Federal Bank Q1 profit jumps 64 pc on lower provision for bad loans Mumbai

Federal Bank on Friday reported a 63.5 percent jump in net profit at Rs 601 crore in the June quarter on a steep decline in money set aside for bad loans.

The South-based lender had reported a net profit of Rs 367 crore in the year-ago period.

It's core net interest income grew 13.1 percent to Rs 1,605 crore during the reporting quarter on a 16 percent advance growth and a 0.07 percent expansion in the net interest margin to 3.22 percent.

Overall, other income dipped 30.2 percent to Rs 453 crore, while the operating profit was also down by 14.1 percent to Rs 973 crore.

Its managing director and chief executive Shyam Srinivasan attributed the same to reverses on the treasury operations side as the yields are going up, and added that the bank has tried to improve on other business parameters while trying to restrict the impact of the overall markets and rates movements on its investment book.

The profit on the sale of securities came at Rs 12 crore for the quarter under review as against Rs 394 crore a year ago, while the bank manager said that the overall fee income came at Rs 441 crore as compared to Rs 255 crore in the preceding year.

The bank's total provisions more than halved to Rs 373 crore during the June quarter, majorly on the back of a reduction in the loan loss provisions which narrowed down to Rs 150 crore for the reporting quarter.

From an asset quality perspective, the stock of gross non-performing assets came at 2.69 percent at the end of June. The same stood at 3.50 percent in the previous year and 2.80 percent three months ago.

The fresh slippages came at Rs 444 crore, with retail contributing a bulk Rs 204 crore.

Srinivasan said the spurt in retail slippages is due to advances restructured earlier slipping into NPAs, and the bank is not concerned about it as it expected a fifth of such advances to slip.

He said that slippages from retail and also agriculture, which did not have any regulatory forbearance in the past, will be higher going forward.

The bank expects the overall credit costs to come at between 0.40-0.50 percent for FY23, Srinivasan said.

He further said that it is aiming to maintain credit growth at the current level of about 16 percent, and will aim to get the NIM at 3.25 percent levels.

The bank holds a 7 percent market share in the overall deposits mobilized by the Indian banking system and will aim to hold its share or increase it in the present set of deposit mobilization push launched by the RBI as the rupee comes under pressure.

Its overall capital adequacy stood at 14.57 percent as against 15.77 percent three months ago, and 14.64 percent in the year-ago period.

The bank's scrip gained 1.44 percent to close at Rs 98.70 apiece on the BSE.