Mumbai: IDFC Bank Ltd reported on Wednesday a net profit of 242.2 crore for the three months ended December, its maiden quarter after it began operations in October 2015.

Earnings for the same period last year as reported by IDFC Ltd are not comparable.

The bank indicated that about 15% of its loan book could fall in the stressed category, which could mean a rise in non-performing loans in the coming quarters.

The bank’s net interest income (NII), the difference between interest earned on loans and paid on deposits, was 404.2 crore for the third quarter of the current fiscal. Net interest margin, a measure of the bank’s profitability, was at 2%. Other income, mainly income from fees and commissions, was at 200 crore.

Going forward, the bank will focus on boosting its fee-based income from its traditional corporate loan book, which it inherited from IDFC, said Rajiv Lall, vice-chairman and managing director at the bank.

“We will build up the earning power of our corporate book by changing the mix of interest versus non-interest earnings," said Lall in an interaction with the media.

IDFC Ltd, an infrastructure finance institution, received a banking licence from the Reserve Bank of India in July 2015, following which the assets and liabilities of the finance company were transferred to the bank as per regulations.

IDFC Bank began operations in October 2015 with a loan book of about 41,000 crore and has set up 24 branches across urban and rural centres.

In its first quarter as a bank, the lender’s outstanding advances stood at 42,995, a growth of 3% since its inception. The bank has lent close to 54 crore under its rural banking vertical labelled “Bharat Banking", said Sunil Kakar, group chief financial officer.

“Rural banking is certainly our focus but it is not our prime focus. It is one of the three pillars, the others being wholesale and consumer banking," said Lall.

The bank’s gross non-performing assets (NPA) were 3.1% of loans on a gross basis and 1% on a net basis. The bank expects its gross NPAs to increase in the coming quarters through slippages in its restructured loans. Restructured loans along with gross NPAs formed 7-8% of total advances, said Kakar, adding that the bank has proactively identified loans that may face trouble even though they don’t fall under the regulatory definition of stressed assets.

IDFC Bank has close to 8,800 crore worth of loans under stress, which is about 15% of total advances, Lall said. “When we say that our asset quality is stable, what we are saying is that the overall stressed book has not grown and the provisions that we have made are adequate," he said.

The bank would not need to make provisions in the coming quarter even if its gross NPAs grow in absolute terms, Lall said.

The bank has proactively identified stressed loans and provided for the same, he added.

RBI has asked banks to identify visibly stressed loans and make provisions against these by March 2016 in a move directed at cleaning up bank books by March 2017.

In the July-September quarter, IDFC Ltd had made a one-time provision of 2,638.72 crore to clean up the balance sheet before starting banking operations. This had led to a consolidated net loss of 1,468.83 crore for IDFC Ltd in the September quarter.

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