IDFCFIRSTB

IDFCFIRSTBANK/SD/170/2022‐23 October 22, 2022 National Stock Exchange of India Limited BSE Limited Exchange Plaza, Plot No. C ‐ 1, G ‐ Block Phiroze Jeejeebhoy Towers Bandra‐Kurla Complex, Bandra (East) Dalal Street, Fort Mumbai 400 051 Mumbai 400 001 NSE ‐ Symbol: IDFCFIRSTB BSE ‐ Scrip Code: 539437 Sub.: Investor Presentation – Unaudited Standalone and Consolidated Financial Results (“Financial Results”) of IDFC FIRST Bank Limited (“Bank”) for the quarter and half year ended September 30, 2022. Dear Sir / Madam, Please find enclosed herewith the Investor Presentation in connection with the Financial Results of the Bank for the quarter and half year ended September 30, 2022 (Q2H1‐FY23). The above information is also being hosted on the Bank’s website at www.idfcfirstbank.com, in terms of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended. Please take the above on record and acknowledge receipt of the same. Thanking you, Yours faithfully, For IDFC FIRST Bank Limited Satish Gaikwad Head – Legal & Company Secretary Encl.: As above IDFC FIRST Bank Limited Naman Chambers, C 32, G Block, Bandra‐Kurla Complex, Bandra (East), Mumbai ‐ 400 051. Tel: +91 22 7132 5500 Fax: +91 22 2654 0354 Registered Office: KRM Towers, 7th Floor, No.1, Harrington Road, Chetpet, Chennai ‐ 600 031. Tel: +91 44 4564 4000 Fax: +91 44 4564 4022 CIN: L65110TN2014PLC097792 bank.info@idfcfirstbank.com www.idfcfirstbank.com Our Vision 1 Key Financial Highlights of Q2 FY23 2 Management Commentary 3 Background of IDFC FIRST Bank 4 Products and Digital Innovation 5 Deposits and Borrowings 6 Table Retail – Risk Management, Funded Assets, Asset Quality Trends 7 of Wholesale– Risk Management, Funded Assets, Asset Quality 8 Contents Overall Funded Assets and Asset Quality Trends 9 Profitability 10 Capital Adequacy 11 Board of Directors 12 Shareholding Pattern 13 FIRST Compass (ESG) 14 Awards & Recognition 15 1. Our Vision Our Vision: “To build a world class bank in India, guided by ethics, powered by technology and to be a force for social good.” 2 1. Our Vision Culture and Ethos @ IDFC FIRST Bank (Annual Report 2018-19) (Annual Report 2018-19) (Annual Report 2019-20) (Annual Report 2019-20) (Annual Report 2019-20) (Annual Report 2019-20) (Annual Report 2020-21) 3 1. Our Vision Culture and Ethos @ IDFC FIRST Bank We are a universal bank with highly We know that we are on to a wonderful diversified sources of income. Apart model, and I am confident that if we from lending, we have launched stay the course and play with a straight several other new businesses such bat, we will meet all aspirations of as cash management, Trade Forex, investors and other stakeholders. Wealth management, toll and Hence, no matter the pressure, we transit, credit card business, communicate our strategy to all segmented current accounts, start- stakeholders in simple terms, stick to up banking, and distribution of the plan, and deliver on the stated insurance and investment products. strategy. I am confident that with this approach, results will follow, it’s only a matter of time. (Annual Report 2020-21) (Annual Report 2020-21) (Annual Report 2021-22) (Annual Report 2021-22) We will not dilute credit norms to I have always maintained that we are get more business. We are very building a world class bank for the careful with our portfolio quality and we monitor indicators longer run and are not rushing it. We minutely. We rigorously subject the tick all boxes except one. We currently We believe we will have strong applications through 10 specific don’t make the cut on only one count filters. We generally reject about ROE, with the growth potential of 40-60% of the applications received net profits. I believe we will address a youthful-stage bank and strong by us based on product category this issue in FY23 comprehensively. as part of the above stringent technology orientation to filtration process. leverage the future. (Annual Report 2021-22) (Annual Report 2021-22) (Annual Report 2021-22) 4 2. Key Financial Highlights of Q2 FY23 Bank At a Glance (as on September 30, 2022) Funded Assets Customer CASA Ratio Core Operating Net Interest Deposits Profit Margin Rs. 1,45,362 Cr Rs. 1,14,004 Cr 51.28% Rs. 1,052 Cr 5.98% Q2-FY23: (124 bps QoQ) (84% YoY) (15 bps YoY) (25% YoY) (36% YoY) Profit After Return on Return on Capital Adequacy Asset Quality Tax Assets (%) Equity (%) Ratio (%) GNPA% : 3.18% 15.35% Q2-FY23: Rs. 556 Cr Q2-FY23: 1.07% Q2-FY23: 10.13% NNPA% : 1.09% (Q1-FY23: 8.96%) (Sep-21: 15.60%) (Q2-FY22: Rs. 152 Cr) (Q1-FY23: 0.97 %) PCR% : 76.49% 1. Funded Assets are net of IBPC. 2. Capital Adequacy is computed by Including profits for H1 FY23. 3. GNPA & NNPA as on June 30, 2022stood at 3.36% and 1.30% with PCR of 73.13%; 4. Provision Coverage Ratio is including technical write w/offs. 5 2. Key Financial Highlights of Q2 FY23 Key Financial Highlights of Q2 FY23 Area Key Parameters Q2 FY22 Q2 FY23 Growth (%/bps) Assets Total Funded Assets Rs. 1,16,470 Cr Rs. 1,45,362 Cr 25% Customer Deposits Rs. 83,889 Cr Rs. 1,14,004 Cr 36% Deposits CASA Ratio (%) 51.28% 51.28% - BGaNnPkA L (e%v)e –l Bank level GNPA: 4.274%.2,7 N%N,PA: 2.09% GNPA: 3.183%.1,8 N%N PA: 1.09% -108 bps RNeNtPaAil &(% C) o–mBmanekr cleiavle Flinance2 GNPA: 3.452%.0, 9N%NPA: 1.66% GNPA: 2.031%.0, 9N%NPA: 0.73% -142- b10p0s, b-9p3s bps Asset Quality RPreotaviils i&o nC oCmovmereargceia Rl Faitnioa n-cBea2nk 63.00% 76.49% 1,349 bps RGeNtPaAil (&% C) o–mRmetearilc i&a lC Foinmamnceer2cial GNPA: 3.453%.4, 5N%NPA: 1.66% GNPA: 2.032%.0, 3N%NPA: 0.73% -142- 1b4p2s ,b -p9s3 bps RNeNtPaAil &(% C) o–mRmetearilc i&a lC Foinmamnceer2cial 1.66% 0.73% -93 bps Core Operating Profit Rs. 571 Cr Rs. 1,052 Cr 84% Profit/(Loss) After Tax Rs. 152 Cr Rs. 556 Cr 266% Profitability RoA% 0.35% 1.07% 71 bps RoE% 2.97% 10.13% 715 bps 1. Total Funded Assets are Net of IBPC; 2. Commercial Finance consists of business installment loans, micro business loans, small business working capital, commercial vehicle, trade advances 6 etc. with most loans < Rs. 5 crore; 3. Core Operating Income comprises of NII & Fee and Other Income excluding trading gain; 4. Core operating Profit is NII & Fee and Other Income excluding trading gain; 5. RoA/RoEare quarterly annualized. 6. Provision Coverage ratio includes technical write-offs as we continue to collect from the write off pool 3. Management Commentary Management Commentary (1/2) • We design highly customer friendly products and services. We apply a “Near-and-Dear” test while designing all our products and services, meaning, we only sell such products which we are happy to sell to our family members. We charge minimal fees, if at all, and certainly not in ways the customer does Culture not notice. We have taken being ethical and transparent to a philosophical level within the bank. Whether in savings accounts, credit cards or any other service, we introduce features in favor of the customer, such as online redemption of rewards points, evergreen rewards points, monthly interest credit, no fees on non-home branch transactions, and over 25-30 such services. • We think of safety first. Sobuilding deposits was our first priority. At merger, the bank had institutional deposits and borrowings of Rs. 1,05,541 crore (Breakup: Corporate Deposits of Rs. 25,577 crore, Certificateof Deposits of Rs. 22,312 croreand institutional borrowings of Rs. 57,652 crore), and retail Safety First CASA of only Rs. 2,795 crore. Sowe slowed down growth in advances to 3-year CAGR of only 6% and instead grew a strong retail deposit base for three years. The deposit side transformation is now completeand we have CASA of 50%. On this strong foundation, we expect to grow the overall loan book ~20-25% on a sustainable basis from here on for the foreseeable future. Legacy • All Legacy Accounts provided for, or already part of reported NPA.We have sufficiently provided for all legacy stressed corporate and infrastructure Accounts loans. The share of Infrastructure book has further reduced to 4.1%of the total Funded Assets from 22% as on December 31, 2018 (merger quarter) Wholesale • HighqualityofincrementalWholesaleLending:Sincemerger,wehavesanctioned~Rs.20,000croreofloanstonewcorporateclientsandassetqualityis Lending pristine. • We have grown retail deposits by 3-Year CAGR of 73%and reached CASA of 50%, based on our strong brandand high service levels. We have created the Deposits strong capabilities to comfortably grow the deposit base from here on as required. • We have a track record of 12 years of maintaining our Gross NPA at ~2% and ~1% respectively, including Capital First vintage, Asset • Our portfolio has been subjected to multiple stress-tests, including economic slowdown (2010-2014), Demonetisation(2016), GST implementation (2017), Quality ILFS crisis (2018), Covid (2020-21), yet the Gross and Net NPA has remained in the corridor of GNPA and NNPA of 2% and 1% respectively, except during COVID. Even post COVID, retail NPA has reverted to the long termaverages (Gross and Net NPA=2.03% and NNPA=0.73%as of September 30, 2022). 7 3. Management Commentary Management Commentary (2/2) Capital • Thebankiswellcapitalisedatwithcapitaladequacyof15.4%andhassignificantheadroomforTier2capital,andloangrowth. • Our incrementalunit economics ofthebankareexcellent.IncrementalROEon Retaillending isaround 20%afteradjustingfor opex,credit costsandtax. Unit This is already showing in the P & L line and ROE build up. Our ROE is increasing every quarter and has crossed 10%, literally from 0% in at the time of Economics merger. • As a universal Bank, we have launched multiple lines of new businesses such as Fastag, Cash management, wealth management, etc. in addition to the Fee Income wholesale loans, retail loans, insurance distribution, mutual fund distribution etc. In all businesses we feel we are yet at thestart of the journey. We continue to launch new business lines. Retail Fees constitutes 92%of the total fee income which points to granularity and sustainability of this line item. • Our NIM is strong at ~ 6%. Our Incremental ROE on Retail and commercial finance is between 18-20% after adjusting for credit costs and tax. As a result, over the last 5 trailing quarters, our ROE has increased from 2.97% in Q2-FY22 to 5.44% in Q3-FY22, to 6.67% in Q4-FY22, to 8.96% in Q1-FY23 and to Profitability 10.13% in Q2 FY23.This clearly demonstrates the strong ROE generation of our incremental business which is rapidly increasing the overall ROE of the Bank quickly. We expect this phenomenon to continue to play out going forward. Corporate Eminent,qualifiedandexperiencedBoardofDirectors.All committeesareheadedbyindependentdirectorsexceptCSRwhichisheadedbytheMDandCEO. Governance Wesaythingsastheyare,withtransparentcommunication,bothinternalandexternal,anddetailedinvestorpresentation. Contemporary Technologies: The bank continues to invest in laying a strong, modular and contemporary technology architecture that will help the bank to simultaneously enable efficiency, resilience, and growth. The Bank continues to strengthen its superior capabilities of predictive analytics in the area of Technology creditunderwriting,portfoliomanagement,collectionstrategy,fraudriskmitigationandothersuchareas. 8 4. Background of The IDFC Bank- Capital First Merger IDFC FIRST Bank • IDFC FIRST Bank was created by the merger of Erstwhile IDFC Bank and Erstwhile Capital First on December 18, 2018. • Erstwhile IDFC Bank started its operation as a Bank after demerger from IDFC Ltd, a premier infrastructure Financing Domestic Financial Institution since 1997. The loan assets and borrowings of IDFC limited were transferred to IDFC Bank at inception of IDFC Bank. • Capital First was a successful consumer and MSME financing entity since 2012 with strong track record of growth, profits and asset quality. • On merger, the Bank was renamed IDFC FIRST Bank. On merger, 13.9 shares of IDFC Bank were issued for every share of Capital First as part of the merger scheme in December 2018 9 4. Background of Background and history of erstwhile IDFC Bank IDFC FIRST Bank About IDFC Bank IDFC Limited was a leading and reputed infrastructure financing Domestic Finance Institution. The institution diversified into Asset Management, Institutional Broking and Investment Banking. It applied for and acquired a Commercial Banking License from RBI. IDFC Bank laid the foundation for a strong banking framework and created necessary systems, risk management, infrastructure, IT architecture and processes for future growth. It created efficient cash management system and treasury and for managing trading. 1997 2008 • IDFC incorporated in Chennai on the • Acquired AMC business of Standard recommendation of the Expert Chartered Bank. Setup an office in Group on commercialization of 2011 Singapore Infrastructure Projects • IDFC Mutual Fund ranked 10th 2014 in the country by AUM 2009 • Secured license from RBI 2005 • IDFC is recognised as a top 5 Lead • IDFC lists on both NSE & BSE. Raises Arranger for Project Finance Loans in 2012 Rs. 1372 crore of equity capital Asha by Dealogic 2015 • IDFC completes 15 years. • Launch of IDFC Bank • Recognised as the best NBFC 2007 2010 for Infrastructure Financing. • Does a QIP raising Rs. 2100 crore • IDFC Investment Bank ranked 2ndin the • Acquired SSKI, a leading domestic equity league tables by Bloomberg. IDFC investment bank and institutional ranked among the top 50 companies in equities firm India’s S&P ESG Index. 10 4. Background of IDFC FIRST Bank Background and history of Capital First (Rs. Cr) Background Strong growth in AUM 5 Yr PAT CAGR of 56% Wholesale AUM Retail AUM Total AUM 32,623 327 Capital First was a successful NBFC, 26,997 239 206 growing its loan book and net profits at 19,824 166 16,041 114 a 5 year CAGR of 29% and 56% 11,975 9,679 35 56 6,186 7,510 3.8 respectively, with stable asset quality of 2,751 935 Gross NPA of <2% and Net NPA of <1% -15.7 -46.2 for nearly a decade. 0 1 Y F 1 1 Y F 2 1 Y F 3 1 Y F 4 1 Y F 5 1 Y F 6 1 Y F 7 1 Y F 8 1 Y F 8 1 -p e S 0 1 Y F 1 1 Y F 2 1 Y F 3 1 Y F 4 1 Y F 5 1 Y F 6 1 Y F 7 1 Y F 8 1 Y F 9 1 - 1 H Cost to income came down to Stock Price increased 7x from Rs. 120 to Continuous Increase in Return on Equity (%) <50% with scaling up of business Rs. 850 in 6 years 128% 115% 845.60 13.3% 14.5% 782.50 11.9% 10.1% 78% 80% 8.3% 72% 74% 71% 4.9% 3.6% 59% 51% 51% 53% 48% 0.5% 399.40 431.55 -2.1% 162.20 178.90 120.55 -6.1% 0 1 2 3 4 5 6 7 8 9 1 1 1 1 1 1 1 1 1 1 8 0 Y F 9 0 Y F 0 1 Y F 1 1 Y F 2 1 Y F 3 1 Y F 4 1 Y F 5 1 Y F 6 1 Y F 7 1 Y F 8 1 Y F 9 1 Y F Y F Y F Y F Y F Y F Y F Y F Y F Y F - 1 H 3/31/2012 3/31/2013 3/31/2014 3/31/2015 3/31/2016 3/31/2017 1/15/2018 -1 H 11 5. Product & Digital The Bank has a wide bouquet of fund based and non-fund based products Innovations across urban and rural consumer, MSMEs and Corporates Personal Banking: For salaried & self-employed individuals, Business Banking: The bank provides a Corporate Banking: the Bank provides various products to fulfill different financial needs wide range of solutions including working capital Comprehensive funded and across urban and rural India. andbusiness loans for businesses. non-funded product solutions for Corporate customers Prime Home Loans Affordable Home Loans JLG Loans -Microfinance Loan against Property Micro Business Loans Working Capital Loans Car Loans Education Loans Gold Loans Business Loans Professional Loans Trade Finance, Forex & CMS Solutions Personal Loans Credit Cards Agri / Farmer Loans Commercial Vehicle Business Banking Term Loans Consumer Durable Loans Two Wheeler Loans Tractor Loans 12 5. Product & Digital Innovations The Bank has a wide range of Current and Savings Account Offerings CURRENT ACCOUNTS: SAVINGS ACCOUNTS: The Bank has multiple current account offerings doorstep The Bank offers savings accounts with attractive interest rates and multiple features including health banking, CMS solutions, best in class digital platforms etc, to benefits, doorstep banking, higher insurance limits which cater to different customer segments with cater to enterprises, entrepreneurs, start-up and specific offerings to women customers, senior citizens, minors, rural customers and salaried individuals in professionals like Doctors / Chartered Accountants defence Savings Account Senior Citizen SA FIRST Power SA Vishesh Savings Account Rs. 25,000 AMB Savings Regular Corporate Salary Minor Savings HonourFIRST Rs. 10,000 AMB Account DefenceAccount account with Debit card The Bank also offers Term Deposits to individuals and corporate at attractive interest rates 13 Our Digital Initiatives 5. Product & Digital Innovations Significant traction on electronic platforms Ranked6th RTGS & NEFT Bharat Bill Payment UPI Transactions:Growth of 96% payments through CMS System (BBPS): amongst ~25% over the last quarter Retail Digital solutions up by 50% YoY (vol.) 30 biller operating units Transactions 10 mn+ Credit Card Spends: 1.2 mn+ FASTagissued since Growth of 136% YoY Credit cards issued since POS Transactions: launch and 23% QoQ launch in January 2021 (Vol): 29% growth QoQ 14 5. Product & Digital Innovations India’s FIRST FASTAG with Triple Benefits – Toll, Fuel and Parking! IDFC FIRST Bank Credit Card customers can now link their card 10 Million with IDFC FIRST FASTAG and enjoy seamless auto recharge FASTag Issued IDFC FIRST Bank issuance business crossed 10 Million FASTAGS. Leading Issuer bank IDFC FIRST is one of the leading issuersamong 35+ Issuer banks in NETC Largest Acquirer Bank FIRST Bank to enable Largest Acquirer Bank with 450 FASTAG recharges Toll plazas as merchants. on WhatsApp Chat using UPI Rs. 50 Cr Per Day Issuance Value (September 2022) Source: NPCI website 15 5. Product & Digital Innovations Empowering RMs – Assisted Wealth Management Journeys Now Live AUM of Wealth Management Business has grown 50% YoY to Assisted Transactions: Digitally assisted transaction reach Rs. 7,947 crore as on September 30, 2022. 1 execution for Mutual Funds Investment Dashboard: Assets managed by RM & Team, 2 including Product & Asset-Class split Held-away Portfolio - to track client’s non-IDFC First 3 portfolio along with in-house portfolio Actionable insights: FD/SIP maturity, customer cash-flows, 4 birthday reminders, asset allocation, sectoral exposure Portfolio Analytics: Customer portfolio drill down with 5 Asset-class wise holdings & Capital Gain Reports Investment Ideas: Risk adjusted curated portfolios,product 6 discovery via collections & filters Goal Based Investing: Goal creation, implementation and 7 progress tracking Detailed Product Information: scheme performance, risk 8 profile suitability & minimum investment details 16 6. Deposits and Borrowings Deposits: Strong growth in CASA Deposits • Bank has a demonstrated capability to grow CASA deposits. The Bank provides high levels of customer service, excellent brand, and attractive customer firstproducts. in Rs. crore 63,305 YoY - Q2 FY23 vs Q2 FY22 ↑37% 51,170 QoQ - Q2 FY23 vs Q1 FY23 ↑12% 45,896 3Y CAGR: 86% 20,661 7,893 5,544 31 Mar 18 31 Mar 19 31 Mar 20 31 Mar 21 31 Mar 22 30 Sep 22 17 6. Deposits and Borrowings Deposits: CASA Ratio stable at ~ 50% The CASA ratio has been stable at ~ 50% for over a year now despite reducing the interest rate in FY 21-22. CASA Ratio stable @ ~50% 51.75% 51.28% 48.44% 31.87% 11.54% 11.40% 31 Mar 18 31 Mar 19 31 Mar 20 31 Mar 21 31 Mar 22 30 Sep 22 18 6. Deposits and Borrowings Deposits: Strong growth in Retail Deposits ( Retail CASA + Retail Term Deposit) • Even during an extreme stress such as Covid, the bank’s retail deposits grew by Rs. 29,970 crore in FY21. Our core retail deposits has risen strongly at a 3-Year CAGR of 73%. in Rs. crore • Bank has 670 branches and 812 ATMsas of September 30, 2022. 84,859 68,035 63,894 YoY - Q2 FY23 vs Q2 FY22 ↑32% QoQ - Q2 FY23 vs Q1 FY23 ↑12% 3Y CAGR: 73% 33,924 13,214 5,693 31 Mar 18 31 Mar 19 31 Mar 20 31 Mar 21 31 Mar 22 30 Sep 22 19 6. Deposits and Borrowings Deposits: Strong growth in Total Customer Deposits in Rs. crore Total Customer Deposits (Retail Deposits + Wholesale Deposits) has grown strongly by 3- year CAGR of 32% 1,14,004 93,214 YoY - Q2 FY23 vs Q2 FY22 ↑36% 82,725 3Y CAGR: 32% QoQ - Q2 FY23 vs Q1 FY23 ↑11% 57,719 40,504 28,370 31 Mar 18 31 Mar 19 31 Mar 20 31 Mar 21 31 Mar 22 30 Sep 22 20 6. Deposits and Borrowings Summary of Deposits & Borrowings Particulars (in Rs Cr) Sep-21 Jun-22 Sep-22 YoY Legacy Long Term Bonds 7,588 6,624 6,508 -14% Legacy Infrastructure Bonds 9,395 7,958 7,742 -18% Refinance including Legacy Borrowings 17,345 17,630 20,109 16% Other legacy Bonds and other borrowings 6,265 5,315 4,749 -24% Tier II Bonds - 1,500 1,500 - Total Borrowings (A) 40,592 39,026 40,609 0% CASA Deposits 46,269 56,720 63,305 37% Term Deposits 37,620 46,148 50,700 35% Total Customer Deposits (B) 83,889 1,02,868 1,14,004 36% Certificate of Deposits (C) 6,346 10,481 9,438 49% Money Market Borrowings (D) 12,011 16,662 16,034 33% Borrowings & Deposits (A) + (B) + (C) + (D) 1,42,838 1,69,037 1,80,085 26% CASA Ratio (%) 51.28% 50.04% 51.28% Average CASA Ratio % (On Daily Average Balance for the Quarter) 49.45% 46.97% 49.20% 21 6. Deposits and Borrowings Legacy High Cost Borrowing continues to run down. Balance Maturity In Rs. Cr RoI(%) Beyond As on Sep-21 As on Sep-22 FY23 FY24 FY25 FY26 FY26 Infrastructure Bonds 9,395 7,742 477 1,094 5,319 852 - 8.89% Long Term Legacy Bonds 7,588 6,508 - 1,660 1,231 3,617 - 9.04% Other Bonds 4,020 2,392 794 765 149 333 352 8.97% Refinance 6,665 3,807 993 1,884 930 - - 8.18% Total 27,667 20,449 2,264 5,403 7,628 4,802 352 8.82% The Bank repaid high cost borrowing of Rs. 7,218 crore between 01 October 2021 and 30 September 2022. As we replace the balance high cost borrowings of Rs. 20,449 crore with our incremental cost of ~5.50%, it will add about ~Rs. 650 crore to the net interest income of the bank on an annualized basis in due course. 22 7. Retail - Risk Management Risk Management in Retail & Commercial Finance Asset quality in retail and commercial finance lending is driven by the following factors: - Sourcing & Underwriting Quality (Refer Page 24-27) - Cheque /ECS bounce on presentation (Refer Page 28) - Collection Efficiency on cheque/ ECS bounces (Refer Page 29) NPA formation is ultimately a combination of the leading indicators or input parameters as described above. Our leading indicators on each of the above parameters are strong, hence we expect asset quality to remain high going forward. 23 7. Retail - Risk Management Stringent Underwriting Process in Retail Business 1 No-Go Criteria The Bank evaluates certain quick no-go criteria such as deduplication against existing records, bank validation and minimum credit parameter rules. The Bank pings the Credit Bureaus to check the customer’s credit behavior history, number of credit inquiries, age in bureau,limit utilization, recency of 2 Credit Bureau Check inquiries, level of unsecured debt, etc. The Bank uses certain file screening techniques, banking transaction checks and industry fraud databases to weed out possiblefraudulent applications. The 3 Fraud Check bank also uses Fraud Scorecards and real-time video-based checks to identify fraudulent applications Underwriting The application is then put through scorecards which have been developed based on experience with similar cohort of customersinthe past. It includes criteria 4 Scorecard & Cashflows such as leverage, volatility of average balances, cheque bounces in bank account, profitability ratios, liquidity ratios and study of working capital, etc. The Bank conducts field level verifications, including residence checks, office address checks, reference verification, lifestyle checks (to see if the product / 5 Field Verification quantum of loan correlates with lifestyle profile) and business activity checks. Based on inputs received, from our processes, a personal discussion is conducted with the customer which includes establishment of business credentials, 6 Personal Discussion understanding financials, seeking clarifications on financials, queries on banking habits, queries on the credit bureau report, clarification on banking entries if any, and understanding the requirement and end use of funds. The Bank checks for further credit history and industry level exposure by doing CRILC checks and checks by external entities,where required, to study 7 Industry Check financials, access to group companies whether legal cases have been filed against the company, disqualification of directors,etc. The bank statement of account is analyzed for business credits, transaction velocity, average balances at different periods of the month, EMI debits, account 8 Banking Analysis churning, interest servicing, etc. This helps us understand the cash flow on the basis ofwhich we calculate the permissible EMI, loan amount, etc. 9 Financial Verification Detailed financial analysis is performed covering, Ratio analysis, debt to net-worth, turnover, working capital cycle, leverage,etc. 10 Title Deeds Evaluation of title deeds of the property and collateral, legality validity, enforceability etc., Repayment : Bank takes standing instructions to debit the bank account of the customers on a monthly basis and thus pulls theEMI from the customers naturally operated account. The cheque returns are low, but the returned cheques are subsequently followed up for collections. 24 Note: The underwriting process mentioned above, may change depending on product to product. 5 P7.r oRdeutacitl & - RDiisgkit al Ticket size analysis for key products (based on H1-FY23 bookings) MInannoavgaetmioennst Loan Against Property: Provided to customers Home Loan: Provided to primarily salaried and self- against property after bank statement/ cashflow employed individuals based on salary / cashflows analysis. Avg Ticket Size: ~Rs. 11M Avg Ticket Size: ~Rs. 5M 44% Avg LTV (At Disbursal) : 54% Avg LTV (At Disbursal) : 62% 39% 30% 29% • Granularportfolio 22% • Underwritten through Cashflow 16% 9% 10% analysis and/oradvanced scorecards 1% 1% • Well diversifiedacrossgeographies: <= 10M 10-20M 20-30M 30-50M > 50M <= 2M 2-5M 5-10M 10-30M > 30M • South– 34%, • West – 32%, Business Loans: Short-term loans provided to primarily Personal Loans: Shortterm loans provided to salaried SME customers against their bank statement/ cashflow & self-employed individuals against their salary / • North– 25% analysis. cashflows • East – 8% Avg Ticket Size: ~Rs. 500K Avg Ticket Size: ~Rs. 2.5M 31% 39% 28% ~90% to salaried customers 34% 19% 17% 15% 6% 6% 5% <= 2M 2-3M 3-4M 4-5M > 5M <= 300K 300-500K 500-700K 700-900K > 900K 25 Note: The X-Axis i.e.ticket size are in Rupees. 7. Retail - Risk Management High quality of sourcing Quality of customers onboarded continues to improve as evidenced by bureau score of onboarded customers. Customers with bureau score >700 has increased to 83% of new bookings from 61% of new bookings in 2019 Increased % of customers with bureau score >700 84% 84% 83% 83% 80% 68% 61% 60% Jan'19 to Jun'19 Jul'19 to Dec'19 Jan'20 to Jun'20 Jul'20 to Dec'20 Jan'21 to Jun'21 Jul'21 to Dec'21 Jan'22 to Jun'22 Jul'22 to Sep'22 26 7. Retail - Risk Management High quality of sourcing 90% of customers are credit tested before we onboard them, as compared to 83% in 2019, indicating migration to safer credit profiles. We are able to afford migration to safer customer segments because of cost of funds has reduced over time. Increasing % of Customers with Credit History 90% 90% 90% 90% 88% 87% 84% 83% Jan'19 to Jun'19 Jul'19 to Dec'19 Jan'20 to Jun'20 Jul'20 to Dec'20 Jan'21 to Jun'21 Jul'21 to Dec'21 Jan'22 to Jun'22 Jul'22 to Sep'22 27 7. Retail - Risk Management Low Cheque Bounce on Presentation • The number of cheques returned on presentation after 1st month after booking is a direct indicator of asset quality. • Bounces on presentation of ECS/ Cheques have reduced by 35% as compared to Dec-19 (Pre – COVID) • Thus, apart from improving quality of the loan book, we are having lesser requirement for field collections, saving the bank in collection costs. • The improved quality of sourcing is expected to lead to lower delinquency and credit losses in future. ~95% collectionssimply by presentingcheque/ECS/NACHin the FirstEMI, restarecollectedthroughnormalprocesses. 1.33 1.29 1.00 0.99 0.93 0.70 0.63 Dec-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 Sep-22 On trailing 12-month averages 28 7. Retail - Risk Management High Collection Efficiency • Post return of cheques, the collection team contacts customers. Here the indicator of success is collection efficiency. • The collection efficiency in early-stage bucket (urban retail) has increased from 98.9% pre COVID to 99.5%, an increase of 60 bps, which will result in correspondingly reduced NPA and it explains a little more on how this benefits the portfolio going forward. • Our Collection efficiency has been upwards 98-99% for over 10 years now, and this has now increased to 99.5% indicating consistently high portfolio asset quality. 98.9% 99.0% 99.4% 99.6% 99.5% 89.2% m u i r o o t a r o M 0 0 1 1 2 2 2 2 2 2 2 2 - - - - - - b p r p r p e e a e a e F S M S M S Similar experience of improvement is observed in the Rural financing also. 29 7. Retail Funded Assets Consistent growth in Retail and Commercial Finance • The bank has developed deep specialisation in providing retail and commercial financing for over a decade with consistently low NPA levels of Gross and Net NPA. • Based on the above controls mentioned in page24 to page29 the bank has grownretail book with high asset quality overa decade. 1,09,669 Retail & Commercial Finance Outstanding Book (Rs crore) 13,173 92,477 10,144 75,404 10,104 57,328 8,521 42,209 96,496 82,333 6,407 (Pre-merger) 65,300 48,807 35,802 7,693 1,185 6,508 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Sep-22 Retail Funded Assets Commercial Finance Note: Above numbers are net of IBPC. 30 7. Retail - Asset Reduced SMA 1 and SMA 2 in Retail & Commercial loan portfolio Quality Trends SMA 1 is the overdue portfolio in Bucket 31-60 days, and SMA 2 is the overdue portfolio in 61-90 days. SMA 1 and 2 put together is come down to just 1% of the Book. Based on this, we expect a lower level of NPA formation in future. 5.0% 3.0% 3.0% 2.8% 2.3% 1.8% 1.5% 1.0% Mar-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar'22 Jun-22 Sep'22 • The SMA figures in the chart above exclude JLG portfolio • Even including the JLG portfolio, SMA 1 & 2 improved to 1.1% (Sep-22) as compared 1.7% (Jun-22) and as compared to 2.2% (Mar-22) 31 Consistently high Retail asset quality with GNPA of ~2% and NNPA ~1% for 7. Retail - Asset Quality Trends more than 10 years (FY11-FY22) - The Bankhas a track recordofmaintaining Gross NPA at~ 2%and NetNPA ataround 1% for over10 years - Our cost of funds has come down as we are bank, thus Bank has shifted to more prime segment. This is reflected in our better credit score for onboarded customers, Lower cheque bounce, higher collection efficiency - Since we have moved to the prime of each segment we operate in, we expect our Gross NPA and Net NPA to be lesser less than our historical Gross and Net NPA of 2%and 1% - Based on the above, our Gross and net NPA have come down to 2.03% and 0.73% as of September 2022 and we expect to continue to maintain retail asset at these levels going forward,based on our past trackrecord,and our moving to prime of everysegment we operate in. - The portfolio has been put through repeated stresstest over the last 12 years butour strongand disciplined underwritingcapabilities helped to maintain the high asset quality in the corridor of Gross NPA of ~2% and Net NPA of ~ 1% for over a decade. Such long-term consistent performance demonstrates the inherent strength of the portfolio. Stress Test 1: Stress Test 2: Stress 3: Stress Test 4: Stress Test 5: Economic Slowdown Demonetization GST IL&FS Crisis COVID-19 4.01% 2.63% 2.02% 2.14% 1.91% 1.98% 2.18% 2.12% 2.03% 1.66% 1.77% 0.99% 1.90% 0.53% 0.25% 0.08% 1.41% 1.51% 1.19% 1.06% 1.32% 1.24% 1.15% 0.93% 0.06% 0.00% 0.67% 0.67% 0.73% 0.38% Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Sep-18 Mar-19 Mar-20 Mar-21 Mar-22 Jun-22 Sep-22 GNPA NNPA Note: The figures till Sep-18 pertains to the retail portfolio at Capital First Limited. For comparison purposes, all the NPA figures have been provided at 90 DPD. In the above 32 calculations, GNPA and NNPA were on 180 DPD basis for March 31, 2011and March 31, 2022. For March 2011 and 2012, numbers above represented were at Company level. 7. Retail - Asset Provision Coverage Ratio of the Retail & Commercial book has reached 78% Quality Trends 77.61% 72.16% 69.59% 68.21% 61.05% 61.37% 57.53% 55.35% Dec-19 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 33 Note: Provision Coverage Ratio as shown above are including technical write-offs as we continue to collect from the write off pool. 8. Wholesale Risk Management Risk Management in Wholesale Banking • The Bank has been replacing concentrated Infrastructure oriented Project Finance exposure with a well- diversified, mid-tier corporate exposure • 330 New-To-Bank clients added in the past 42 months (Rs. ~20,000 crore of sanctions) with pristine asset quality • Each exposure is approved only after a thorough quantitative & qualitative risk analysis with a multi- committee approval process • Over the years, the Bank has reduced the concentration risk on this portfolio including reduction in the Top 20 borrowers’ concentration and Top 5 industry concentration. • More than 80% of Overall Corporate (non-infra) rated portfolio (funded & non-funded) has external credit rating of A and above • To Corporate Banking clients, we offer comprehensive banking services including Payments & Cash management, Employee Salary Accounts, Trade Finance, Fx Management etc. 34 8. Wholesale- Risk Management Stringent Underwriting Process in Wholesale Business • All New-To-Bank potential borrowers (incl. promoter/ directors) are checked including CIBIL, Suit filed, CFR, CRILC, etc. • Further, bank has also defined minimum internal rating thresholds for onboarding any borrower, which acts as a 1 Customer Selection guiding factor for loan originations. • The Bank follows a conservative underwriting approach wherein primary assessment of debt servicing ability is based on underlying cash flows of the borrower. Due Diligence with 2 • The Bank conducts detailed due diligence of the borrower including objective financial assessment, assessment of focus on Cash Flows borrower’s business profile, industry, ownership & management, key risks and customer’s past track record, which in turn helps determining the Bank’s appetite for the exposure. • As part of underwriting process market feedback is obtained from borrower’s peers, customers, suppliers, external 3 Smell Check rating agencies, banks, etc. • Focusing on granular small to medium ticket size credit exposures with average ticket size of New to Bank exposure at 4 Granular Exposure Rs. 60 Cr. • The Bank follows a ‘risk-based’ approach for credit sanctions wherein higher risk exposures (basis internal rating, 5 Risk based approvals quantum and tenure) require approval from higher approval authority. 35 Note: The underwriting process mentioned above, may change depending on product to product. 8. Wholesale Risk Management Risk Management in Wholesale Banking The Bank has reduced its corporate (non-infra) book from 29% Similarly, the Bank has reduced its infrastructure financing portfolio from in Mar-19 to 17% in Sep-22 19% in Mar-19 to 4% in Sep-22 19% 29% 14% 22% 19% 18% 17% 9% 5% 4% Mar-19 Mar-20 Mar-21 Mar-22 Sep-22 Mar-19 Mar-20 Mar-21 Mar-22 Sep-22 Also, the exposure to top 20 single borrowers reduced from 16% in Further, the exposure to top 5 industries also reduced from 41% Mar-19 to Mar-19 to 8% in Sep-22 22% in Sep-22 which has further strengthened the balance sheet. 16% 41% 35% 13% 12% 27% 9% 24% 22% 8% Mar-19 Mar-20 Mar-21 Mar-22 Sep-22 Mar-19 Mar-20 Mar-21 Mar-22 Sep-22 36 8. Wholesale Funded Assets Stable Corporate Banking Book Corporate (Non-infrastructure) Book (Rs. Crore) 32,155 Stable Corporate Banking Book 27,039 24,883 As on Sep 30, 2022 23,676 22,427 22,499 GNPA % 3.43% NNPA % 0.14% PCR % 98% Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Sep-22 Provision coverage ratio is including technical write-offs 37 Provision Coverage in Corporate Book (Non-infra) has improved from 50% 8. Wholesale Asset Quality Trends to 98% in the last 3 years 97.80% 96.98% 94.50% 92.26% 87.43% 80.67% 72.32% 49.61% Dec-19 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 *PCR is including technical write-offs 38 8. Wholesale Funded Assets Reduced infrastructure financing Book Infrastructure Book (Rs. Crore) 26,832 21,459 As on Sep 30, 2022 14,315 GNPA % 24.48% 10,808 NNPA % 13.40% 6,891 PCR % 52.27% 5,992 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Sep-22 Provision coverage ratio is including technical write-offs 39 9. Overall Funded Assets Diversified Funded Assets Composition of Funded Assets Infrastructure Loans, 4% Home Loan, 12% Corporate and Others, 20% Loan Against Property, 13% Overall Funded Assets Commercial Finance, 9% (as on September 30, 2022) Rs. 1,45,362 crore Wheels, 9% Credit Card, 2% Digital, Gold Loan and Others, 7% Consumer Loans, 13% Rural Finance, 10% • Commercial Finance consists of Loans to small business owners and entrepreneurs through products like business installment loans, micro business loans, small business working capital, commercial vehicle, trade advances etc. with most loans < Rs. 5 crore. • Funded Assets are net of IBPC. • Corporate and Others include Security Receipts, Loans converted into Equity, PTC and RIDF. • Consumer Loans include personal loans, education loan, consumer durable loan and cross sell. 40 9. Overall Funded Assets Summary of Funded Assets Gross Funded Assets (In Rs. Crore) Sep-21 Jun-22 Sep-22 Growth YoY (%) Growth driven by Prime Home Home Loan 10,671 15,352 16,925 59% Loans launched in 2021 Loan Against Property 16,945 18,631 18,740 11% Wheels 8,479 11,263 12,615 49% Consumer Loans 14,448 19,679 19,579 36% Rural Finance 11,317 14,223 15,142 34% Digital, Gold Loan and Others 5,292 9,166 10,789 104% New Businesses launched – Low base effect Credit Card 1,233 2,315 2,706 119% Commercial Finance 9,865 10,679 13,173 34% Corporate 20,822 23,970 24,883 20% Infrastructure 10,142 6,739 5,992 -41% Others 7,256 5,645 4,818 -34% Total Gross Funded Assets 1,16,470 1,37,663 1,45,362 25% Note: 1. The figures above are net of Inter-Bank Participant Certificate (IBPC) transactions; 2. Commercial Finance consists of Loans to small business owners and entrepreneurs through products like business installment loans, micro business loans, small business working capital, commercial vehicle, trade advances etc. with most loans < Rs. 5 crore; 3. Others include Security Receipts, Loan converted into Equity, PTC and RIDF. 41 9. Bank - Asset Quality Trends Asset Quality Composition as on September 30, 2022 Segment Gross Advances Breakup Gross NPA Net NPA Retail and 1,09,669 2.03% 0.73% Commercial Finance Corporate 22,790 3.43% 0.14% (Non-Infrastructure) Infrastructure 5,653 24.48% 13.40% Financing Overall Bank Level 1,38,113 3.18% 1.09% The significant and growing part of the book, i.e. the Retail and commercial business financing business has low NPA levels because of high-quality underwriting, credit bureaus,technology,cashflowbasedlendingandadvancedscorecard-basedlending.AssetQualityintheCorporateBooktooisstrongwithadequatePCRof98%. Bank’s GNPA and NNPA (excluding Infrastructure) was 2.27% and 0.63% respectively with PCR (including technical write-offs) of 83%. We expect infrastructure book to winddowninduecourseandhencethisreferencerangeexcludinginfrastructurefinancingisrelevant. 42 Overall Asset quality of the Bank continues to improve and it reflects the 9. Bank - Asset Quality Trends better incremental underwriting in retail, commercial and wholesale loans 4.61% 4.27% 4.15% 3.96% 3.70% Excluding the NPA in the 3.36% 3.18% infrastructure financing book 2.83% 2.32% which will run down in due 2.09% 1.86% course, the Gross and Net 1.74% 1.53% 1.23% 1.30% NPA of the Bank would have 1.09% been 2.27% and 0.63% and the PCR including technical write offwould be 83%. Dec-19 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 GNPA% NNPA% 43 The Bank has improved its provision coverage ratio in the last three years 9. Bank - Asset Quality Trends from 58% to 76% Provision Coverage Ratio at the Bank level* (%) 76.49% 73.13% 70.29% 67.16% 63.57% 63.00% 61.06% 58.14% Dec-19 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 *The Provision Coverage Ratio of the Bank after excluding the infrastructure book would be 83% as on September 30, 2022. *PCR is including technical write-offs 44 Net Stressed Assets is reduced significantly to 1.3% of total asset as on 9. Bank - Asset Quality Trends September 30, 2022 from 3.2% last year 8,000 Net stressed Assets = Net NPA + Net SRs + Net Restructured Assets (OTR) 4.0% 7,000 3.5% 3.2% 2.9% 6,000 3.0% 5,000 2.5% The Bank has reduced the net stressed 2.0% assets, both in absolute value and as % 4,000 2.0% 1.6% of the total assets. 3,000 1.3% 1.5% This indicates lower NPA levels going forward. 2,000 1.0% 1,000 0.5% 0 0.0% Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Net NPA Net SRs Net Restructured Assets (OTR) Net Stressed Assets / Total Assets 45 10. Profitability Strong rise in Net Interest Income Net Interest Income (In Rs. Crore) Yearly Trend Quarterly Trend 3,002 32% 9,706 32% 3Y CAGR: 27% 3Y CAGR: 26% 27% 2,272 21% 7,380 22% 25% 6,076 1,784 1,465 4,845 FY19* FY20 FY21 FY22 Q2 FY20 Q2 FY21 Q2 FY22 Q2 FY23 * H2-FY19 actual annualized For Q2 FY23, the Net Interest Income grew by 32% YoY. Also, the NIM% (annualized) stood at 5.98%. We expect to maintain NIM% at around 6% during FY23. 46 10. Profitability Strong growth in Fee & Other Income Fee and Other Income (In Rs. Crore) Fee Income Break up for Q2-FY23 Yearly Trend 2,691 66% 3Y CAGR: 32% Others, 5% Loan Origination fees, 35% 5% 33% 1,550 1,622 General Banking Fees, 25% 1,167 WM / Third Party Distribution, 12% Credit Card & Toll, 12% FY19* FY20 FY21 FY22 Trade & Client Fx, * H2-FY19 actual annualized 11% Quarterly Trend 945 44% • During Q2 FY23, the Fee and Other Income of the Bank 3Y CAGR: 38% increasedby 44% YoY. 658 • The Bank has launched and scaled up many fee-based 126% products in the last 3 years. -19% 359 291 • Many of these products are in the early stage of their lifecycle and have the potential to grow significantly going forward. • 92% of the fee income & other income is from retail Q2 FY20 Q2 FY21 Q2 FY22 Q2 FY23 banking operations which is granular and sustainable. 47 10. Profitability Strong increase in Core Operating Profit • Thecore operatingprofit(Net InterestIncome + FeeandOtherIncome excludingtrading gains)of the Bankhas grownby 84% YoYduringQ2 FY23. • Such strong outperformanceof Operating Profit overthe growthof loan book demonstrates the power ofincremental profitability in the business model. • We expect Core Operating profit to continue to rise fromhere based on strong operating leverage. Core Operating Profit (In Rs. Crore) Yearly Trend 2,753 Quarterly Trend 1,052 44% 84% 3Y CAGR: 36% 8% 3Y CAGR: 35% 1,909 1,764 60% 23% 571 9% 465 1,105 428 FY19* FY20 FY21 FY22 Q2 FY20 Q2 FY21 Q2 FY22 Q2 FY23 * H2-FY19 actual annualized 48 10. Profitability Quarterly Income Statement Growth (%) In Rs. Crore Q2 FY22 Q1 FY23 Q2 FY23 YoY Interest Income 4,101 4,922 5,470 33% Interest Expense 1,828 2,171 2,468 35% Net Interest Income 2,272 2,751 3,002 32% Fee & Other Income 658 899 945 44% Trading Gain 122 (44) 116 -5% Operating Income 3,052 3,607 4,064 33% Operating Income (Excl Trading Gain) 2,930 3,650 3,947 35% Operating Expense 2,359 2,663 2,895 23% Operating Profit (PPOP) 693 944 1,169 69% Operating Profit (Ex. Trading gain) 571 987 1,052 84% Provisions 475 308 424 -11% Profit Before Tax 218 636 745 242% Tax 66 162 189 187% Profit After Tax 152 474 556 266% 49 10. Profitability Half Yearly Income Statement Growth (%) In Rs. Crore H1 FY22 H1 FY23 YoY Interest Income 8,190 10,391 27% Interest Expense 3,733 4,638 24% Net Interest Income 4,457 5,753 29% Fee & Other Income 1,107 1,844 67% Trading Gain 515 73 -86% Operating Income 6,079 7,670 26% Operating Income (Excl Trading Gain) 5,564 7,598 37% Operating Expense 4,392 5,558 27% Operating Profit (PPOP) 1,687 2,113 25% Operating Profit (Ex. Trading gain) 1,172 2,040 74% Provisions 2,347 732 -69% Profit Before Tax (660) 1,380 - Tax (181) 350 - Profit After Tax (478) 1,030 - 50 10. Profitability Strong growth in profitability; ROA crosses 1%. Profit After Tax (Rs. Cr) Return on Average Total Assets 1.07% 556 0.97% 474 0.76% 0.64% 343 281 0.35% 152 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 The strong profitability trajectory of the Bank is driven by Return on Average Equity • Powerfulincremental unit economics 10.13% • Retail lending business ROE of 18-20% 8.96% • Retiring of high-cost liabilities 6.67% • Growthin credit cards business 5.44% • Improving branch productivity • New Business launches (Wealth, FASTag,CMS, etc.) 2.97% • Profitable wholesale business • Reduced provisions • Improved operating leverage Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 We expect profitability to further improvegoing forward. RoA(%) and RoE(%) are quarterly annualized 51 10. Profitability Balance Sheet Growth (%) In Rs. Crore Sep-21 Jun-22 Sep-22 (YoY) Shareholders' Funds 20,350 21,485 22,052 8% Deposits 90,235 1,13,349 1,23,442 37% - CASA Deposits 46,269 56,720 63,305 37% - Term Deposits 43,966 56,629 60,138 37% Borrowings 52,603 55,688 56,643 8% Other liabilities and provisions 9,314 10,044 10,639 14% Total Liabilities 1,72,502 2,00,565 2,12,776 23% Cash and Balances with Banks and RBI 17,019 10,761 14,847 -13% Net Retail and Wholesale Funded Assets 1,11,353 1,32,555 1,40,239 26% - Net Retail Funded Assets 76,793 1,00,094 1,08,228 41% - Net Wholesale Funded Assets* 34,560 32,461 32,011 -7% Investments 34,881 47,095 46,580 34% Fixed Assets 1,329 1,456 1,615 22% Other Assets 7,920 8,698 9,495 20% Total Assets 1,72,502 2,00,565 2,12,776 23% *includes credit investments (Non-Convertible Debentures, RIDF, PTC, SRs and Loan Converted into Equity) 52 11. Capital Adequacy Capital Adequacy Ratio is strong at 15.35% as on September 30, 2022 In Rs. Crore Sep-21 Jun-22 Sep-22 Common Equity 19,606 20,821 21,478 Tier 2 Capital Funds 993 2,618 2,642 Total Capital Funds 20,600 23,439 24,120 Total Risk Weighted Assets 1,32,057 1,48,600 1,57,120 CET 1 Ratio (%) 14.85% 14.01% 13.67% Total CRAR (%) 15.60% 15.77% 15.35% • Capital Adequacy Ratio is including profits. • The Bank is well capitalized for growth in future. 53 12. Board of Directors Board of Directors: MD & CEO Profile Vaidyanathanaspirestocreate“aworld-classbankIndianBankwhichoffershigh-qualityaffordableandethicalbankingforIndia”. He left a Board levelposition at ICICI group in 2010 and acquired stakes inof a small listed, loss making, real-estate financing NBFC withmarketcapofRs.780crores($140m)withtheideaofconvertingittoaBank.Hedidsothroughaleveragedbuyoutwhichwas fundedbypersonalborrowingRs.78crore($14m),whichheraisedbypledgingthepurchasedstockandhishomeascollateral. He then changed the business model to financing micro and small entrepreneurs by use of technology with ticket sizes of $100- $100K,andraisedfreshPEbackedequityof(bydemonstratingtheproofofconcepttoinvestors.HerenamedthecompanyCapital FirstandbecameitsChairmanandCEO. HeturnedthecompanyaroundfromlossesofRs.30crores($5m,2010)toprofitofRs.358crore($50m,2018).Thesharepriceof CapitalFirstrosefromRs.122(2012)toRs.850(2018)andthemarketcapincreased>10timesfromRs.780 crores($120 m,2010) to Rs. 8200 crores ($1.2 b, 2018). Per stock exchange filings, he bought the NBFC shares at Rs. 162 through leverage, and, in order toclose theloanavailedtopurchasetheshares,soldpartofhisholdingsatRs.688in2017. Capital First's retail loan grew from Rs. 94 crores ($14m, 2010) to Rs. 29,600 crores ($4 b, 2018) with 7 million customers. Having builtCapitalFirsttoscale,helookedoutforacommercialbankinglicensetoconvertittoaBank.In2018,opportunitystruckinthe formofanofferformergerfromIDFCBank.HeledtheintegrationandtookoverastheMDandCEOofthemergedbank,renamed toIDFCFirstBank.SincethenhehasincreasedretailandcommercialfinancebooktoRs.1,09,669crores,increasedNIMfrom2.9% atmergerto6.0%,increasedCASAfrom8.7%to51.3%,andturnedthebankintoprofitability. ThevisionofIDFCFirstBankis"TobuildaworldclassbankinIndia,guidedbyethics,poweredbytechnologyandbeaforceforsocialgood." Earlier,VaidyanathanworkedwithCitibankfrom1990-2000.HejoinedICICIGroupin2000whentheretailbankingbusinesswasinitsinception.Hetookthebranchnetworkto 1411,builta largeCASAbook, andbuiltretail lendingincluding mortgages, autoloans, andcredit cardsof Rs.1.35trillion ($30 bn)by2009.Theretailbankingbusiness hebuilt helped transform the institution from a wholesale DFI to a retail banking institution. He joined the Board of ICICI Bank in 2006 at age 38 and became MD and CEO of ICICI PrudentialLifeInsuranceCompanyat41. He has received many domestic and international awards notably ET Most inspiring CEO 2022, CNBC Awaaz "Entrepreneur of the Year" 2020, "Most Inspirational Leveraged ManagementBuyout,India2018"byCFIAwards,London,CNBCAsia’s"MostInnovativeCompanyoftheYear"2017,"EntrepreneuroftheYear"atAsiaPacificEntrepreneurship Award 2016 & 2017, "Most Promising Business Leaders of Asia"by Economic Times. in 2016, Business Today - India's Most Valuable Companies 2016 & 2015, Economic Times 500 India's Future Ready Companies 2016, Fortune India's Next 500 Companies 2016, Dun & Bradstreet India's Top 500 Companies & Corporates 2016 & 2015, "Outstanding contribution to Financial Inclusion, India, 2017" from Capital Finance, London, "Most Promising Business Leaders of Asia" 2016 by Economic Times. He is an alumnus of Birla InstituteofTechnologyandHarvardBusinessSchool(AdvancedManagementProgram).Hehasrun23half-marathonsand8fullmarathons. 12. Board of Directors Board of Directors MR. SANJEEB CHAUDHURI –PART-TIME NON-EXECUTIVE CHAIRPERSON (INDEPENDENT DIRECTOR) Mr. Sanjeeb Chaudhuri is a Board member and Advisor to global organizations across Europe, the US and Asia. He has most recently been Regional Business HeadforIndiaand South Asia for Retail, Commercial and PrivateBankingandalso GlobalHead of Brand and ChiefMarketing Officer at Standard CharteredBank.Priortothis,hewasCEOforRetailandCommercialBankingforCitigroup,Europe,MiddleEastandAfrica.HeisanMBAinMarketingand hascompletedanAdvancedManagementProgram. MR.AASHISHKAMAT-INDEPENDENTDIRECTOR Mr. Aashish Kamat has over 32 years of experience in the corporate world, with 24 years being in banking & financial services & 6 years in public accounting. He was the Country Head for UBS India, from 2012 until his retirement in January 2018. Prior to that he was the Regional COO/CFO for Asia Pacific at JP Morgan based out of Hong Kong. Before moving to Hong Kong, he was in New York, where is was the Global Controller for the Investment Bank (IB) at JP Morgan in New York; & at Bank of America as the Global CFO for the IB, and, Consumer and Mortgage Products. Mr. Kamat started his careerwithCoopers&Lybrand,apublicaccountingfirm,in1988beforehejoinedJPMorganin1994. DR. (MRS.) BRINDA JAGIRDAR -INDEPENDENT DIRECTOR Dr. (Mrs.) Brinda Jagirdar, is an independent consulting economist with specialization in areas relating to the Indian economy and financial intermediation. She is on the Governing Council of Treasury Elite, a knowledge sharing platform for finance and treasuryprofessionals. She is a member, Banking and Finance Committee, Indian Merchants Chamber and also nominated as member, Depositor Education and Awareness (DEA) Fund Committee by the RBI. She retired as General Manager and Chief Economist, SBI, based at its Corporate Office in Mumbai. She has a brilliant academic record,withaPh.D.inEconomicsfromtheDepartmentofEconomics,UniversityofMumbai,M.S.inEconomicsfromtheUniversityofCaliforniaatDavis, USA, M.A. in Economics from Gokhale Institute of Politics and Economics, Pune and B.A. in Economics from Fergusson College, Pune. She has attended anExecutiveProgrammeattheKennedySchoolofGovernment,HarvardUniversity,USAandaleadershipprogrammeatIIMLucknow. 55 12. Board of Directors Board of Directors MR. HEMANG RAJA -INDEPENDENT DIRECTOR Mr. Hemang Raja, is an MBA from Abilene Christian University, Texas, with a major in finance. He has also completed an Advanced Management Programme (AMP) from Oxford University, UK. He has vast experience in the areas of Private Equity, Fund Management and Capital Markets in companies like CreditSuisse andAsia GrowthCapitalAdvisersinIndia asMDand Head- India.He hasserved ontheexecutive committee oftheBoard oftheNationalStockExchangeofIndiaLimited;alsoservedasamemberoftheCorporateGovernanceCommitteeoftheBSELimited. MR.PRAVIRVOHRA-INDEPENDENTDIRECTOR Mr.PravirVohraisapostgraduateinEconomicsfromSt.Stephen'sCollege,UniversityofDelhi&aCertifiedAssociateoftheIndianInstituteofBankers. He began his career in banking with SBI where he worked for over 23 years. He held various senior level positions in business as well as technology withinthebank,bothinIndia&abroad.Thelate1990ssawMr.VohraasVicePresidentinchargeoftheCorporateServicesgroupatTimesBankLtd.In January 2000,he moved to the ICICI Bank group where he headed a number of functions like the Retail Technology Group & Technology Management Group.From2005till2012hewasthePresidentandGroupCTOatICICIBank. MR. S GANESH KUMAR -INDEPENDENT DIRECTOR Mr. S Ganesh Kumar was the Executive Director of the Reserve Bank of India. He was with the Reserve Bank of India for more than three decades. His most recent responsibilities included the entire gamut of Payment and Settlement Systems, creation and development of strategic plans for the Bank and to take care of the external investments and manage the foreign exchange reserves with the central bank. Mr. Kumar is a post graduate in Managementhavingexperienceinvariedfieldssuchasmarketing,marketresearch,banking,finance,law,andInformationTechnology. 56 12. Board of Directors Board of Directors MR.AJAYSONDHI-NON-EXECUTIVENONINDEPENDENTDIRECTOR Mr. Ajay Sondhi, is a 2017 Fellow, Harvard Advanced Leadership Initiative, MBA - Finance from JBIMS, Mumbai University, and B.A. in Economics (Honors) from St. Stephens College, Delhi University. He is a seasoned Financial Services and Board professional with extensive Indian and global experience. Most recently he was Founder & CEO of Sentinel Advisors Pte Ltd, Singapore, a boutique business and strategy advisory firm. He was previously MD and Regional Manager for PWM at Goldman Sachs, Singapore. He has had a long career in banking, and has held several senior leadershiprolesintheindustryinIndiaandoverseas. DR.JAIMINIBHAGWATI-NON-EXECUTIVENONINDEPENDENTDIRECTOR Dr. Jaimini Bhagwati is a former IFS officer, economist and foreign policy expert. He received his PhD in Finance from Tufts University, USA. He did his Master's in Physics from St Stephen's College, Delhi and a Master's in Finance from the Massachusetts Institute of Technology, USA. He was the High Commissioner to the UK and Ambassador to the European Union, Belgium and Luxembourg. Dr. Bhagwati has served in senior positions in the Government of India, including in foreign affairs, finance and atomic energy. In his earlier role at the World Bank, he was a specialist in international bond and derivatives markets and was the RBI chair professor at ICRIER. He is currently a Distinguished Fellow at a Delhi based think‐tank called the CentreforSocialandEconomicProgress(CSEP). MR. VISHAL MAHADEVIA – NON-EXECUTIVE NON INDEPENDENTDIRECTOR Mr. Vishal Mahadevia joined Warburg Pincus in 2006 and is Managing Director, Head of India and is a member of the firm’s executive management group. Previously, he was a Principal at Greenbriar Equity Group, a fund focused on private equity investments in the transportation sector. Prior to that, Mr. Mahadevia worked at Three Cities Research, a New York-based PE fund, & as a consultant with McKinsey & Company. He received a B.S. in economics withaconcentrationinfinance&B.S.inelectricalengineeringfromtheUniversityofPennsylvania. 57 13. Shareholding Pattern Shareholding Pattern as of September 30, 2022 Scrip Name : IDFC FIRST Bank (BSE: 539437, NSE:IDFCFIRSTB) Other Body President of Corporate, 1.2% Trusts and India, 4.2% Clearing Members, 0.2% Total # of shares as of Sep 30, 2022 622.13 Cr Public (Incl. NRIs), 28.8% Book Value / Share as of Sep 30, 2022 Rs. 35.45 Promoters, 36.5% Basic EPS (Q2-FY23 annualized) Rs. 3.54 MF/Insurance/Ba nk/AIF/FI, 9.9% FII/FPI/Foreign Corporate, 19.3% 58