Federal Bank net up 9% on lower provisioning

Jan 18 2014, 03:24 IST
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SummaryFederal Bank on Friday posted a 9.18% year-on-year (y-o-y) growth in net profit to R230.13 crore.

Federal Bank on Friday posted a 9.18% year-on-year (y-o-y) growth in net profit to R230.13 crore. The private lender said net profit was backed by lower provisioning made possible by improved asset quality and a net interest income, which stood at R545.57 crore growing at 9.70% y-o-y. Gross non-performing assets (NPAs) came down to R1,201 crore from R1,466 crore in the second quarter and from R1,564 crore on a year-on-year (y-o-y) basis. As a ratio of total advances, gross NPAs were at 2.83%, down 56 basis points (bps) on a sequential basis and 102 bps on a year-on-year basis.

“Our asset quality has improved significantly, which is encouraging in the current stressful environment,” said Federal Bank managing director and chief executive officer Shyam Srinivasan during a post-results call. “We have sacrificed our growth for a better quality of loans,” he added.

Federal Bank said that it had recoveries to the tune of R150 crore and the lender sold loans worth R186 crore to asset reconstruction companies during the third quarter. The October-December quarter at Federal Bank also saw fresh slippages to the tune of R146 crore, of which R42 crore were in the retail loan book and R59 crore in SME advances. Net interest margins (NIMs) at the bank were 3.24% for the October-December period, which was down 6 bps sequentially and 23 bps on a year-on-year basis. Srinivasan added that the lender would like to keep a blended NIM of 3.26% for the whole year. Advances increased by 5.43% to R41,639.96 crore from R39,494.03 crore a year ago. SME advances at the bank grew substantially by 38% y-o-y to reach R10,184 crore. The bank also reduced its dependence on large corporate advances an the portfolio recorded a degrowth of R1,805.75 crore.

Total deposits grew by 11.9% from a year ago to R57,737 crore. The share of low-cost current account savings account (Casa) deposits improved to 30.36% at the end of December, 2013.

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