Federal Bank net falls 21.6% yoy as provisions increase

The bank said the share of its customers who have availed of the repayment moratorium had fallen to 24% by value as on July 12 from 35% as on May 25.

Federal Bank’s net profit for the June quarter fell 21.6% year on year (yoy) to Rs 401 crore as the lender set aside Rs 395 crore in provisions — 195.5% higher than that in the same period a year ago. Of the total provisions, Rs 186 crore was towards expected stress from the Covid-19 outbreak and the associated lockdown.

The bank said the share of its customers who have availed of the repayment moratorium had fallen to 24% by value as on July 12 from 35% as on May 25. Shyam Srinivasan, MD & CEO of Federal Bank, said the reduction in the number of moratorium accounts had been broad-based across customer segments. “Across the portfolios, we have seen it reduce between 30% and 40%, whether it’s agri, retail, business banking, commercial banking, corporate banking,” he said, adding, “Corporate has seen a significantly better improvement by about 50%. That’s because one or two very good corporates who took the moratorium initially have made the full repayments.”

As a share of segmental advances, Federal Bank saw the largest incidence of the moratorium being availed in the business banking category, where 42% of all advances are now under the standstill, down from 75% earlier.

Federal Bank’s net interest income (NII), the difference between interest earned and interest expended, grew 5.4% yoy to Rs 1,296 crore. Its net interest margin improved three basis points (bps), sequentially, to 3.07% in Q1FY21. The bank’s total advances grew 9% yoy to Rs 1.23 lakh crore as on June 30, 2020. Deposits grew 17% yoy to Rs 1.55 lakh crore and the current account savings account (CASA) ratio rose 58 bps yoy to 32.02%.

Srinivasan said the bank was seeing loan growth in some categories, such as gold loans, in geographies where people’s mobility had not been restricted. Federal Bank has sanctioned loans worth Rs 1,380 crore and made disbursements to the tune of Rs 1,250 crore under the emergency credit line guarantee scheme (ECLGS) for small businesses.

The bank put up a mixed show in terms of asset quality, with the gross non-performing assets (NPAs) ratio rising 12 bps, sequentially, to 2.96% and the net NPAs ratio down nine bps from the end of March to 1.22%. Federal Bank’s shares closed at `49.85 on the BSE, down 2.45% from their previous close.