IDFC's earnings for first-quarter fiscal 2015 declined by 13% as provisions rose by 246%, with 85% of these being made in the energy sector. Management increased provisions as the much anticipated and broad-based recovery in the infrastructure sector is still a few quarters away. Furthermore, the positive regulatory announcements during the last few weeks on long-term infrastructure bonds and introduction of REITs in India will benefit the sector and the company only in the longer term. Even though the company's gross loan book declined by 7% as a result of infrastructure headwinds, its assets under management grew by 19% during past year and investment banking and broking fees were up 28% as capital markets in India have witnessed increased activity and buoyancy.
In some ways, this quarter's results do not represent long-term fundamentals at IDFC. Besides the very high provisions, the firm also made a one-time write-back on depreciation of INR 796 million as it moves to the industry standard of the straight-line method of depreciation of its loan book, versus the more conservative written-down value method being used previously. Furthermore, its non-operational other income, which tends to be lumpy, also rose by 116% versus the same quarter last year.
We continue to view the banking license development as favorable for the long-term profitability of the company. While operational costs are likely to go up considerably as IDFC invests in a branch network and ramps up employee strength, we see earnings and returns bouncing back in a few years. We continue to monitor IDFC's progress on establishing its banking presence, and believe the firm is on track with meeting key regulatory requirements such as paring down its foreign shareholding and restructuring its corporate entity. As more details come to light on the infrastructure bonds and REITs, we will adjust our forecasts. For the moment, we maintain our INR 144.49 per share fair value and no-moat economic rating.
