Federal Bank Q2 Results: Profit Rises 35.5% On Lower Provisions
The lender's Q2 net profit rose 35.5% year-on-year to Rs 954 crore, beating Bloomberg estimate of Rs 862.8 crore.
Federal Bank Ltd.'s second-quarter profit rose, beating analysts' estimates.
The lender's net profit rose 35.5% year-on-year to Rs 954 crore in the quarter ended September, according to an exchange filing. Analysts polled by Bloomberg estimated a net profit of Rs 862.8 crore for the July–September quarter.
Sequentially, the net profit rose 11.7%.
Net interest income, or core income, for the bank rose 17% to Rs 2,056 crore from last year. Other income rose 19.7% year-on-year to Rs 730 crore.
Asset quality for the lender improved, with the gross non-performing asset ratio falling 12 basis points sequentially to 2.26% as of Sept. 30. The net NPA ratio, too, improved by 5 bps to 0.64% quarter-on-quarter.
Fresh slippages fell 26.4% quarter-on-quarter to Rs 365 crore.
The bank witnessed some of the best NPA ratios in eight to nine years as these improved on the back of lower slippages, according to Shyam Srinivasan, managing director and chief executive officer, Federal Bank, in a post-earnings media briefing.
Provisions for the quarter fell 83.5% to Rs 44 crore from a year ago. The provision coverage ratio, excluding technical write-offs, was 71.03% in Q2.
The CASA ratio fell 524 bps year-on-year to 31.2% as of Sept. 30. Sequentially, it fell 68 bps.
The net interest margin increased 2 bps to 3.22% quarter-on-quarter, compared with the previous 3.20%.
The bank expects NIMs to improve going forward as deposit growth plays out, Srinivasan said.
The deposits grew 23% year-on-year to Rs 2.3 lakh crore. Sequentially, the deposits were up 5%.
"We expect similar progression in the quarters ahead, typically in H2FY24, as demand increases," Srinivasan told reporters.
The private lender's net advances witnessed an overall growth of 20% year-on-year to touch 1.9 lakh crore. On a yearly basis, the retail book grew 22%, and business banking grew 18%.
The bank also expects credit costs to rise by 30-35 bps in H2FY24, even though they have been lower than expectations in H1FY24, Srinivasan said.
"We expect to add 85–90 branches in FY24," he said.
Shares of the Federal Bank rose 2.14% to hit a lifetime high of Rs 152.6 apiece after the release of the results.
