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Informist, Saturday, Aug. 2, 2025

 

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-Federal Bank: Elevated slippages driven largely by MFI book 
-Federal Bank Apr-Jun fresh silppages INR 6.58 bln vs INR 4.17 bln year ago 
--Federal Bank net advances INR 2.412 tln as on Jun 30, up 9% on year 
--Federal Bank total deposits INR 2.874 tln as on Jun 30, up 8% on year 
--Federal Bank Apr-Jun NIM 2.94% vs 3.12% qtr ago, 3.16% year ago 
--Federal Bank Q1 net interest income INR 23.37 bln vs INR 22.92 bln yr ago 
--Federal Bank Basel III capital adequacy ratio 16.03% as on Jun 30 
--Federal Bank net NPA ratio 0.48% as on Jun 30 vs 0.44% qtr ago 
--Federal Bank gross NPA ratio 1.91% as on Jun 30 vs 1.84% qtr ago 
--Federal Bank Apr-Jun provisions INR 4.00 bln vs INR 1.44 bln year ago 
--Federal Bank Apr-Jun total income INR 78 bln vs INR 72.46 bln year ago 
--Federal Bank Apr-Jun net profit INR 8.62 bln vs INR 10.10 bln year ago 
--Analysts saw Federal Bank Apr-Jun net profit at INR 9.26 bln 
--Federal Bank Apr-Jun net profit INR 8.62 bln

 

By Priyasmita Dutta

 

NEW DELHI – Federal Bank's net profit for the quarter ended June fell nearly 15% on year as provisions for the quarter surged a little less than threefold. The Kerala-based private sector lender's net profit totalled INR 8.62 billion, missing the Street view by INR 640 million. Sequentially, the net profit fell 16%. The fall in Federal Bank's Apr-Jun net profit on year and on quarter was the highest since 2015, data available with Informist showed. 

The bank's provisions during June quarter were INR 4 billion, compared to INR 1.44 billion in Apr-Jun last year. Sequentially, too, the provisions jumped nearly threefold. The jump in provisions comes amid deterioration in asset quality, which analysts had expected due to the seasonality factor. The bank's net non-performing asset ratio was 0.48%, four basis points lower than the March quarter and 12 bps lower than the year-ago quarter. Gross NPA, on the other hand, weakened seven basis points sequentially and 20 bps on year to 1.91% in Apr-Jun. 

 

On Friday, shares of the bank closed at INR 196 on the National Stock Exchange, down 3.2%. Irrespective of the fall in asset quality, in an investor presentation, the bank said that broad resilience was seen in asset quality. 

 

The provision coverage ratio was 74.41% at the end of June, lower than 75.37% end of March and 70.79% end of June last year. 

 

In Apr-Jun, the Kerala-headquartered bank's credit cost was 0.65%, sharply higher than 0.27% in the trailing quarter and 0.26% in Apr-Jun last year. "On asset quality, while credit costs were elevated this quarter, they were largely driven by slippages in the Agri and MFI portfolios," Managing Director and Chief Executive Officer of the bank K.V.S. Manian said. "Based on current trends, we expect these slippages to moderate and stabilise going forward, leading to a normalisation in credit costs," the bank cited Manian as saying in a press release. 

In the June quarter, slippage ratio was 1.11%, up 27 bps from the March quarter and 33 bps from the June quarter of 2024-25 (Apr-Jun). The bank reported fresh slippages of INR 6.58 billion in the reporting quarter, higher than INR 4.17 billion last year. Within this, retail slippages were the highest share at INR 2.73 billion as against INR 2.39 billion last year, but agriculture-related slippages to the tune of INR 2.70 billion in Apr-Jun were nearly fourfold of the year-ago figure.

 

Irrespective the blips, the bank's business performance was steady, with its global advances and global deposits rising over 9% and 8%, respectively, to INR 2.45 trillion and INR 2.87 trillion as of Jun. 30. Within advances, retail advances were up 8% on year to INR 1.37 trillion. The retail book makes up 56% of its loan portfolio. 

 

The domestic current account savings account deposits ratio was 30.35% at the end of June, 12 bps higher from the March quater and 108 bps higher on year. In Apr-Jun, the cost of deposits fell 20 bps sequentially to 5.78%. On a year-on-year basis, the cost of deposits was down 6 bps.

 

The capital adequacy ratio based on Basel-III norms was 16.03% at the end of June, lower than 16.40% at the end of March but higher than 15.57% at the end of June 2024.

 

Given the business dynamics amidst the interest rate scenario, the private sector bank's net interest income was up 2% on year to INR 23.37 billion. Sequentially, however, it was down 2%. The net interest margin softened to 2.94% in the June quarter, from 3.12% in the March quarter and 3.16% in June quarter of last year. 

 

The bank's total income during Apr-Jun was up 7.6% on year to INR 78 billion, buoyed by a 22% rise in its fee and other income. At record INR 11.13 billion, the bank's fee and other income was up 11% sequentially.   End

 

Edited by Deepshikha Bhardwaj

 

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