Net interest income, the difference between interest income and interest expenditure, grew 7.62 per cent to Rs 587.16 crore in the quarter under review, compared to Rs 545.57 crore in the year-ago quarter.
“The credit environment still remains benign and we haven’t seen any large credit borrowings. But we have managed to grow ahead of the around 10 per cent credit growth that the sector has been witnessing in the last few quarters,” said Shyam Srinivasan, managing director, Federal Bank.
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Net interest margin in the December 2014 quarter stood at 3.2 per cent, against 3.24 per cent in the year-ago period. Net interest margin fell sequentially, too, from 3.35 per cent in the September 2014 quarter.
“Last quarter, there was a one-off benefit of about Rs 26 crore on interest on income tax refund and that had an impact. Apart from this, there unrealised interest rate reversal of Rs 8 crore with regard to one account going into NPA (non-performing assets), and both put together had an impact of approximately Rs 35 crore leading to softer margins in this quarter,” explained Srinivasan.
Other income, which includes commission, fees, treasury gains etc, rose 41 per cent to Rs 220 crore in the October-December 2014 quarter from Rs 156.25 crore. The rise in other income was mainly supported by treasury gains of Rs 77 crore in the quarter.
Asset quality was stable with gross NPAs as percentage of total advances stood at 2.19 per cent, compared to 2.83 per cent in the corresponding year-ago period. The net NPA ratio also fell to 0.69 per cent from 0.86 per cent.
According to Srinivasan, the NPA trajectory is likely to improve further. The restructured books stood at Rs 40 crore for this quarter. No loans were sold to asset reconstruction companies in the December 2014 quarter.
At the end of the December 2014 quarter, net advances for the lender increased 15 per cent to Rs 48,026 crore from Rs 41, 639 crore in December 2013 quarter. Retail advances grew 15.34 per cent and SME advances were up 17.65 per cent. Total deposits swelled 14 per cent to Rs 65,550 crore from Rs 57,737 crore in the same period. The bank’s capital adequacy ratio stood at 14.51 per cent at the end of December 2014 quarter.