Federal Bank Q3 profit falls 8% at ₹404 crore

Federal Bank reported an 8 per cent decline in third quarter standalone net profit at ₹404 crore against ₹441 crore in the year-ago quarter.

The bottomline was weighed down by a 161 per cent year-on-year (y-o-y) jump in provisions, including towards loan loss and standard accounts, at ₹421 crore (₹161 crore in the year-ago period).

Net interest income/ NII (difference between interest earned and interest expended) was up 24 per cent y-o-y to ₹1,437 crore (₹1,155 crore).

Other income, including fee income and profit on sale of securities, increased by 18 per cent to ₹482 crore (₹408 crore).

Credit growth

Shyam Srinivasan, MD and CEO, said the 24 per cent growth in NII came on the back of a 6 per cent credit growth, indicating that interest income streams are well-structured.

Gross non-performing assets (NPAs) declined to 2.71 per cent of gross advances against 2.84 per cent in the preceding quarter.

Net NPA position improved to 0.60 per cent of net advances against 0.99 per cent in the preceding quarter.

Including the proforma slippages (whereby the Supreme Court directed banks that the accounts that were not declared NPA till August 31, 2020, shall not be declared NPA till further orders), GNPA and NNPA would have been 3.38 per cent and 1.14 per cent, respectively, in the reporting quarter.

Ashutosh Khajuria, ED and CFO, said the bank has made 15 per cent provision for the proforma slippages as per IRAC (Income Recognition, Asset Classification) norms.

Srinivasan observed that against the initial expectation of accounts aggregating about ₹3,500 crore getting restructured in FY21, the bank now expects only about half this amount to get restructured.

Total advances grew 6 per cent y-o-y to ₹1,28,180 crore. This came on the back of 16 per cent growth in retail advances (with gold loans jumping 67 per cent); business banking (13 per cent); agriculture (24 per cent); and commercial banking (8 per cent). Corporate advances, however, de-grew 7 per cent.

Total deposits increased by 12 per cent y-o-y to ₹1,61,670 crore. The proportion of low-cost CASA (current account, savings account) deposits increased to 34 per cent of total deposits from 31 per cent a year ago.