Federal Bank dips 7% post Q3 results

The stock dipped 7% to Rs 105 on BSE after the bank's gross and net non-performing assets in December quarter rose sequentially

Federal Bank dipped 7% to Rs 105 on BSE after the private sector lender’s gross and net non-performing assets in December quarter (Q3FY18) rose sequentially.

During the quarter, the gross non-performing assets (NPAs) rose to 2.52% from 2.39% at the end of the second quarter of current fiscal. Net NPAs of the bank stood at 1.36% as against 1.32% reported in the September quarter (Q2FY18).

Federal Bank reported 26% year on year (yoy) growth in net profit at Rs 2.6 billion against Rs 2.06 billion in previous year quarter. Net interest income grew 20% at Rs 9.5 billion on yoy basis.

“Post the improvement in Q2, asset quality took a hit, largely owing to stress across segments, especially in education (in Kerala) and corp loans. Consequently, GNPAs rose around 11% QoQ to around Rs 21.6 billion (2.52%). Lower restructured loans (1.7%), miniscule exposure (Rs 550mn) to NCLT accounts and downtrend in SMA-II loans augur well for asset quality,” analysts at HDFC Securities said in results review.

Despite strong core metrics, Federal Bank may witness pressure due to the asset quality blip, it added.

In past one year, the stock had outperformed the market by surging 56% as compared to 28% rise in the S&P BSE Sensex till Monday.

The trading volumes on the counter jumped more than five-fold with a combined 37.41 million shares changed hands on BSE and NSE.