Federal Bank Net Zooms Over 46% On Fee Income, Stable Assets

Federal Bank’s net profit shot up by 46.25 per cent to ₹384.21 crore in the first quarter of this fiscal on the back of stable asset quality and robust non-core income.

The Kochi-based private sector lender had reported a net profit of ₹262.71 crore in the quarter ended June 30, 2018.

Net total income of the bank for the period under review rose 23.57 per cent to ₹1,545.70 crore for the April- June quarter.

Of this, net interest income grew 17.77 per cent to ₹1,154.18 crore (₹980.06 crore). Other income grew by 44.55 per cent to ₹391.52 crore (₹270.86 crore).

It posted a net interest margin of 3.15 per cent for the first quarter.

“This has been the 14th consecutive quarter of net profit and an all-time high in operating profit. Credit growth has been stable and has had the right mix of both caution and control, largely influenced by a very volatile external environment. Leading the credit growth has been the retail segment,” said Shyam Srinivasan, Managing Director and CEO, Federal Bank. The lender continues to exercise strict vigil on the non-performing asset (NPA) front, and was able to keep it in check during the quarter, he added.

Lending to IL&FS, DHFL

The bank’s provisions stood at ₹192.04 crore, marginally lower than ₹199.15 crore a year ago.

Fresh slippages in the first quarter amounted to ₹415 crore, including ₹32 crore to two special purpose vehicles of the crippled infra lender IL&FS, while the overall recoveries rose to ₹300 crore.

Gross non-performing assets stood at ₹3,394.69 crore as on June 31, 2019 or 2.99 per cent, against 3 per cent in the year-ago period, while the net NPA ratio improved to 1.49 from 1.72 in the March quarter.

About the exposure to the troubled mortgage lender DHFL, Srinivasan declined to name the account but said its exposure to certain accounts is standard. The bank’s overall exposure to the troubled non-banking lenders segment stood at 13 per cent of the loans, which is almost the same as March, said Srinivasan.

Federal Bank scrip gained 0.7 per cent to close at ₹107.35 apiece on BSE.

IDBI Federal Life Insurance

IDBI Bank is looking to exit or reduce its shareholding in IDBI Federal Life Insurance. Srinivasan said that JP Morgan has been appointed as the investment banker and efforts are on to find a new partner to replace IDBI Bank.

IDBI Federal Life Insurance is a three-way joint venture between IDBI, Federal Bank and Aegis.