Federal Bank today reported a 25 percent growth in its June quarter net at Rs 262.71 crore on an increase in core income on jump in advances and better asset quality.
The bank had reported a net profit of Rs 210.15 crore in the year-ago period.
Its net interest income grew 22.40 percent to Rs 980.06 crore for the reporting quarter, primarily on a 24 percent credit growth, while hardening of yields impacted the other income which was down 18% to Rs 271 crore, despite a 15% growth in core fees.
The operating profit growth came at 8 percent, but a dip in provisions to Rs 199.15 crore as against the year ago period's Rs 236.44 crore helped in the higher growth in the net profit.
Fresh slippages surged marginally when compared to last year to Rs 461 crore, but were far lower than Rs 872 crore in the March quarter. The gross non performing assets ratio came down to 3%. The bank's recoveries and upgrades were at a highest ever Rs 246 crore.
Federal Bank managing director and chief executive officer Shyam Srinivasan said it has been able to perform better on the asset quality front and added that it will be able to meet the credit cost guidance of 0.65-0.70 percent for FY19.
He, however, said that the overall slippages for FY19 may go up to 1,250 crore as against the Rs 1,200 crore guided by the bank earlier, but underlined that there are no lumpy sour accounts.
Over Rs 160 crore of the fresh slippages came from the retail and agriculture segments and Srinivasan said it is a routine run rate.
The corporate segment led the credit growth for the bank with a 32 percent rise in advances, followed by retail at 20 percent and the SME segment at 17 percent.
Share of the low-cost current and savings account deposits was stable at 33.47 percent of the overall deposits, which grew 16 percent.
The net interest margin were stable at 3.12 percent, and Srinivasan said the bank is targeting for the same to go up to 3.2 percent for the entire fiscal.
When asked about its plans to sell stake in IDBI Federal Life Insurance, Srinivasan said the "process" of sale has not stopped for the bank, even though its partner IDBI Bank is being taken over by life insurance behemoth LIC.
Srinivasan said the bank has not heard anything from its partner lately and hoped that the newly appointed senior leadership at IDBI Bank will take a call on it soon.
The bank expects some clarity on the matter in the next one or two months, he said.
Investors cheered the results and the Federal Bank scrip jumped 19.16% to close at Rs 88.30 a piece on the BSE, compared with a 0.54% increase in the benchmark.
First Published: IST