.3.2021 increased from the ratio of 8.36% as on 31.3.2020. This ratio declined from 9.59% as on 31.12.2020. IDFC FIRST Bank can compare itself with KOTAK MAHINDRA Bank whose leverage ratio as on 31.3.2021 was 16.30%.