Federal Bank

The Federal Bank posted a good jump in profitability but asset quality remained under stress. Its NII rose 15% (YoY) at Rs.2324 crore and non-interest or other income showed a sharp rise of 32% at Rs.329 crore. This helped boost the net profit, which was up 26% at Rs.210 crore. It also posted its highest quarterly operating profit of Rs.558 crore and Cost-to-Income improved 357bps to 50.62% (YoY).  Total advances rose 29% while deposits were up 17%.

In terms of asset quality, Gross NPA rose 9 bps to 2.42% (QoQ) while Net NPA rose 11bps to 1.39% from 1.28%.  Fresh accretion in current Q1 rose to a total of Rs.425 crore, up from Rs.244 crore of which retail and agri showed a sharp rise due to demonetization dispensation & farm loan waiver impact.

Total provisions rose 19% (QoQ) and by 34% (YoY) at Rs.348 crore. The Provision Coverage Ratio is 70.26%. The Bank said that a Rs.100 crore account held by a private sector company in Kolkatta slipped into NPA in current Q1 and it has provide for it fully.

Out of the “dirty dozen”, the Bank said that it has exposure to 4 accounts and all four are in the steel sector and exposure is to the tune of Rs.160 crore. In Q1, it sold Rs.193 crore worth of NPAs to asset reconstruction companies.

As at 30th June 2017, the bank had 1,252 branches and 1,678 ATMs.