Federal Bank reported its highest-ever quarterly net profit in Q2 FY24

The bank's NII grew 16.72 per cent to Rs 2,056.42 crore, up from Rs 1,761.83 crore in the same quarter of the previous financial year

Federal Bank clocked its highest-ever quarterly net profit at Rs 953.82 crore during the second quarter of financial year 2023-24 (Q2FY24), up 35.54 per cent from Rs 703.71 crore in the year-ago period.

The growth in net interest income (NII) to its record high levels and lower provisioning lifted the profits of the bank.

The NII of the lender rose 16.72 per cent to Rs 2,056.42 crore from Rs 1761.83 crore in Q2FY23. The total provisions of the bank for the quarter declined to Rs 44 crore against Rs 268 crore in the same quarter last year. Provision coverage ratio (PCR), excluding technical write-off, was 71.03 per cent.

“It was a good quarter and we did guide for performance getting stronger from Q1 into Q2 and we are pleased that we could deliver that. We hope to keep this momentum going into Q3 and beyond,” said Shyam Srinivasan, managing director and chief executive officer, Federal Bank.

However, the net interest margin (NIM) slipped to 3.16 per cent versus 3.30 per cent in the second quarter of FY23.

The deposits of Federal Bank increased 23 per cent to Rs 2.32 trillion, whereas the advances grew by 18.05 per cent to Rs 1.92 trillion from the same period of a year ago. The cost of deposits continued to stay elevated at 9.35 per cent, as compared to 8.29 per cent across the time period.

Among advances, retail loans that account for nearly 32 per cent of the total, stood at Rs 62,009 crore, 18 per cent higher than Rs 52,528 crore printed in the year-ago quarter. The microfinance (MFI) portfolio also posted strong growth at Rs 2,325 crore, as compared to Rs 761 crore in the quarter ended September 30, 2022.

The asset quality of the private lender stood at a 34-quarter high with gross non-performing assets (GNPA) slipped down to 2.26 per cent from 2.39 per cent in Q1FY24. Net NPA inched down to 0.64 per cent from 0.69 per cent in the last quarter.

“The asset quality remains robust as this is the best NPA in the last 8 to 9 years due to lower slippages. Going forward, we intend to keep it around similar levels,” Srinivasan added.

Further, in the first half of FY24 the bank added 35 new branches. Srinivasan said the bank planned to add more than 35 branches in the second half of FY24, targeting around 80 to 90 branches by the end of financial year.