Federal Bank’s Q1 profit jumps 64% on lower provisions for bad debts

The Federal Bank on Friday announced a 63.5% increase in its net profit to Rs 601 crore in the June quarter due to a sharp drop in money set aside for bad debts.

The Southern-based lender had reported a net profit of Rs 367 crore in the prior year period.

Its core net interest income rose 13.1% to Rs 1,605 crore in the reporting quarter on 16% growth in advances and a 0.07% net margin expansion from interest at 3.22%.

Overall, other income fell by 30.2% to Rs 453 crore, while operating profit also fell by 14.1% to Rs 973 crore.

Its managing director and managing director, Shyam Srinivasan, attributed the same to reversals on the treasury side as yields rose, and added that the bank had tried to improve other business metrics while trying to limit the impact of all markets and rate movements. on his investment book.

Profit on sale of securities stood at Rs 12 crore for the quarter under review from Rs 394 crore a year ago, while bank management said overall fee income stood at Rs 441 crore against Rs 255 crore the previous year. .

The bank’s total provisions more than halved to Rs 373 crore in the June quarter, mainly due to a reduction in loan loss provisions which narrowed to Rs 150 crore for the quarter reference.

From an asset quality perspective, the stock of gross non-performing assets stood at 2.69% at the end of June. The same proportion was 3.50% the previous year and 2.80% three months ago.

New slippages amounted to Rs 444 crore, with retail contributing bulk at Rs 204 crore.

Srinivasan said the surge in retail slippages is due to earlier restructured advances slipping in NPAs, and the bank is not worried about this as it expects a fifth of those advances to slip.

He said slippages in retail and agriculture, which had no regulatory forbearance in the past, will be greater in the future.

The bank expects overall credit costs to be between 0.40 and 0.50 percent for FY23, Srinivasan said.

He further said that he aims to keep credit growth at the current level of around 16% and will aim to bring the NIM to 3.25%.

The bank holds a 7% market share in all deposits mobilized by the Indian banking system and will aim to retain or increase its share in the current round of deposit mobilization spurts launched by the RBI as the rupee is under pressure.

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