Rising NPAs pull down Federal Bank net 38.5%, stock tanks 8%

Asset quality troubles shaved off the net profit of Kerala-based lender Federal Bank during the December quarter by a hefty 38.53 per cent to Rs 162.72 crore from the same period last fiscal.
The bank had reported a net profit of Rs 264.69 crore in the corresponding period last fiscal.
Core net interest income grew by a tepid 3.07 per cent during the reporting period to Rs 605.20 crore, while other income dipped by 16.64 per cent to Rs 183.31 crore, primarily due to a dip in forex revenues due to sluggish Exim trade.
The gross non-performing assets ratio zoomed to 3.15 per cent of the total assets as against 2.19 per cent in the year-ago period on fresh slippages of Rs 370 crore, which included three large accounts worth Rs 280 crore in the metals and shipping space.

The bank's Managing Director and Chief Executive Shyam Srinivasan refused to answer a direct question on whether the worst on asset quality is over, but said the fourth quarter will be better on this front.
"We have addressed all known issues," he said during a concall with reporters.

The overall provisions were at Rs 75.11 crore as against a write-back of Rs 82 lakh in the year-ago period, which dented the bottom-line.
The bank stock took a battering from investors after the announcement of the results. The scrip closed 7.74 per cent down at Rs 48.25 a piece on the BSE, as against a 0.58 per cent correction on the benchmark Sensex.

It sold three loans from the construction, metals and shipping sectors, worth Rs 225 crore, to asset reconstruction companies during the reporting period, he said.
Net advances grew 9.84 per cent during the quarter and the overall capital adequacy stood at 14.32 per cent.
Srinivasan said the loan mix is spread evenly between retail, MSMEs and corporates at present and added that corporate demand has kicked-in again from November after many quarters.
To avoid any issues on asset quality in the future, Srinivasan said the bank is lending only to the better-rated corporates.