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Federal Bank profit surges 32% boosted by higher income, lower provisions

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federal bank, federal bank resultsThe bank’s gross NPA ratio fell 8 bps from the end of September to 2.99% of the loan book.

Federal Bank on Monday reported a 32% year-on-year (y-o-y) rise in its net profit for the quarter ended December to Rs 441 crore, on the back of a 13.3% rise in total income to Rs 3,738 crore and a 15% fall in provisions to Rs 161 crore. The net interest income (NII) rose 7.2% y-o-y to Rs 1,155 crore. The NII is the difference between interest earned and interest paid by a bank.

The net interest margin (NIM), a key measure of profitability, fell marginally to 3% from 3.01% at the end of September.

Shyam Srinivasan, managing director and chief executive officer, guided for a NIM of close to 3.08% for the full year. “This quarter we saw the impact of the two accounts which slipped and the revenue reversal was close to `17-18 crore. As credit volume picks up on all these businesses, the NIM will certainly be north of 3.06% and the full-year number will be close to 3.08%,” he said.

The bank’s gross NPA ratio fell 8 bps from the end of September to 2.99% of the loan book. The net NPA rose 4 bps sequentially to 1.63%. Fresh slippages rose 10% sequentially to Rs 593 crore, of which Rs 321 crore came from the corporate book. Two large housing finance companies that slipped during the quarter accounted for Rs 283 crore.

The retail book saw slippages worth Rs 101 crore, down from Rs124 crore in the September quarter, while those in the agri book fell to Rs 50 crore from Rs 72 crore in the previous quarter. Slippages in the business banking segment fell to Rs 66 crore from Rs95 crore in Q2FY20.

Its standard restructured book shrunk to Rs 463 crore from Rs 612 crore at the end of the September quarter. A full repayment of Rs 200 crore by Air India led to the shrinking of the restructured book. Net advances grew 13% y-o-y to Rs1.19 lakh crore by the end of December. Retail loans grew 23%, corporate loans grew 5.86% and SME advances rose 17%. Srinivasan attributed the loan growth to gains in market share in some specific geographies.

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