Money & Banking

Federal Bank net up a tad in Q2 on higher provisioning

Our Bureau Mumbai | Updated on October 16, 2018 Published on October 16, 2018

Impact of Kerala floods may continue for the next three to four quarters, says CEO

 

 

Federal Bank, on Tuesday, posted a 0.9 per cent increase in net profit at ₹266.04 crore for the quarter ended September 30, 2018, due to higher provisioning.

The private sector lender had registered a net profit of ₹263.70 in the second quarter of 2017-18.

For the first half of the current fiscal, Federal Bank’s net profit grew 11.6 per cent at ₹528.75 crore, up from ₹473.85 crore in the comparable period of 2017-18.

Provisions shot up by over 63 per cent at ₹288.82 crore in the second quarter of the fiscal, against ₹176.77 crore a year ago.

Shyam Srinivasan, Managing Director and CEO, Federal Bank, said the provisions are classified as investment provisions of ₹105 crore, credit provisions of ₹152 crore, and standard asset provisions of ₹32 crore.

He said the bank has also made two strategic investments in the second quarter, including in Equirus, an investment banking firm, and CCIL. The two required a one-time provisioning.

Gross, net NPAs

Gross non-performing assets rose to 3.11 per cent of gross advances to ₹3,184.53 crore in the second quarter of the fiscal.

It amounted to 2.39 per cent a year ago.

Net NPAs also rose to 1.78 per cent of net advances at ₹1,796.29 crore for the July to September quarter, from ₹1,066.38 crore in the corresponding period a year ago.

Total slippages stood at ₹477 crore in the second quarter, of which about ₹122 crore was from corporate business, which was primarily from one roadway account.

The bank’s total income grew 15.79 per cent at ₹3,087.81 crore during the second quarter of the current fiscal, against ₹2,666.82 crore a year ago.

Its net interest income rose 13.75 per cent at ₹1,022.47 crore in the second quarter of the fiscal from ₹898.91 crore a year ago.

Kerala floods

The impact of the Kerala floods continues to be felt by the state-based lender. Srinivasan said that there has been an impact of ₹30-35 crore on the financials in the second quarter of the fiscal.

“The impact of the floods on the repayment capacity of businesses is likely to continue for the next three to four quarters,” he said, adding that it does not mean that the money is not recoverable.

Shares of Federal Bank gained 7.86 per cent and closed at ₹81.65 apiece on the BSE on Tuesday.

Published on October 16, 2018
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