Earnings Review
Federal Bk PAT up 18% YoY yr on rise in total income
This story was originally published at 18:14 IST on 24 July 2024
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By Kabir Sharma
MUMBAI – Federal Bank today reported a net profit of 10.10 bln rupees for the quarter ended June, up 18.3% on year, supported by a surge in total income. This is the highest quarterly net profit recorded by the bank. The net profit of the private bank was higher than the Stree estimate of 9.58 bln rupees. Compared to the previous quarter, the net profit rose 11.4%.
The total income of the bank rose 25.9% on year to 72.46 bln rupees in Apr-Jun. Sequentially, the total income was up 7.6%. Interest earned, which accounts for the lion's share of the total income, rose 26.0% on year to 63.31 bln rupees in the reporting quarter.
A 36.0% increase in income on investments also boosted the net profit for the private sector lender. Income on investments rose to 11.08 bln rupees from 8.15 bln rupees a year ago and 10.33 bln rupees a quarter ago.
Total expenses of the bank rose 29.0% on year to 57.45 bln rupees. Employee costs fell 16.8% on quarter to 7.38 bln rupees. However, employee costs rose 19.7% on year. The operating expenses declined 7.2% sequentially to 17.06 bln rupees, but rose 26.5% from a year ago.
Net advances rose 20.3% on year to 2.21 trln rupees as on Jun 30. Retail Advances grew 19.8% on year to 700.2 bln rupees, while business banking advances rose 20.5% on year to 181.59 bln rupees. Commercial banking grew 23.7% on year to 226.87 bln rupees and corporate advances rose 12.2% to 765.89 bln rupees.
On the liabilities side, total deposits of the bank rose 19.6% on year at 2.66 trln rupees as on Jun 30. Current and savings account deposits were up 10% on year at 778.83 bln rupees as on Jun 30. The bank's CASA ratio was 29.27% as on Jun 30, lower than 29.38% reported a quarter ago and 31.85% a year ago.
Gross non-performing assets of the bank at the end of June were at 47.38 bln rupees, which as a percentage to gross advances stood at 2.11%. The net NPA was at 13.30 bln rupees or 0.60% of the net advances as on Jun 30. The provision coverage ratio, excluding technical write off, was 70.79%.
The Basel-III capital adequacy of the bank was at 15.57% as on Jun 30.
The bank's net interest income rose 19% on year to 22.92 bln rupees in the quarter ended June. Net interest margin of the bank moderated to 3.16% in Apr-Jun from 3.21% in Jan-Mar. The bank said it aims to keep the net interest margin in the range of 3.15-3.25% in the current financial year.
The bank also announced its plans to raise 60 bln rupees via multiple debt instruments, but did not specify a timeline for the same.
In the post-earnings conference call, the bank's Managing Director and Chief Executive Officer Shyam Srinivasan said the bank plans to keep the pace of deposit accretion and credit advances at a steady 5% on quarter.
The bank will continue with branch expansion for sustained growth in deposits. The private lender, which opened 14 branches in Apr-Jun, plans to open around 35-40 in Apr-Sep and a total of 100 branches in the current financial year ending March, Srinivasan said.
The bank aims to maintain its credit-to-deposit ratio near 80%, he said.
On the impact of the Reserve Bank of India's new investment norms, the management said the bank's treasury income rose by around 500 mln rupees in Apr-Jun following the implementation of the norms. According to the revised norms, banks can classify their entire bond investment portfolio under any of three categories – held-to-maturity, available-for-sale, and fair value through profit and loss. Under the new norms, the current sub-category of held-for-trading would be included in the fair value through profit and loss category.
Today, the shares of the bank ended 1.7% higher at 201.23 rupees on the National Stock Exchange. End
Edited by Saji George Titus
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