Private sector lender Federal Bank on Friday posted a 53% year-on-year increase in its net profit for the three months ended September 30 on account of lower provisions.
The bank’s net profit stood at 704 crore in Q2FY23 while its provisions declined 9% y-o-y to Rs 268 crore. The lender’s pre-provisioning operating profit (PPOP) improved 33% y-o-y to Rs 1,212 crore led by healthy growth in its non-interest income, which grew by 24% to Rs 609 crore.
The bank’s net interest margin (NIM) expanded by 10 basis points (bps) to 3.30% despite an increase in cost of deposits. Net interest income (NII) improved by 19% y-o-y to Rs 1,762 crore on robust loan growth. The bank’s net advances grew by 20% y-o-y led by broad-based growth across segments including retail, agriculture, MSME and wholesale. The bank has 1,305 branches and 1,876 ATMs as on 30th September 2022.
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The bank also saw an improvement in its asset quality both on a sequentially and y-o-y basis. Gross non-performing assets (NPA) stood at 2.46% as of September 30, lower by 78 bps y-o-y and 23 bps q-o-q while net NPAs stood at 0.78%, down by 34 bps y-o-y and 16 bps q-o-q.
The bank’s total deposits grew by by 10% y-o-y to Rs 1.9 trillion, with current account savings account (CASA) deposits at Rs 68,873 crore, higher by 11%. CASA ratio improved by 25 bps to 36.41% as of September 30. The bank’s capital adequacy ratio (CRAR) as per Basel III guidelines stood at 13.84% as on September 30.
“This has been our strongest quarter till date with very good growth across all key parameters. Strong business momentum has aided meaningful gains in market share. We have delivered the highest ever net profit with ₹ 704 Cr, ROA and ROE are in the right trajectory and the asset quality of the bank continues to be strong at 2.46% and 0.78%,” Shyam Srinivasan, managing director & CEO, said.