1. Federal Bank to buy more mortgage loans

Federal Bank to buy more mortgage loans

Federal Bank acquired a R1,300-crore mortgage portfolio from a AAA-rated housing finance company (HFC) during the July-September quarter and is on the lookout for more such acquisitions, bank’s managing director and CEO Shyam Srinivasan said on Wednesday.

By: | Mumbai | Published: October 27, 2016 6:16 AM

Federal Bank acquired a R1,300-crore mortgage portfolio from a AAA-rated housing finance company (HFC) during the July-September quarter and is on the lookout for more such acquisitions, bank’s managing director and CEO Shyam Srinivasan said on Wednesday.

“We are finding some very juicy ones (deals) in the market. So we are going after that. A bank like ours is well-capitalised and (has a) good liability profile and relatively low credit deposit ratio. Naturally, the opportunity is to go and get some good credit from the market,” Srinivasan said, adding that prospecting for portfolio buys is not part of the bank’s normal course of business and a small core of people is currently working on it.

Ashutosh Khajuria, executive director at the bank, said that if the portfolio purchase were to be taken into account, Federal Bank’s retail advances for the quarter ended September would show a 27% growth year-on-year (y-o-y). The bank, which reported a 24.8% y-o-y growth in its net profit for July-September on Tuesday, saw retail advances growing by 22% y-o-y.

Two of the bank’s accounts with steel manufacturers have gone for restructuring under the Scheme for Sustainable Structuring of Stressed Assets, popularly known as S4A. Khajuria said that both accounts were standard assets and, as such, attracted 20% provisioning under regulatory guidelines, thereby contributing to the near 93% y-o-y rise in provisions during the quarter. Provisions recorded a marginal fall on a sequential basis. The bank’s overall provision coverage ratio was at 71.7% at the end of the quarter and Srinivasan said that it will continue to target a figure of over 70% in the coming quarters. Slippages for the quarter stood at R268 crore which, Khajuria said, was the lowest for the bank since the end of March 2015.

The bank has won two accounts under its start-up fund, Srinivasan said.

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