Federal Bank Q1 net jumps 46% on rise in total income

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Published: July 17, 2019 1:55:11 AM

Total advances grew by 19% y-o-y to Rs 1.12 lakh crore, primarily led by an uptick in the lender’s retail loan portfolio. The core retail loan portfolio grew by 32% y-o-y to Rs 58,880 crore, led by an increase in the personal and vehicle loans.

Federal Bank, Federal Bank Q1, Federal Bank total income, Federal Bank share, Federal Bank nse, Federal Bank results, Federal Bank stock, Federal Bank newsVehicle loans grew 61% y-o-y to Rs 6,121 crore. The average yield on advances improved by 18 bps quarter-on-quarter to 9.55% in Q1FY20.

Private-sector lender Federal Bank on Tuesday posted a 46.25% year-on-year (y-o-y) rise in its net profit to Rs 384.2 crore for the three months to June 2019, primarily on account of a 23.5% y-o-y rise in total income, led by a sharp increase in earnings from other income which includes earnings from fees, commission and forex transactions. Other income rose by 44.55% to Rs 391.5 crore against the corresponding quarter in the previous year.

The Kerala-based lender had reported a net profit of Rs 262.71 crore in the corresponding quarter a year ago. The bank’s operational performance improved with a 29.8% y-o-y increase in the pre-provisioning profit to `782.7 crore, led by a 23.5% increase in total income to Rs 3,620 crore. The net interest income (NII) — the difference between interest earned and interest paid by the bank — grew 18% y-o-y to Rs 1,154 crore in Q1FY20.

Total advances grew by 19% y-o-y to Rs 1.12 lakh crore, primarily led by an uptick in the lender’s retail loan portfolio. The core retail loan portfolio grew by 32% y-o-y to Rs 58,880 crore, led by an increase in the personal and vehicle loans. Vehicle loans grew 61% y-o-y to Rs 6,121 crore. The average yield on advances improved by 18 bps quarter-on-quarter to 9.55% in Q1FY20.

The bank provided Rs 192 crore in Q1FY20, down 3.5% y-o-y.  Federal Bank MD & CEO Shyam Srinivasan said the bank is being watchful of its credit growth and certain stressed sectors. “These stressed sectors include the long-gestation and capital intensive infrastructure projects and therefore we have to be mindful of them,” he said.

Troubled sectors like non-banking financial companies and housing finance companies form 6.4% and 7.9% of the bank’s total lending book, respectively.

The bank’s asset quality appreciated marginally with the gross non-performing asset (NPA) ratio falling by one basis point (bps) q-o-q to 2.99%. It rose by seven bps y-o-y. Total gross NPAs for the quarter amounted to Rs 3,394 crore, nearly Rs 15 crore more from the previous quarter. Net NPA stood at Rs 1,672.82 crore.

Srinivasan added that the credit growth has been stable and has had the right mix of caution and  control largely influenced
by a volatile external environment. “On the liability front, we have gained share in what has been arguably one of the toughest operating environment for liabilities. The bank continues to exercise strict vigil on the NPA front, and was able to keep it under check during the quarter. Overall a very strong and productive quarter for the bank,” he said.

The bank declared slippages worth Rs 32 crore against two special purpose vehicles (SPVs) of IL&FS out of the Rs 240 crore lent to the non-bank lender. “We cannot declare these accounts as NPA as a court order bars us to do so, but we have made prudential provisions against them,” said Federal Bank ED & CFO Ashutosh Khajuria.

The bank also said it has an exposure to the troubled housing finance lender —DHFL. However, Srinivasan declined to spell out the amount of exposure but mentioned that the account was standard. Total deposits rose 19.14% y-o-y to Rs 1.32 lakh crore. The current accounts and savings accounts (Casa) grew by 12% y-o-y to Rs 41,676 crore, while the Casa ratio improved to 31.44% against 33.47% for the corresponding quarter in the previous year.

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