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Informist, Monday, Jul 22, 2024

By Kshipra Petkar

MUMBAI – Strong loan growth and stable margins are expected to drive the net profit of Federal Bank in the June quarter. The net profit of Federal Bank is seen rising 12.3% on year to 9.59 bln rupees for the quarter, according to an average of estimates by 12 brokerages. Sequentially, the net profit is seen rising nearly 6%.

The net interest income of the bank is seen rising 18.9% on year to 22.81 bln rupees for the quarter under review, as per the average of estimates. On a sequential basis, the net interest income is expected to rise 3.9%. Increase in fee income and interest income is likely to drive net interest income and net profit, IDBI Capital Market Services said in a pre-earnings report.

According to provisional numbers as of Jun 30, the bank reported a healthy growth in deposits and loans. The bank's gross advances rose 20.1% on year to 2.24 trln rupees and total deposits rose 19.6% on year to 2.66 trln rupees as of Jun 30.  The retail credit book of the bank grew by 25% on year and the wholesale credit book grew 14%. Retail to wholesale ratio was at 56:44.

Kotak Institutional Equities expects the bank's slippages at 1.1% of loans, which works out to 5.5 bln rupees, mainly driven by the retail and micro, small and medium enterprise segments. The brokerage expects the gross non-performing asset ratio to marginally increase from a quarter ago, while Prabhudas Lilladher expects the asset quality to improve by 5 basis points sequentially.

The gross non-performing asset ratio of the bank improved to 2.13% as of Mar 31 from 2.29% a quarter ago, while the net NPA ratio fell to 0.60% from 0.64% a quarter ago.

Analysts will look forward to the bank's commentary on possible changes in management, sustainability of credit growth, performance of new business segments and asset quality.  In May, the bank said it was in an advanced stage of submitting the list of candidates for chief executive officer for the bank to the Reserve Bank of India.

The bank will announce its earnings for Apr-Jun quarter on Wednesday. At 1426 IST, the shares of the bank were 1.4% higher at 194.22 rupees on the National Stock Exchange.

Following are the Apr-Jun earnings estimates of Federal Bank based on reports compiled by Informist from 12 brokerage houses:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Saji George Titus

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