Federal Bank plunges 10% on weak Q4 results

The stock plunged 10% to Rs 90.65, trading close to its 52-week low of Rs 87.50 touched on February 6, 2018 on the BSE in intra-day trade.

Federal Bank has plunged 10% to Rs 90.65 on the BSE in early morning trade, after the private sector lender reported weak set of numbers with assets quality worsens in March 2018 quarter (Q4FY18). The stock was trading close to its 52-week low of Rs 87.50 touched on February 6, 2018 on the BSE in intra-day trade.

The bank’s net profit during the quarter under review fell by 43.5% to Rs 1.44 billion on higher provisioning for bad loans. It had posted a net profit of Rs 2.56 billion for quarter ended March 2017 (Q4FY17).

Bank has made accelerated recognition of sensitive assets and treated them as non-performing loans (NPAs) and made provisions for it. The provisioning for bad loans and contingencies grew three times in Q4FY18 to Rs 3.71 billion from Rs 1.22 billion in Q4FY17.

Bank's gross NPAs rose to 3% of the gross loans (Rs 27.95 billion) as on March 31, 2018 compared with 2.33% (Rs 17.27 billion) at end-March 2017. Net NPAs were at 1.69% (Rs 15.51 billion) as against 1.28% (Rs 9.41 billion).

“The revised framework for resolution of stressed assets, being a new regulation, has impacted our bottom line figure. This is as a result of our accelerated recognition of sensitive assets abiding by the spirit of the revised regulation on stressed asset resolution, which, I am sure, will go far to strengthen and professionalize the banking industry’s capabilities to manage stressed assets. Having turned the corner with respect to recognition of NPAs from the restructured standard book this Q4, the Bank is confident of meeting the expectations of its stakeholders and will start FY 19 with significantly lower stress,” said Shyam Srinivasan, Managing Director & CEO, Federal Bank.

At 09:25 am; the stock was trading 9% lower at Rs 91.80 on the BSE, as compared to 0.50% rise in the S&P BSE Sensex. The trading volumes on the counter nearly doubled with a combined 20.87 million shares changed hands on the BSE and NSE so far.