Federal Bank on Tuesday reported a marginal, 0.88% rise in its net profit for the second quarter of FY19 at Rs 266 crore, restricted by an increase in provisions as dud assets increased.
The South-based lender had posted a net profit of Rs 263.70 crore in the year-ago quarter.Provisions jumped 63.38% to Rs 288.82 crore during the quarter from Rs 176.77 crore a year ago. On a sequential basis, provisions surged 45.03% from Rs 199.15 crore.
Net interest income (NII), the core income a bank earns by giving loans, increased by 13.75% y-o-y to `1022.47 crore against `898.91 crore in the previous year.
The lender’s asset quality during the quarter slipped slightly. Gross non-performing assets (NPAs) increased by 63.42% to `3184.53 crore at the end of the September quarter from `1948.97 crore in the same quarter last year. Gross NPAs stood at 3.11% as compared to 2.39% in the year-ago quarter. Net NPAs stood at1.78% against 1.32% a year ago.
Speaking to reporters after the release of earnings, managing director and chief executive officer Shyam Srinivasan confirmed that the lender has restructured loans worth `35 crore on account of Kerala floods in Q2. “Expect some more restructuring on account of Kerala floods in Q3 & net interest margin to go up to 3.20-3.25% level in coming quarters,” he said.
The bank experienced healthy growth in lending — the advances for the quarter grew 25.17% to `1.01 lakh crore, while the deposits recorded a 21.6% y-o-y growth to `1.18 lakh crore.
After the results turned out to be better than what experts predicted, shares of the bank surged 7.86%.
The bank registered operating profit of `697.60 crore for the quarter, an increase of 19.62% over the corresponding quarter last year. The operating and net profits for six months to September 30 stood at `1,300.52 crore and `528.75 crore respectively. NRE deposits of the bank grew from `38,255.82 crore to `46,787.05 crore, registering a growth of 22.30%.
(With inputs from FE bureau in Kochi)