IDFC First Bank’s operating profit will continue to outpace loan book growth: V Vaidyanathan

economictimes.indiatimes.com:

V Vaidyanathan, MD & CEO, IDFC First Bank, says: “We feel that our operating profit will continue to outpace our loan book growth. Our loan book guidance is 22-24%. But our profit will outpace it because the operating leverage is kicking in.

For example, this quarter that has just ended, YOY, our loan book grew by 24%. Our NII grew by 36%, our operating profit grew by 45% and our PAT grew by 61%. How was the magic happening that we grew the loan book by X, but operating profit was growing higher? I think fundamentally our business model is very strong.”Another very strong quarterly performance, all round growth, you cannot find any fault lines. The headline of a Morgan Stanley report says it was a good quarter with all round growth and we remain optimistic about the franchise value. This is coming from a firm which maybe three-four quarters ago had dismissed the great turnaround in IDFC Bank?Well, they had a negative view on a bank for three or four years running.

So for us, it is a massive endorsement coming from a brand like Morgan Stanley who are known for good quality research and are respected by global institutions. We are very happy about that.Coming to specifics, what has worked for you for the quarter gone by? What were the factors at play?We should not look at what happened last quarter because a quarter is a very short time. What we are seeing is a work done over maybe three or four years.

People could not see it at that point of time because there were so many clouds and because of legacy assets and the high cost infrastructure bonds. Our real work of what we were building was clouded by these issues. But today, those clouds gradually going away, the true model is beginning to show.