Authored by : Anubhav Maurya Updated May 18, 2024 | 06:04 PM IST Photo : Shutterstock.com The RBI approved the merger of IDFC Limited, IDFC Financial Holding Company Limited, and IDFC First Bank.
With the issuance of a no-objection certificate on December 27, 2023, the Reserve Bank of India (RBI) approved the merger of IDFC Limited, IDFC Financial Holding Company Limited, and IDFC First Bank.
The previous year's same quarter net earnings of Rs 803 crore had dropped to Rs 724 crore, a 10% decline.
From Rs 7,822 crore to Rs 9,861 crore, the bank's overall income increased, while its interest income increased from Rs 6,424 crore to Rs 8,219 crore.
Following the announcement, shares of IDFC First Bank increased by 0.26% to close at Rs 77.44, while shares of IDFC Ltd remained unchanged.
Authored by : Anubhav Maurya Updated May 18, 2024 | 06:04 PM IST Photo : Shutterstock.com The RBI approved the merger of IDFC Limited, IDFC Financial Holding Company Limited, and IDFC First Bank. (Image: Shutterstock/ET NOW News)
Merger ahead: In a major development, the shareholders of IDFC First Bank have unanimously approved of the much awaited merger with IDFC Ltd. At an important meeting called by the Chennai bench of the National Company Law Tribunal (NCLT) on May 17, the matter was approved with a whopping 99.95% vote in favour, as per BSE filings.
The regulatory establishment supports this merger in addition to the shareholders. With the issuance of a no-objection certificate on December 27, 2023, the Reserve Bank of India (RBI) approved the merger of IDFC Limited, IDFC Financial Holding Company Limited, and IDFC First Bank. The boards of the three companies unanimously approved this regulatory move in July 2023.
IDFC First Bank's Journey The story of IDFC First Bank's journey is one of strategic development and growth. The bank has been on a rising trend from its founding in 2014, when the RBI issued its licence, and culminated in the current IDFC First Bank through the crucial merger with Capital First Ltd in 2018.
With IDFC's non-financial holding company owning 39.93% of the bank, the merger is expected to simplify operations and improve regulatory compliance by streamlining the corporate structure. With a 4.9% increase in book value per share, supported by the audited financials as of March 31, 2023, the merger is positive financial news for shareholders.
IDFC First Bank Quarterly Results However, the bank's March 2024 Q4 report card presents mixed results. The previous year's same quarter net earnings of Rs 803 crore had dropped to Rs 724 crore, a 10% decline. The reason given was increased provisions which is quite impressive. From Rs 7,822 crore to Rs 9,861 crore, the bank's overall income increased, while its interest income increased from Rs 6,424 crore to Rs 8,219 crore. Net Interest Income (NII) increased by a robust 24% as well.
IDFC First Bank appears to be doing better when it comes to asset quality, as net NPAs have decreased to 0.60% and gross NPAs have shrunk to 1.88%. However, at Rs 722 crore, provisions and contingencies have increased by 50%. An important measure of health, the capital adequacy ratio, has slightly decreased to 16.17%. Following the announcement, shares of IDFC First Bank increased by 0.26% to close at Rs 77.44, while shares of IDFC Ltd remained unchanged.
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(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
