Federal Bank net plunges 96 per cent on higher provisions

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Mumbai | Published: May 3, 2016 5:22:37 AM

Federal Bank has posted more than 96% year-on-year fall in its net profit for the March quarter as provisions more than doubled over the year-ago period and total income remained largely flat.

Federal Bank has posted more than 96% year-on-year fall in its net profit for the March quarter as provisions more than doubled over the year-ago period and total income remained largely flat.

The private sector lender’s total income for the quarter stood at Rs 2.253.38 crore, up merely 1.8% Y-o-Y. Net interest income, the difference between interest earned and interest expended, came in at R685.95 crore, 10% higher than the same quarter last year.

Federal Bank’s net interest margin for the quarter under review stood at 3.37%, nearly unchanged from the March quarter last year.

The rise in NII was primarily driven by growth in the bank’s loan book, which rose by 13.3% to R58,090.14 crore.

The Kerala-based lender also witnessed a steady growth in deposits, which increased to R79,171.71 crore as on March 31 from R70,824.99 crore last year. The current account savings account (CASA) base expanded by slightly over 19% annually to R25,704.84 crore, primarily led by a rise in savings deposits, which grew by more than 20% to R21,422.21 crore.

As on March 31, Federal Bank’s CASA ratio stood at 32.47%, against 30.43% at the end of the same quarter last year. NRE deposits, which are not considered a part of the CASA base, increased 27% to R30,732 crore.

In terms of loan growth, the bank saw its home loan portfolio growing by close to 15% to R7,876.10 crore, while loans given to small and medium enterprises rose 17.5% to R15,172.07 crore. In all, retail loan disbursal rose over 7% year-on-year to R17,330.70 crore.

On the asset quality front, Federal Bank witnessed a quarter-on-quarter decline in gross non-performing assets (NPAs) and net NPAs as a percentage of total advances.

Gross NPA stood at 2.84%, against 3.15% as on December 31, while net NPA came in at 1.64%, 2 basis points lower than the previous quarter.

However, when compared to the same quarter last year, gross NPAs were higher around by 80 basis points and net NPAs were up by 91 bps.

Managing director Shyam Srinivasan said a significant part of the provisions made in the March quarter was prudential provisioning for assets that run the risk of being classified as stressed or sub-standard in future. Total provisions for the quarter stood at Rs 384.26 crore, more than double the amount in the year-ago period.

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