Core Viewpoint - IDFC First Bank has overcome the challenges posed by its microfinance portfolio, with expectations for improved net interest margins and steady growth in asset quality and credit costs [1][5]. Financial Performance - The bank's net interest margin (NIM) is currently at 5.59%, with expectations to exceed 5.8% in FY26 as fixed deposits reprice lower [8][13]. - The bank's gross and net NPAs have declined both year-on-year and sequentially, indicating a recovery in asset quality [5][10]. - Special Mention Account (SMA) numbers and slippages have consistently improved over the past six quarters, leading to a reduction in credit costs [2][5]. Deposit Growth - IDFC First Bank's deposit base has increased from ₹40,000 crore in December 2018 to ₹2.7 lakh crore, representing more than a sixfold rise [6][7]. - Annual deposit growth is approximately ₹45,000–50,000 crore, reflecting the trust built with customers [7]. CASA Ratio and Cost of Funds - The bank's CASA ratio remains robust at over 50%, supported by competitive savings rates, with a goal to stabilize it in the 45–50% range [9]. - The easing of deposit costs is expected to contribute positively to NIM and overall income growth [8][13]. Future Outlook - The bank anticipates that its microfinance book will stabilize by Q4 FY25, with growth resuming alongside the broader portfolio thereafter [12]. - The initial assessment of new Expected Credit Loss (ECL) norms and regulatory changes appears favorable, with a marginally positive impact expected [11].

Core Viewpoint - The Reserve Bank of India (RBI) proposed to replace the incurred-loss-based provisioning framework with an expected credit loss (ECL)-based framework for banks, effective April 1, 2027, to align with global standards [1][4]. Group 1: Proposed Framework Details - The new ECL framework will introduce staging criteria for asset classification while maintaining existing Non-performing Asset (NPA) classification norms [2]. - It will set calibrated ceilings for broad exposure classes under Stages 1, 2, and 3, and align income recognition norms based on the Effective Interest Rate (EIR) method [2]. - The framework will also include principles for model risk management in implementing ECL models [2]. Group 2: Capital Impact - The RBI anticipates minimal overall impact on the minimum regulatory capital requirements for banks, with a one-time provisioning expected but manageable within a proposed 5-year glide-path [3]. Group 3: Impact on Specific Banks - Microfinance-focused banks, such as Bandhan Bank, IndusInd Bank, RBL Bank, AU Small Finance Bank, and IDFC First Bank, are expected to be most affected due to their higher exposure to micro loans [5][6]. - The State Bank of India (SBI) initially estimated a need for around ₹25,000 crore in provisions, which has now been reduced to below ₹20,000 crore [7]. - Among large private banks, Kotak Mahindra Bank may face significant impacts due to a lower buffer, while Axis Bank is expected to experience a mild effect [7].

Core Insights - The Reserve Bank of India's (RBI) transition from incurred loss provisioning to expected credit loss (ECL) will significantly affect microfinance loan-focused banks, particularly Bandhan Bank, IndusInd Bank, RBL Bank, AU Small Finance Bank, and IDFC First Bank [1][2] Impact on Banks - ECL will be implemented for new loans starting April 2027 and for existing loans from April 2027 to March 2031, impacting microfinance institutions (MFIs) and state banks on existing loans [2] - The ECL model estimates potential future losses on loans, which may lead to higher provisioning requirements for banks, especially in the micro loan segment where delinquencies are typically higher [3] Provisions and Financial Impact - State Bank of India (SBI) initially estimated a need for around ₹25,000 crore in provisions under ECL norms, which has now been revised to below ₹20,000 crore [4] - IIFL Capital Securities predicts that public sector and mid-size banks may require additional provisions of 1-2% of loans, while large private banks with higher buffers will experience minimal to no impact [6] Strategic Implications - The shift to ECL is expected to enhance resilience and align Indian banks' provisioning practices with global standards, prompting a reevaluation of credit risk assessment and management [7] - Banks will need to adapt their product and pricing strategies, as well as improve data and governance capabilities to effectively integrate ECL into their operations [8]

Core Viewpoint - Oma Savings Bank Plc reported a challenging first quarter for 2025, with high costs and declining market interest rates negatively impacting financial results. The bank is focused on strengthening its operations and customer relationships moving forward [3][4][5]. Financial Performance - The comparable profit before taxes for Q1 2025 was EUR 4.6 million, a significant decrease from EUR 25.6 million in the same period last year [4][12]. - The cost/income ratio for the quarter was 54.4%, compared to 34.1% in the previous year, indicating increased operational costs [12][13]. - Net interest income fell by 18.3% year-over-year to EUR 46.9 million, primarily due to lower market interest rates [6][12]. - Total operating income decreased by 18.9% to EUR 60.1 million, while total operating expenses increased by 31.9% to EUR 34.2 million [12][13]. Cost Structure - The rise in costs is largely attributed to the implementation of the risk management action plan (Noste), which incurred total investments of EUR 11.6 million [5][12]. - Impairment losses on financial assets totaled EUR -22.3 million, with one-third related to updates in the expected credit loss (ECL) calculation model [8][12]. Customer and Market Position - The mortgage loan portfolio grew by 3.0%, the corporate loan portfolio by 0.4%, and the deposit base by 2.7% compared to the previous year [7][12]. - Customer satisfaction remains high, with the bank gaining 10,000 new customers following the acquisition of Handelsbanken [10][11]. Outlook and Guidance - The bank maintains its earnings guidance for 2025, expecting comparable profit before taxes to be between EUR 65 million and EUR 80 million, likely below the midpoint of this range [14][17]. - The ongoing economic uncertainty and declining market interest rates are expected to continue affecting the bank's performance [15][17].

Core Viewpoint - Lloyds Bank plc reported a significant decline in profit before tax for Q1 2025, primarily due to increased operating expenses and higher impairment charges compared to the same period in 2024 [5][6]. Financial Performance - Profit before tax for Q1 2025 was £1,177 million, a decrease of 26% from £1,587 million in Q1 2024 [5][20]. - Profit after tax was £881 million, down from £1,159 million in the same quarter of the previous year [5][20]. - Total income for Q1 2025 was £4,371 million, slightly lower than £4,385 million in Q1 2024, with net interest income increasing by 4% to £3,244 million [6][20]. Operating Expenses and Impairments - Total operating expenses rose to £2,884 million, a 6% increase from £2,728 million in Q1 2024, driven by inflationary pressures and strategic investments [7][20]. - The impairment charge increased significantly to £310 million from £70 million in the same quarter of 2024, reflecting a higher charge in Commercial Banking and adjustments related to potential impacts from US tariff policies [9][20]. Balance Sheet Overview - Total assets increased by 1% to £616,356 million as of March 31, 2025, compared to £611,213 million at the end of 2024 [10][21]. - Financial assets at amortised cost rose by £3,135 million to £508,032 million, with notable growth in UK mortgages and unsecured loans [11][21]. Capital and Risk Management - The common equity tier 1 (CET1) capital ratio decreased slightly to 13.6% from 13.7% at the end of 2024, influenced by profit accruals and increased risk-weighted assets [15][16]. - Risk-weighted assets increased by £3,955 million to £190,951 million, reflecting lending growth and temporary increases due to hedging activities [17][18]. Economic Assumptions - The Group's base case scenario anticipates slow GDP expansion and a modest rise in the unemployment rate, with persistent inflationary pressures [27][30]. - Key economic assumptions include a GDP growth of 0.2% for Q1 2025 and a projected UK Bank Rate decrease to 4.00% by the end of Q4 2025 [30][34].