MUMBAI: The Kochi-based old generation private sector lender Federal Bank has reported a 14.7% on-year dip in its net income at Rs 861.75 crore in the June quarter, down from Rs 1,010 crore a year ago, driven by rising credit costs in the microfinance and agri books. Sequentially, the numbers are worse with a drop of 16.31%.
The key net interest income rose 1.96% to Rs 2,336.83 crore, while other income jumped to Rs 1,113 crore, up 21.6%, taking the total income up 7.64% to Rs 7,799.61 crore, the management led by chief executive KVS Manian told reporters in an earnings call Saturday.
The asset quality was impacted by a 39 bps rise in credit costs to 65 bps from 26 bps in the year-ago period, largely driven by slippages in the agri and MFI portfolios. This has the total slippages rising by 1.1% in the quarter. "Based on current trends, we expect these slippages to moderate and stabilise going forward, leading to a normalisation in credit costs," Manian said.
The bank added Rs 686 crore in fresh slippages, mostly from the microfinance and agri books.
The total business of the bank grew 8.5% to reach Rs 5,28,640.65 crore, making it the sixth largest private sector lender. The total deposits were Rs 2,87,436.31 crore (of this the low-cost Casa base expanded 12% to Rs 87,236 crore), which grew 8.03%, and advances were Rs 2,41,204.34, which grew 9.24% during the quarter.
The key profitability metric -- net interest margin -- slipped to 2.94% from 3.16%, impacting the overall bottomline as the yield on advances was heading south.
On the asset side, net advances increased from Rs 2,20,806.64 crore to Rs 2,41,204.34 crore, a growth of 9%. Of this, retail advances grew 15.64% to Rs 81,046.54 crore, business banking advances grew 6.29% to Rs 19,193.95 crore, commercial banking advances grew 30.28% to Rs 25,028 crore, corporate advances registered a growth of 4.47% to Rs 83,680.44 crore and CV/CE advances grew 30.31% to Rs 4,858 crore.
Gross non-performing assets (NPA) stood at Rs 4,669.7 crore, which as a percentage to gross advances declined to 1.91% from 2.11%, while net NPAs as a percentage to net advances stood at Rs 1,157.64 crore and 0.48% down from 0.60%, respectively. Provision coverage ratio excluding technical write-off was 74.41.
“Our mid-yielding engines like gold loans, credit cards are firing well too,” Manian said. “We delivered a strong operating performance, with improving productivity. Fee income hit a record high, and Casa ratios continued to improve steadily.”
“With macro tailwinds building and our strategic themes gaining traction, we’re confident of accelerating growth in the second half while staying disciplined on risk and profitability,” Manian added.