Total advances grew 15% y-o-y to Rs 1.16 lakh crore and total deposits rose over 18% to Rs 1.39 lakh crore.
Federal Bank on Wednesday reported a 56.6% year-on-year (y-o-y) growth in its net profit to Rs 416.7 crore for the quarter ended September on the back of a 30% y-o-y increase in non-interest income and a similar reduction in provisions.
The bank earned a net interest income (NII) of Rs 1,123.77 crore in the quarter, a growth of 10% compared to the year-ago period. NII is the difference between interest earned and interest expended by a bank. The net interest margin (NIM), a key measure of profitability, stood at 3.01%.
Non-interest income for Q2 was to the tune of Rs 420.92 crore, while provisions stood at Rs 251.77 crore.
Gross non-performing assets (NPA) stood at Rs 3,612.11 crore in absolute terms and at 3.07% as a percentage of gross advances. The net NPA ratio stood at 1.59%, or Rs 1,843.64 crore, in absolute terms. The provision coverage ratio came in at 66.16%.
Managing Director and CEO Shyam Srinivasan said the bank had made additional provisions against standard assets in the September quarter as some clients were under stress. He said that the lender had identified potential slippages at the beginning of the financial year, including three accounts with a total exposure of about Rs 500 crore.
He said one of the loans had slipped into the NPA category in Q2. “It was a foreign currency loan of about `180 crore. We will be able to exercise the security in coming months,” he said, adding that provisions had been made for the loan.
Total advances grew 15% y-o-y to Rs 1.16 lakh crore and total deposits rose over 18% to Rs 1.39 lakh crore. Srinivasan said the bank was moving closer towards its desired granular and balanced mix of a 50:50 retail-wholesale loan book, with the share of retail borrowers being 49% and corporate customers at 51% at the end of September. He also said the deposit growth in the quarter was 1.7 times the credit growth in the period, thus increasing the carrying cost of deposits.
The capital adequacy ratio stood at 13.98% at the end of the quarter. Following the announcement of the results, shares of Federal Bank ended 2.78% lower at Rs 82.15 on the BSE.