NEW DELHI/MUMBAI:Private sector lender Federal Bank has recorded a 25 per cent jump in net profit for the quarter ended June 30 with improving asset quality and core income beefing up margins.According to the financial details filed with the stock exchanges, net profit for the first quarter of the current financial year stood at Rs 262.71 crore, against Rs 210.15 crore a year ago.
The quarter saw the bank’s net interest income growing at 22.40 per cent to Rs 980.06 crore, primarily due to a 24 per cent growth in credit. However, hardening yields during the period affected other income, which came down by 18 per cent to Rs 271 crore, despite a 15 per cent growth in core fees.
The main reason for cheer, however, comes from the improving asset quality. While operating profit grew 8 per cent, the bank also saw a dip in provisioning for bad loans. The bank has made a provision of Rs 199.15 crore as against Rs 236.44 crore for the same quarter of last year.
The bank also saw a small increase in fresh slippages compared to the first quarter of the last financial year. But, at Rs 461 crore the figure comes as a significant improvement of the previous quarter ended March 31, which saw a cumulative provisioning of Rs 872 crore. The gross non-performing assets ratio has also come down to 3 per cent, while the bank’s recoveries and upgrades were at a highest ever, recording Rs 246 crore.
Meanwhile, speaking to reporters, Federal Bank managing director and chief executive officer Shyam Srinivasan said it has been able to perform better on the asset quality front, pointing out that the bank will be able to meet the credit cost guidance of 0.65-0.70 per cent for the current fiscal year.
Slippages could rise
MD and CEO Shyam Srinivasan said overall slippages for FY19 may go up to I1,250 crore as against the I1,200 crore forecast earlier. He also stressed that there were no “lumpy” or “sour” accounts. Corporate segment led the credit growth with a 32 per cent rise in advances.