Federal Bank reports record Net Profit of Rs 704 cr in Q2FY23, up 53 pc YoY

The bank said it also recorded the highest ever Net Interest Income (NII) at Rs 1762 crore, an increase of 19.09 percent YoY from Rs 1479.42 crore for the quarter ended 30th September 2021.

Other Income of the bank grew by 23.97 percent to Rs 609.52 crore compared to Rs 491.65 crore for the same quarter last year.

Shyam Srinivasan, Managing Director & CEO, said, “This has been our strongest quarter till date with very good growth across all key parameters. Strong business momentum has aided meaningful gains in market share. We have delivered the highest ever net profit with Rs 704 Cr, ROA and ROE are in the right trajectory and the asset quality of the bank continues to be strong at 2.46 percent and 0.78 percent. Credit costs are well controlled at 53 bps. We are encouraged by this and are working to ensure that the trend continues.”

The bank said its Net Interest Margin (NIM) for the quarter grew to 3.30 percent, higher by 10bps YoY.

Srinivasan said that the bank intends to keep the cost-to-income ratio at sub-50. In the September quarter, too, it has been 48 to 50 percent even as the bank added 25 branches. Over the course of three years, the bank intends to add 25 percent more branches while maintaining the cost-to-income ratio at the same level.

Operating Profit also swelled by 32.91 percent to the highest ever Rs 1212 crore during the period under review from Rs 912.08 crore as on 30th September 2021.

Its Gross Non-Performing Assets (GNPA) and Net Non-Performing Assets (NNPA) brought down to 2.46 percent and 0.78 percent respectively during the second quarter

Gross NPA of the bank as at the end of Q2 FY23 stood at Rs 4031.06 crore, which as a percentage to Gross Advances stood at 2.46 percent.

The Net NPA and Net NPA as a percentage to Net Advances as on September 30, 2022 stood at Rs 1262.35 Cr and 0.78 percent respectively.

The Provision Coverage Ratio (including technical write-offs) was 82.76 percent.

Credit Cost for the quarter stood at 0.53 percent.

The bank expects a 15 percent credit growth in FY23.

The total business of the bank reached Rs 350386.03 crore registering a growth of 14.36 percent as on September 30, 2022.

Total Deposits increased from Rs 171994.74 crore as on September 30, 2021 to Rs 1,89,145.71 crore as on 30th September 2022.

Srinivas pointed out that while there is a war for deposits, the bank wants to borrow at the right price. He also noted that while non-resident remittances have increased, the deposits in the segment have gone down.

Current Account Savings Account or CASA Deposits grew by 10.74 percent to reach Rs 68873.27 crore.

On the asset side, Total Advances increased from Rs 137313.37 crore as on September 30, 2021, to Rs 1,63,957.84 crore as on September 30, 2022, a growth of 19.40 percent.

Srinivasan said that two-thirds or 65 percent of the bank's loan book is linked to the repo rate while 25 percent is fixed.

In FY24, the bank aims to improve the advances by 20 to 25 percent.

Retail Advances grew by 18.38 percent to reach Rs. 52438.89 crore.

Agri advances reached Rs.21090.70 crore registering a growth of 17.96 percent.

Business banking advances grew by 17.20 percent to reach Rs. 13617.35 crore.

Commercial Banking grew by 18.61 percent to Rs 16240.00 crore.

Corporate Advances registered a growth of 20.70 percent to reach Rs 58928.90 crore from Rs 48822.63 crore.

The net worth of the bank increased from Rs 17551.94 crore to Rs. 19617.82 crore, as on 30th September 2022.

The Capital Adequacy Ratio (CRAR) of the bank, computed as per Basel III guidelines stood at 13.84 percent as at the end of the quarter.

Federal Bank said it has 1305 branches and 1876 ATMs/Recyclers as on 30th September 2022.

The bank said that the FedFina IPO DRHP has been approved by SEBI in June and the bank is in talks with prospective investers. However, the date of the IPO is still not decided, it said, adding that it would be decided based on the situation, as there is still one year to go.