Introducing IDFC FIRST Bank

Introducing IDFC FIRST Bank

Founded on 18 December 2018 following

the merger of erstwhile IDFC Bank and Capital First.

• Strong systems and processes

• Launched retail liability operations,

opened 200 bank branches (Dec.

18), raised retail CASA of Rs.

2,800 Crore (Dec. 18)

• Built efficient treasury management

systems

• Strong presence in corporate and

infrastructure financing

• Launched contemporary payment

systems, internet and mobile

banking

• Launched retail lending businesses

successfully

• Strong retail franchise in niche

segments with strong credit skills

• Track record of continuous growth

• Expanded to more than 220 locations

across India supported by 102 branches

• Consistently increasing profitability (5

year CAGR at 39%) and high ROE

(15%)

• High asset quality across cycles

including increasing interest rate,

demonetisation and GST

• Customer base of over 7 million and 4

million live customers

• Strong loan assets of more than

Rs.1,04,660 Crore

• 34.26% of loans in retail segment

• Margins increased from 1.7% on

standalone to 3.3% post-merger

• Diversified asset profile

• Strong platform to grow retail deposits and

CASA

• A large retail customer base of more than

70 Lakh live customers including 30 Lakh

rural customers

Overview

Mr. V. Vaidyanathan is the first Managing Director and CEO of IDFC FIRST Bank, a bank founded by the merger of Capital First and IDFC Bank in December 2018.

Prior to this role, he founded Capital First Limited by first acquiring an equity stake in an existing NBFC, and then executing a Management Buyout (MBO) by

securing an equity backing of Rs. 810 crores in 2012 from PE Warburg Pincus. The MBO included (a) buyout of majority and minority shareholders through Open

Offer to public; (b) Fresh capital raise of Rs. 100 crores into the company; (c) Reconstitution of the Board of Directors (d) Change of business from wholesale to

retail lending; (e) Creation of a new brand "Capital First".

As part of his entrepreneurial journey, he left ICICI Group in 2010 and acquired a stake in a small start-up NBFC. He then exited legacy businesses of Real estate

financing, Foreign Exchange, Broking, Investment management businesses and instead transformed the company into a large retail financing institution with

operations in more than 225 locations across India. Between March 2010 to September 2018, he has grown the retail financing book from Rs. 94 crores ($14

million) to Rs. 29,625 crores ($4.06 billion), has grown the Equity Capital from Rs. 690 crores ($106 million) to Rs. 2,928 crores ($401.1 million) and reduced the

Gross NPA and Net NPA from 5.36% & 3.78% to 1.94% & 1.00%. Under his leadership, the Company's long term credit rating was upgraded four notches to AAA.

He joined ICICI Limited in early 2000 when it was a Domestic Financial Institution (DFI) and the retail businesses he built helped the transition of ICICI from a DFI to

a Universal Bank. He built the Retail Banking Business for ICICI Limited since its inception, and grew ICICI Bank to 1411 Bank branches in 800 cities, 25 million

customers, a vast CASA and retail deposit base, branch, internet and digital banking, built a retail loan book of over Rs. 1,35,000 crores ($20 billion) in Mortgages,

Auto loans, Commercial Vehicles, Credit Cards, Personal Loans. In addition, he also built the SME business and managed the Rural Banking Business for the bank.

These businesses helped the conversion of the institution to a universal bank renowned for retail banking.

He was appointed the Executive Director on the Board of ICICI Bank in 2006 and later became the Managing Director on the Board of ICICI Prudential Life

Insurance Company in 2009. He was also the Chairman of ICICI Home Finance Co. Ltd (2006), and served on the Board of CIBIL- India's first Credit Bureau (2005),

and SMERA- SIDBI's Credit Rating Agency (2005). He started his career with Citibank India in 1990 and worked there till 2000, where he learnt the ropes in

Consumer Banking.

During his career, he and his organization have received a large number of domestic and international awards including the prestigious, "Transformational Leader

2018" by CFI Awards UK, "Most Inspirational Leveraged Management Buyout, India 2018" by CFI Awards, "Financial Services Company of the Year, 2018 - VC

Circle", "Entrepreneur of the Year" Award at APEA 2017, CNBC Asia "Innovative company of the year" IBLA-2017, "Outstanding contribution to Financial Inclusion,

India, 2017" from Capital Finance International, London, "Economic Times Most Promising Business Leaders of Asia" 2016, 'Outstanding Entrepreneur Award' in

Asia Pacific Entrepreneurship Awards 2016, Greatest Corporate Leaders of India- 2014, 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. During his prior stint, awards included "Best Retail bank in Asia 2001", "Excellence in Retail Banking Award" 2002, "Best Retail Bank in

India 2003, 2004, and 2005" from the Asian Banker, "Most Innovative Bank" 2007, "Leaders under 40" from Business Today in 2009, and was nominated "Retail

Banker of the Year" by EFMA Europe for 2008. He is an alumnus of Birla Institute of Technology and Harvard Business School and is a regular contributor on

Financial and Banking matters in India and international forums.

He is a regular marathoner and has run 22 half-marathons and 8 full marathons. He lives in Mumbai with his family of father, wife and three children.

Mr. V. VaidyanathanMD & CEO

Leadership Team

Amit KumarHead – Retail Liabilities

& Branch Banking

Amit is a Chartered Accountant and is responsible for retail

banking franchise, primarily focussed on serving the banking and

wealth needs of individuals, small businesses and corporate salary

accounts. He’s had an impressive career in retail banking and

financial services, having worked with Bank of America, GE

Capital, MasterCard International and HDFC Bank.

Vikas SharmaHead – Wealth

Management Solutions

Vikas is a seasoned Financial Services and Wealth Management

professional with over 17 years of work experience. Prior to

joining IDFC FIRST Bank 3 years ago, he has worked with

organizations such as HSBC and ICICI Prudential. He is

responsible for wealth products, services, research and portfolio

management across all verticals of the bank.

Parimal ShahNational Sales Head –

Private Banking

24 years of work experience in the Private Banking - Wealth

Management verticals at HDFC Bank, Axis Bank – Burgundy

and Motilal Oswal Financial Services. He carries Strong

leadership skills and in-depth understanding of Private Banking Business.

Seasoned

Leadership team

with a collective

Experience of more

than 6 decades

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▪ SME loans

▪ Home loans

▪ Loan against

property

▪ Loan against

securities

Expansion

Protection

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▪ Retirement solutions

▪ Capital protected

structures

▪ Life insurance

▪ General insurance

▪ Corporate solutions

Preservation

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Savings a/c @ 7% Fixed deposits

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Solutions Across Asset Classes

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• Quarterly portfolio

reviews

• Investment objective

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• Using our proprietary asset allocation methodology VIN- Value Index Navigator, appropriate asset allocation is ascertained

• Increase equity allocation when markets are undervalued and reduce when overvalued

• In house fund selection model, back-tested for performance consistency

• Risk mitigation scores monitored on a monthly basis

• In-depth due diligence of all products across asset classes

Understanding Your

NeedArriving At The Right

Asset Allocation

Product

SelectionRegular

Checks

Objective

Increase equity exposure

when markets are

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profits when overvalued

Methodology

Price to earnings, Price to

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back-testing last 20 years

data

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Our Model is Customised to Suit Every Risk Profile

▪ Equity allocation leads to volatility in the portfolio and hence we cap the equity exposure to portfolios for

different risk profiles

▪ However, as mentioned before, recommended equity exposure is the combination of VIN and risk profile,

as seen on the following slide

▪ VIN explanation is given in the next slide

Profile Aggressive Growth Balanced Semi-

conservativeConservative

Equity allocation (max.)

Equity allocation (min.)

100%

0%

75%

0%

50%

0%

25%

0%

0%

0%

Equity Valuations

(PE & PB ratios)

G-sec Yields

Relative To Equity

Valuations

(G-Sec – PE ratio)

Asset Allocation

Scorecard

Back-test 20 Year

Results On 5 & 3

Year Rolling

Basis

Quant-Based VIN

Approach for Equity Approach for Debt

Equity portfolios – market approach:

- Past performance

- Fund manager consistency

- Volatility (both upside and downside)

IDFC FIRST Bank enhanced filters:

- Only downside risk adjustment

- Earnings outlook for top holdings

- Target price for top holdings

Returns

Consistency

Downside

risk

Debt portfolios – market approach:

- Past performance

- Duration

- Paper quality

Yields

Duration

QualityIDFC FIRST Bank enhanced filters:

- Exclusions: e.g. unrated papers

- Leverage ratios of top holdings

- Upgrade and downgrade trends

Successful Implementation – Equity & Debt

Valuation Score(Current Highlighted)

Aggressive Growth Balanced Semi-Conservative Conservative

1 100% 75% 50% 25% 0%

2 90% 70% 45% 20% 0%

3 80% 60% 40% 15% 0%

4 70% 55% 35% 15% 0%

5 60% 45% 30% 10% 0%

6 50% 40% 25% 10% 0%

7 40% 30% 20% 5% 0%

8 30% 20% 15% 0% 0%

9 20% 10% 10% 0% 0%

10 0% 0% 0% 0% 0%

Score is as on today

VIN – Current Score

Why Us?

Asset Allocation as

per Model+4.5%Return

Equity

Fixed

Income

FY19: How VIN Model Worked For Our Clients!

Allocation

as per risk profile-5%

Return

How we got it right!

HIGH QUALITY SHORT

DURATION

❖ High bond spreads over

G-sec with rate cuts

LARGE&FLEXI-CAP

BIAS

❖ Lower volatility in large

space vis-à-vis mid and

small

Investment Strategy &

House View – Monthly

▪ Key macro factors

▪ Event specific update

▪ Equity and fixed income outlook

▪ Portfolio construction strategies

▪ Recommended products with rationale,

quants and performance

▪ Understanding of client

requirements/profile

▪ In-depth portfolio review that helps

track – asset class bifurcation,

stock/bond level exposure, sector

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maturity profile

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WealthFirst- a Quarterly

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We have built a national footprint through the

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Our Footprint

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