Federal Bank Q1 profit rises 4% to Rs 401 crore; provisions doubles to Rs 395 crore

Private lender Federal Bank has reported 4 per cent growth in net profit at Rs 401 crore during the first quarter ended June 30, 2020 (Q1 FY21), as against Rs 384 crore in the same period last year. On quarter-on-quarter basis, the bank's profit surged 33 per cent from Rs 301 crore in March quarter of FY20.

The Kerala-based bank has posted total income of Rs 3,933 crore in June quarter of 2020 versus Rs 3,621 crore in the year ago period, registering a year-on-year (YoY) growth of 9 per cent. On a sequential basis, revenue fell 4 per cent from Rs 4,108 crore in the March quarter.

The bank's net interest income, or the difference between interest earned on loans and that paid on deposits, rose 12 per cent to Rs 1,296 crore in June quarter this year from Rs 1,154 crore in the corresponding period last year. Other income, which includes core fee income, jumped 25 per cent to Rs 488 crore during the quarter under review from Rs 392 crore in March quarter of 2020.

Federal Bank's provisions during the June quarter more than doubled to Rs 394.62 crore from Rs 192.04 crore in Q1 FY20. The provision coverage ratio (PCR), including technical write-offs, stood at 75.09 per cent during the June quarter of FY21.

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On the asset front, gross non-performing assets (NPAs), as a percentage of total advances, fell marginally to 2.96 per cent in Q1 FY21 compared with 2.99 per cent in Q1 FY20. The net NPA ratio stood at 1.21 per cent against 1.49 per cent in same quarter last year.

The bank's total deposits climbed 17 per cent to Rs 1,54,937 crore, while net advances rose by 8.27 per cent YoY to Rs 1,21,296 crore as on June 30, 2020. Its Capital Adequacy Ratio (CAR) stood at 14.17 per cent with Tier I at 13 per cent.

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On impact of COVID-19, the lender said that it will depend on future developments, which are highly uncertain, including among other things, any new information concerning the severity of the pandemic and action to contain its spread or mitigate its impact. "The bank's capital and liquidity position is strong and would continue to be the focus area for the lender during this period," it said.

In line with the RBI mandated provisions on account of COVID-19, the bank made 10 per cent provision amounting to Rs 3,026.60 lakh during the quarter ended March 31, 2020. In addition to this, the lender made an additional provision of Rs 93 crore (Rs 63.03 crore during the quarter ended March 31, 2020) and a net write back of Rs 17.81 crore, against the likely impact of the COVID-19 pandemic in respect of exposure of the bank to certain specified sectors based on the assessment of presently available information, it said.

The aggregate provision against the likely impact of coronavirus, including the RBI-mandated provision, stands at Rs 186.30 crore as on June 30, 2020, it added.

Ahead of Q1 results, shares of Federal Bank closed Wednesday's trade at Rs 49.85, down 2.45 per cent, against previous closing price of Rs 51.10 on the BSE.