IDFC First Bank signage is seen outside a branch in Mumbai, India, July 04, 2023. IDFC First Bank is merging into IDFC Limited. 155 shares of IDFC First Bank will be awarded for every 100 shares of IDFC according to an Indian media report.
Nurphoto | Nurphoto | Getty Images
india First IDFC Bank expects to see robust credit growth following its recent merger, according to Managing Director and CEO V. Vaidyanathan.
Last week, IDFC First Bank said its board of directors had approved its merger with IDFC Ltd.the latest in a wave of consolidation in the Indian financial sector.
It comes just days after a $40 billion investment mega merger between India’s largest private lender HDFC Bank with Housing Development Finance Corporationthe largest mortgage lender in the country.
Vaidyanathan said that as a country, India is on a “massive trajectory”, which holds immense growth potential for the merged entity in the near term.
“We are insiders of this country and we can see for ourselves day by day how the country is developing,” he told CNBC’s “Street Signs Asia” on Tuesday.
“For the Indian credit market, let me say that around 15% credit growth would be a reasonable expectation in the near future. And for our bank, 25% credit growth would be a reasonable expectation with stable asset quality.”
Last week, IDFC First Bank said the proposed merger would increase the bank’s standalone book value by 4.9% from its March 31 financial statements. He also said he aims to grow his balance sheet by 20% to 25% per year in the short term. medium term.
“The merger will lead to the simplification of the corporate structure of IDFC FHCL, IDFC Limited and IDFC FIRST Bank by consolidating them into a single entity and will help streamline the regulatory compliance of the aforementioned entities,” the statement added.
Vaidyanathan noted that the bank has key “strategic objectives” and that “the Indian market is so large and vast and we are still a small player, we believe we can grow at a good pace for a long time with a stake like This.”
Nonetheless, the deal is subject to approval by major Indian regulators including the Reserve Bank of India, Securities and Exchange Board of India and Indian stock exchanges.
Analysts noted the recent merger will not affect IDFC First Bank’s prospects for inclusion in the MSCI Standard Index for the month of August.
Inclusion in the index “would be a big deal,” Vaidyanathan said. “Whether we do it now or later in our minds, we have no doubts. We are very confident and frankly it would be an honor to be part of the MSCI index for us,” added the CEO.
