Federal Bank Ltd's Q4FY18 standalone net profit declines 43.5% yoy to Rs145cr : Misses Estimates

India Infoline Research Team | May 14, 2018 13:42 IST

The bank’s standalone NII stood at Rs933.20cr, up 10.78% yoy but down 1.77% qoq.

Federal Bank Ltd Q4FY18

Standalone Results Q4FY18: ( cr)

Q4FY18 YoY (%)
NII 933.20 10.8
NPA (%) 3 67
Provisions 371.50 202.8
Net Profit (adjusted) 145 [43.5]
***NPA change is bps
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Buy

Reco. Price

96

Last updated on

25-Apr-2018

Federal Bank's Q4FY18 NII was below estimates at Rs933.2cr as against Rs842.4cr, which is up by 10.8% yoy. The bank’s Q4FY18 net profit was below estimates, which has declined by 43.5% yoy to Rs145cr against Rs256.6cr in Q4FY17. Its GNPA for Q4FY18 stood at 3% against 2.52% qoq, which has increased by 48bps. NNPA for the quarter came at 1.69% against 1.36% qoq, which has increased by 33bps.
  • Advances for the quarter grew by 26% yoy to ~Rs0.93 lakh cr, led by growth across segments. For the quarter, Retail+Agri grew by 20% yoy to Rs35,065cr, SME grew by 19% yoy to Rs19,438cr and corporate grew by 36% to Rs38,670cr.
  • Management has guided for loan book growth of +25% for FY19E.
  • The bank’s market share in advances increased to 1.06%, up 13bps yoy. Retail + SME form around 60% of its loan book.
  • NIMs for the quarter came at 9 quarter low, which has declined by 22bps qoq to 3.11%. This decline was due to contraction on account of accelerated recognition. The management has guided for NIMs in the region of 3.2-3.3% for FY19E.
  • Fee income for the quarter grew by 12% yoy to Rs238cr.
  • Its market share in deposits increased to 0.95%, which is up by 4bps yoy.
  • Retail deposits for Q4FY18 end stood at 94% of total deposits. CASA Ratio has improved by 66bps yoy to Rs33.26% yoy.
  • Recovery/ upgrades stood at Rs239cr for the quarter.
  • Slippages for the quarter stood at Rs872cr. Slippages were primarily due to 7 large exposures in the restructured standard book and the management has guided for run rate of Rs1,100-1,200cr for FY19E.
  • Management guided for ~50-52% cost to income ratio by FY19E and normalized credit cost of 65-70bp.
  • Management further guided for FY19E ROA of ~1% and NIM of 3.25%.
  • Corporate slippages for the quarter came at Rs604cr, which pertains to recognition from restructured books primarily of 6+ years vintage. Majority of slippages were mainly from Infra/Power/Roadways.
  • Significant part of impact in the restructured standard book was driven by new norms on stressed assets. Out of Rs872cr slippages for the quarter, Rs492cr was because of accelerated NPA Recognition on account of revised framework for resolution of stressed assets. Total slippages from the restructured book for the quarter was Rs487cr.
  • For Q4FY18, the bank’s CRAR stood at 14.70%, whereas provision coverage ratio stood at 65%. Cost-to-income ratio for the quarter has improved by 166bps yoy to 52.82%.
  • The stake sale in IDBI Federal will be completed by August’2018 once the bids are evaluated by all the three partners.
  • The bank will announce the stake sale (~26%) in its subsidiary FedFina in the next couple of days.


Technical View:

Federal Bank Ltd is currently trading at Rs. 101.15, down by 2.35 points or 2.27% from its previous closing of Rs. 103.50 on the BSE.
The scrip opened at Rs. 104 and has touched a high and low of Rs. 105 and Rs. 98.55 respectively. So far 2,41,57,772 (NSE+BSE) shares were traded on the counter. The stock is currently trading below its 200 DMA.

BSE 84.40 1.70 (2.06%)
NSE 84.40 1.50 (1.81%)

***Note: This is a NSE Chart

 

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