A tax refund of Rs456 crore has boosted the net income of the old-generation private sector lender Federal Bank, helping it log in a 37% jump in bottom line to Rs1,177 crore in the June quarter. In the trailing 12 months period, the Kochi-based lender had reported RS862 crore in net income.
The management of the largest private sector lender in Kerala said its net profit jumped to Rs1,177 crore in the June quarter of the current fiscal, up 36.53%. Excluding the Rs456 crore tax write-back, which it has fully provided for, the net income would have only been Rs721 crore. This poor show is in spite of the fact that the bank has seen its margin expand by 39 bps to 3.33% as its cost of funds fell 60 bps.
Despite this, the bank counter climbed nearly 5% to Rs341.5, as the bank’s other key metrics like higher net interest income, and lower provisioning due to an improvement in asset quality buoyed investor sentiment.
Net interest income rose 26.1% year-on-year to Rs2,946 crore, while provisions declined to Rs317 crore from Rs400 crore, and tax expense increased to Rs402.7 crore from Rs294.4 crore.
The bank's asset quality improved further during the quarter with the gross non-performing asset ratio falling to 1.52% from 1.62%, and the net non-performing asset ratio declining to 0.18% from 0.20%.
When asked about the FCNR-B mop-up under the special RBI window, the bank, which has the largest NRI franchise among all private sector banks, refused to put a number to it saying the mobilisation has been good.
Harsh Dugar, executive director at the bank, also refused to offer a target for the same or for the planned mobilisation from the OFCB window.
He said NRI remittances had been very strong since the Iran war broke out, helping the bank cross the overall NRI deposits `1 lakh crore mark for the first time. Total business of the bank neared the `6 lakh crore mark.
The bank’s CEO KVS Manian told reporters in a concall that the bank’s key net interest income rose 26.06 to Rs2,945.9 crore, while fee income rose 21.71% and fresh slippages came down 37.79%.
On the improved asset quality Manian said the net NPA of 0.18% is a decadal low for the bank, with the absolute figure coming down 56.29% to Rs 506.04 crore and fresh slippages fell 37.79% to Rs 409.48 crore.
Total business of the bank reached Rs 5,97,615.83 crore, up 13.05% of which deposits stood at Rs 3,20,117.66 crore, up 11.37% and advances at Rs 2,81,239.54 crore up 14.94%. The low-cost Casa balances stood at Rs 1,03,163.15 crore, up 18.26% and the Casa ratio improved by 188 bps to 32.23. The NRI deposits rose to Rs 1,05,123.41 crore, up 14.24%.