Federal Bank posts 32pc rise in Q3 Net on lower provisions

Federal Bank on Monday posted a 32 per cent growth in its December quarter net profit to Rs 440 crore, helped by a reduction in provisions for bad assets.

The bank said its credit provisions were lower for October-December because of standard asset provisioning done in the previous quarter on account of exposure to Reliance Home Finance and Dewan Housing Finance.

A payback received from the state-run carrier Air-India for the overall exposure of Rs 280 crore also helped reduce the asset quality stress.

The overall provisions were Rs 160.86 crore as against Rs 190 crore in the year-ago period, its managing director and chief executive Shyam Srinivasan told reporters.

Total income improved to Rs 3,738.22 crore in the quarter as against Rs 3,299.96 crore in the year-ago period.

Gross non-performing assets (NPAs) declined to 2.99 per cent of the total advances during the quarter, compared with 3.14 per cent at the end of the third quarter of 2018-19. Net NPAs of the bank also fell to 1.63 per cent of the total assets in October-December 2019 as against 1.72 per cent a year ago.

The bank posted a 7 per cent growth in the core net interest income at Rs 1,155 crore, on a 13 per cent loan growth and net interest margins remaining flat at 3 per cent.

Srinivasan explained that the NIM was lower because of the higher fresh slippages of Rs 593 crore as against Rs 526 crore in the year-ago period, and exuded confidence of taking the gap to 3.06 per cent for the last quarter.

The overall slippages included Rs 283 crore from the two non-bank lenders, for which the bank had set aside Rs 170 crore in standard asset provisions last quarter itself.

Srinivasan said there is not a single exposure of over Rs 100 crore on its stressed asset watchlist and added that the amount of overall stress is also at its lowest in recent times at 1.59 per cent of the book as against a peak of 4 per cent in late 2016.

Its exposure to the stressed NBFC sector is 14 per cent of the book and is stable at that levels, he said, adding that names in the list are well performing borrowers which the bank would like to keep.

Its overall capital adequacy stood at 13.64 per cent, and Srinivasan said that the bank may plan to raise money in the second half of next fiscal.

The bank burns up to 0.40 per cent of buffers per quarter and the internal trigger to go for a capital raising is 12 per cent, he said, pointing out that it had last raised money in June 2017.

The bank scrip gained 2.35 per cent to close at Rs 93.80 apiece on BSE, as against a 0.99 per cent correction on benchmark index Sensex.