IDFC First Bank shareholders approve merger of IDFC Ltd with bank

IDFC First

The majority shareholders of IDFC First Bank have approved the amalgamation of IDFC Ltd with the bank at a meeting convened by the Chennai bench of the National Company Law Tribunal, the bank informed the stock exchanges on May 17.

"We wish to inform that the resolution approving the Scheme was passed by overwhelming majority of 99.95 percent of the equity shareholders representing more than three-fourth in value of the equity shareholders of the Bank voting through remote e-voting and e-voting during the meeting, in terms of the provisions of Sections 230-232 of the Companies Act, 2013," the bank said.

NCLT too is likely to announce its approvals soon, according to people familiar with the development.

On December 27, IDFC Ltd said the Reserve Bank of India (RBI) has given its no objection certificate (NOC) for the amalgamation of IDFC Limited, IDFC FHCL, and IDFC First Bank. In July 2023 IDFC board of directors of IDFC FHCL, IDFC and IDFC FIRST Bank approved the proposed for amalgamations.

Also read: IDFC First Bank, IDFC gain on exchange green light to merger deal

IDFC Bank was given a licence by the RBI along with Bandhan Bank in 2014. In 2018, IDFC Bank Ltd and Capital First Ltd announced the completion of the merger to become IDFC First Bank.

IDFC, through its non-financial holding company, holds a 39.93 percent stake in IDFC First Bank. After the merger, the book value per share of the bank will increase by 4.9 percent, as calculated on audited financials as of March 31, 2023.

Earlier bank, in a filing to the stock exchanges, said the merger will lead to the simplification of the corporate structure of IDFC Financial Holding Company, IDFC Ltd and IDFC First Bank by consolidating them into a single entity and will help streamline the regulatory compliances of these entities.

Q4 numbers

The bank on May 27 reported a 10 per cent decline in net profit at Rs 724 crore for the fourth quarter ended March 2024 due to a substantial jump in provisions. The lender had earned a net profit of Rs 803 crore in the year-ago period.

Total income rose to Rs 9,861 crore from Rs 7,822 crore a year ago, IDFC FIRST Bank said in a regulatory filing. Interest income grew to Rs 8,219 crore during the period under review, from Rs 6,424 crore in the corresponding quarter a year ago. Net Interest Income (NII) grew 24 per cent from Rs 3,597 crore in Q4 FY23 to Rs 4,469 crore in Q4 FY24, it said. On the asset quality side, the bank’s gross Non-Performing Assets (NPAs) reduced to 1.88 per cent of gross advances as of March 31, 2024, from 2.51 per cent by the end of March 2023.

Net NPAs also came down to 0.60 per cent of the advances from 0.86 per cent at the end of 2024. However, provisions and contingencies increased by 50 per cent to Rs 722 crore in Q4FY24 as compared with Rs 482 crore a year ago.

The bank did not declare any dividend for FY24 and FY23. The capital adequacy ratio of the bank declined to 16.11 per cent from 16.82 per cent at the end of the previous fiscal