South-based Federal Bank Tuesday reported a marginal, 0.88 per cent increase in September quarter net to Rs 266 crore, restricted by increase in provisions as dud assets increased.
The bank had posted a post tax net of Rs 263.70 crore in the year-ago period. It, however, said that there has not been any adverse impact of the Kerala floods beyond the already assumed one.
Its provisions rose 63.38 per cent to Rs 288.82 crore for the reporting period, which was one of the primary reasons restricting profit growth.
Federal Bank managing director and chief executive Shyam Srinivasan said Rs 152 crore has been set aside for loan losses, Rs 105 crore towards various investments by the bank, including security receipts, and Rs 30 crore is for standard assets.
The gross non-performing asset (NPA) ratio rose to 3.11 per cent, against 2.39 per cent in the year-ago period, on fresh slippages of Rs 477 crore.
The SME portfolio contributed the most to the fresh slippages at Rs 169 crore, followed by Rs 123 crore from corporate and Rs 120 crore from retail.
The Kerala floods impacted the bottomline by up to Rs 35 crore, according to Srinivasan.
He said the floods contributed for Rs 50 crore of the overall Rs 477 crore in fresh slippages, and added that the bank expects slippages on account of the floods to be at Rs 50 crore for the two subsequent quarters as well.
There was a revenue loss of Rs 10 crore in penalties and fees income which had to be foregone and the floods also led to spends of up to Rs 8 crore on reconstruction, he said.
Over Rs 35 crore has been now set aside as standard restructured advances, courtesy the regulatory dispensations for calamity affected areas, he said, adding that the same will go up to Rs 75 crore in the next quarter.
Srinivasan, however, said that the bank is still maintaining its post-Kerala floods revised targets of maintaining the annual credit costs at the 0.65-0.75 per cent level and fresh slippages at up to Rs 1,500 crore in FY19.
The core net interest income for the reporting quarter rose 13.75 per cent to Rs 1,022.47 crore, on a 26 per cent credit growth and a marginal widening of net interest margin to 3.15 per cent.
Despite rising yields, which restrict trading incomes, the other income grew to Rs 322.89 crore, from the Rs 287.22 crore last year, which was attributed to focus on income lines like fees and third-party product distribution.
The bank does not have any exposure to beleaguered infra financier IL&FS, Srinivasan said, pointing out that it has an exposure to a special project vehicle floated by the non-bank lender, which is performing well.
It has a total exposure of Rs 12,000 crore to non-bank lenders, with 40 per cent of it to the top five NBFCs, he said, adding a review of the same has been carried out and there is no cause of concern on this front.
He, however, said that the bank will be watchful of incremental exposures to the segment and there can also be repricing of loans when they come for refinance.
The bank's unsecured lending book nearly doubled to over Rs 550 crore within three months, and Srinivasan said it will continue to chase opportunities in this segment till it reaches a cap of 2 per cent of overall book.
On its investment in insurer IDBI Federal Life, he said the company is doing well and all options, including a sell out of the stake or increasing it, remain on table, even as its larger partner goes through a "transition" exercise.
The bank scrip jumped 7.86 per cent to close at Rs 81.65 apiece on the BSE Tuesday, against 0.85 per cent gains on the benchmark.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)