Federal Bank Q4 net down 43% at Rs 1.45 bn on higher provisions, bad loans

Bank has made accelerated recognition of sensitive assets and treated them as NPAs and made provisions for it

Private sector lender Federal Bank’s net profit for the fourth quarter ended March 2018 (Q4Fy18) fell by 43.5 per cent to Rs 1.44 billion on higher provisioning for bad loans.

It had posted a net profit of Rs 2.56 billion for quarter ended March 2017 (Q4Fy17).

Net profit for 2017-18 was up at Rs 8.78 billion from Rs 8.3 billion in 2016-17.

Shyam Srinivasan, its managing director and chief executive, said the revised framework for the resolution of stressed assets (February 12, 2018) has impacted out bottom-line figure (Q4Fy18). 

Bank has made accelerated recognition of sensitive assets and treated them as non-performing loans (NPAs) and made provisions for it.  The provisioning for bad loans and contingencies grew three times in Q4Fy18 to Rs 3.71 billion from Rs 1.22 billion in Q4Fy17.  

Bank's gross non-performing assets (NPAs) rose to 3 per cent of the gross loans (Rs 27.95 billion) as on March 31, 2018 compared with 2.33 per cent (Rs 17.27 billion) at end-March 2017. Net NPAs were at 1.69 per cent (Rs 15.51 billion) as against 1.28 per cent (Rs 9.41 billion).

Kochi-based lender plans enter in commercial vehicle financing and unsecured retail lending to grow the loan book in Fy19, Srinivasan said. 

At present personal loan portfolio is very small, at – about Rs 4 billion – and now bank is looking at growing credit card business under retail segment, Its retail plus agriculture lending portfolio rose by 20 per cent to Rs 350.65 billion in 12 months ended March 2018.

Its stock closed 2.27 per cent lower at Rs 101 per share on Bombay Stock Exchange.