“We have been provisioning significantly in the first three quarters without taking NPA. As the NPA recognition came through in March, it shifted from standard asset provision to credit provision,” Shyam Srinivasan, MD & CEO of Federal Bank, said.
Federal Bank on Monday reported its highest-ever quarterly net profit of Rs 477.81 crore for the fourth quarter of FY21, 58.60 % higher year-on-year (y-o-y), mainly due to lower provisioning.
Provision and contingency for the fourth quarter has come down by 57.29% y-o-y to Rs 242.33 crore, with the recognition of NPAs.
“We have been provisioning significantly in the first three quarters without taking NPA. As the NPA recognition came through in March, it shifted from standard asset provision to credit provision,” Shyam Srinivasan, MD & CEO of Federal Bank, said. He said the first quarter of the current fiscal will be quite challenging.
The Kerala-based lender had reported a net profit of Rs 301.23 crore in the fourth quarter of FY20 and Rs 404.10 crore in the third quarter of the last fiscal. For the complete FY21, the lender reported a net profit of Rs 1,590.30 crore.
The total income of the bank during the fourth quarter declined by 6.5 % y-o-y to Rs 3,831.71 crore. While interest income remained flat y-o-y, other income declined by 34.5% due to a one-off sale of a portfolio investment in Q4 of FY20. Total business stood at `3,04,523.08, registering a growth of 10.91%.
The bank’s asset quality reported a decline on a quarterly basis. Gross NPA as a percentage was 3.41% for Q4 as against 2.71% in Q3 and 2.84% in the year-ago period. Net NPA ratio for Q4 was reported at 1.19%, compared to 0.60% reported in the third quarter and 1.31% reported in Q4 FY20.
The provision coverage ratio improved substantially from 53.39 % to 65.14% on y-o-y basis.
“We delivered our highest every quarterly profit despite an extremely challenging environment … Segments such as gold loans and CASA continue to shine for us, with gold loans registering a staggering growth of 70.05%. The asset quality held up well and net NPA of 1.19% placed the bank amongst the best in the industry,” Srinivasan said.
The Capital Adequacy Ratio (CRAR) of the bank, computed as per Basel III guidelines, stood at 14.62% as of March 31.