Federal Bank

Well balanced, stable asset quality

Jul 24, 2021 10:07 IST capital market

Federal Bank recorded 8% decline in the net profit to Rs 367.29 crore in the quarter ended June 2021 (Q1FY2022), driven by higher loan loss provisions. The net interest income of the bank was impacted due to higher interest income reversals on account of elevated slippages of loans.

However, the bank has maintained net interest margin nearly stable with reduction in cost of funds and improvement in the CASA deposits ratio.

The advances growth of the bank eased slightly to 8% from 9% a quarter ago, while bank exhibited dip in deposits book to 9% from 13% helping to improve credit deposit ratio on sequential basis to 78.4%. CASA deposits ratio of the bank has improved to 34.8% end June 2021.

Asset quality stable: Asset quality of the bank has maintained stable, in absolute terms as well as percentage terms in Q1FY2022.

Gross NPA has increased 27% on yoy basis and 1% on qoq basis to Rs 4649.33 crore, while Net NPA rose 8% on yoy 2% qoq to Rs 1593.24 crore at end June 2021.

Fresh slippages of advances were elevated at Rs 640 crore in Q1FY2022, while recoveries, upgradations, write-offs and NPA sales were healthy at Rs 642 crore.

Fresh additions to GNPA were contributed by retail segment at Rs 127 crore followed by agriculture at Rs 157 crore, business banking at Rs 169 crore, commercial banking at Rs 117 crore and corporate at Rs 70 crore in Q1FY2022.

The standard restructured advances book of the bank increased to Rs 2574 crore at end June 2021, compared with Rs 1618 crore a quarter ago and Rs 406 crore a year ago.

Provision coverage ratio stood at 65.0% at end June 2021 compared to 65.1% a quarter ago and 75.1% a year ago.

Asset Quality Indicators: Federal Bank

 

Jun-21

Mar-21

Dec-20

Sep-20

Jun-20

Variation

QoQ

YoY

Gross NPA (Rs Crore)

4649.33

4602.39

3470.18

3552.19

3655.59

1

27

Net NPA (Rs Crore)

1593.24

1569.28

757.24

1218.14

1477.46

2

8

% Gross NPA

3.50

3.41

2.71

2.84

2.96

9

54

% Net NPA

1.23

1.19

0.60

0.99

1.22

4

1

% PCR

65.00

65.14

77.10

64.65

75.09

-14

-1009

% CRAR - Basel III

14.64

14.62

14.31

14.64

14.17

2

47

% CRAR - Tier I - Basel III

13.87

13.85

13.00

13.33

13.00

2

87

Variation in basis points for figures given in percentages and in % for figures in Rs crore

Business Highlights:

Business growth eases: Business growth of the bank moderated to 9% yoy at Rs 302271 crore at end June 2021. The moderation in business growth was mainly driven by sharp deceleration in deposits growth to 9% at Rs 169393 crore end June 2021. The advances growth eased marginally to 8% yoy at Rs 132878 crore at end June 2021

Strong retail loan book growth: Gross advances book increased 8% yoy to Rs 132878 crore at end June 2021, as the retail book moved up 15% to Rs 43599 crore, while agriculture loan book increased 24% to Rs 16837 crore and The business banking book expanded 9% to Rs 11576 crore at end June 2021. Further, the commercial banking book rose 10% to Rs 12963 crore, but corporate banking book declined 4% to Rs 47812 crore end June 2021.

Within the retail book, the mortgages jumped 11% to Rs 7783 crore at end June 2021 from Rs 7009 crore at end June 2020. Housing increased 11% to Rs 20124 crore, auto 14% to Rs 3583 crore, personal 14% to Rs 1766 crore, while other retail advances surged 29% to Rs 10343 crore at end June 2021.

CASA ratio improves: CASA deposits of the bank increased 19% at Rs 58959 crore gaining the share in overall deposits to 34.8% at end June 2021 compared to 32.0% a year ago. Within the CASA, the saving deposits increased at strong pace of 19% to Rs 49996 crore, while current account deposits also galloped 19% to Rs 8963 crore at end June 2021. Retail Deposits Ratio improved to 92.7% from 90.3% sequentially.

Network expansion: Bank has network of 1272 branches and 1953 ATMs at end June 2021.

Book Value per share stood at Rs 82.6 per share at end June 2021, while adjusted Book value (adjusting for NNPA and 10% of restructured advances) was at Rs 73.4 per share at end June 2021.

Quarterly Performance:

NII growth eases: Bank has reported 9% growth in Net Interest Income (NII) at Rs 1418.43 crore for the quarter ended June 2021. The interest earned declined 3% to Rs 3355.71 crore, while interest expense also declined 10% to Rs 1937.28 crore in the quarter ended June 2021.

Non-interest income surges on low bases: The non-interest income of the bank increased 33% to Rs 650.15 crore in Q1FY2022, Core fee income of the bank surged 46% to Rs 214 crore, while forex income jumped 71% to Rs 41 crore and recoveries in written off accounts improved 954% to Rs 137 crore in Q1FY2022. However, the treasury income declined 15% to Rs 258 crore in Q1FY2022.

Net total income increased 16% to Rs 2068.58 crore in the quarter ended June 2021.

Expense ratio improves: The operating expenses of the bank rose 9% to Rs 933.40 crore in the quarter ended June 2021. Thus, the expense ratio declined 264 bps yoy to 45.1% in the quarter ended June 2021, supporting 22% rise in the operating profit to Rs 1135.18 crore in Q1FY2022.

Provisions surge: The provisions and contingencies galloped 63% to Rs 126.06 crore in the quarter under review.

With the jump in provisions, PBT declined 8% to Rs 493.35 crore. The effective tax rate was higher at 25.6% in Q1FY2022 compared to 25.5% in Q4FY2020. Net Profit fell 8% to Rs 367.29 crore in the quarter ended June 2021.

Financial Performance FY21

For the year ended March 2021 (FY2021), Bank posted 3% rise in the net profit at Rs 1590.30 crore. The net interest income rose 19% to Rs 5533.71 crore, while non-interest income moved up 1% to Rs 1944.91 crore in FY2021. The operating expenses increased 9% to Rs 3691.72 crore, while provision and contingencies galloped 41% to Rs 1649.63 crore in FY2021. The profit before tax rose 5% to Rs 2137.27 crore in FY2021. The expense ratio declined 193 bps to 49.4% in FY2021 compared to 51.3% in FY2020. After considering 25.6% of effective tax rate, the net profit rose 3% to Rs 1590.30 crore in FY2021.

Federal Bank: Results

Particulars

2106 (3)

2006 (3)

Var %

2103 (12)

2003 (12)

Var %

Interest Earned

3355.71

3444.15

-3

13757.91

13210.75

4

Interest Expended

1937.28

2147.71

-10

8224.20

8561.85

-4

Net Interest Income

1418.43

1296.44

9

5533.71

4648.90

19

Other Income

650.15

488.37

33

1944.91

1931.41

1

Net Total Income

2068.58

1784.81

16

7478.62

6580.31

14

Operating Expenses

933.40

852.43

9

3691.72

3375.61

9

Operating Profits

1135.18

932.38

22

3786.90

3204.70

18

Provisions & Contingencies

641.83

394.62

63

1649.63

1172.17

41

Profit Before Tax

493.35

537.76

-8

2137.27

2032.53

5

Provision for tax

126.06

136.99

-8

546.97

489.75

12

PAT

367.29

400.77

-8

1590.30

1542.78

3

EPS*(Rs)

7.4

8.0

 

8.0

7.7

 

* Annualized on current equity of Rs 399.26 crore. Face Value: Rs 2, Figures in Rs crore

Source: Capitaline Corporate Database


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