Federal Bank Sees 16.74% Profit Surge Amid Strong Recoveries and Deposit Growth

Federal Bank reported a 16.74% increase in consolidated net profit for the June quarter, driven by strong recoveries from written-off accounts and deposit growth. The bank's Managing Director Shyram Srinivasan highlighted growth in net interest income and recoveries as key factors, while aiming to maintain stable credit costs and NIM margins.

Federal Bank, based in South India, posted a robust 16.74% growth in consolidated net profit, reaching Rs 1,027.51 crore for the June quarter.

The private sector lender's net profit on a standalone basis rose to Rs 1,009.53 crore, compared to Rs 853.74 crore in the same period last year.

Driven by a 19% surge in core net interest income to Rs 2,292 crore and nearly 20% growth in advances, the bank's margin adjusted slightly to 3.16% from 3.21% in the previous March quarter.

Shyram Srinivasan, the bank's Managing Director and Chief Executive who will step down in September, emphasized that the bank aims to maintain net interest margin (NIM) between 3.15-3.25%.

The bank also recorded over 19% growth in deposits, partially due to a renewed increase in non-resident deposits, which grew by 9% in the quarter.

Other income rose 25% to Rs 915 crore, with a significant boost from a 39% increase in recoveries from written-off assets, totaling Rs 227 crore.

The bank's gross non-performing assets ratio improved to 2.11%, and fresh slippages stood at Rs 417 crore.

With a credit-deposit ratio at 81%, Srinivasan stressed a 'fund before you lend' approach.

Federal Bank's capital adequacy remains strong at 15.57%, and Srinivasan stated that no fundraise will be needed for up to 24 months.

Srinivasan expressed confidence in the bank's future under new leadership, while noting it aims to become the sixth biggest bank by assets in the next two quarters.

The bank's shares closed 1.74% higher at Rs 201.45 on the BSE, outperforming the benchmark which declined by 0.35%.