Private sector lender Federal Bank today reported a healthy set of numbers with a 25.6 per cent rise in net profit at Rs 210.15 crore for three months to June on higher core income and improvement in asset quality.
Shyam Srinivasan, the managing director and chief executive of the Kochi-based lender, termed the results as "a healthy continuation of the turnaround the bank has scripted since the past few quarters with around improvement in business with an over 29 per cent rise in advances a massive improvement in asset quality."
In a post-earnings concall he told PTI that the lower-than-street-expected net income growth to a single large account becoming an NPA forcing the bank to set aside higher provisions.
"A Rs 100-crore account of privately held Kolkata- based company slipped into an NPA during the quarter. Accordingly we've to fully provide for it. This is has crimped our bottomline," Srinivasan said.
"However, the book could improve the overall asset quality both in terms of gross NPAs and net NPAs both of which saw massive improvements," he said.
Gross NPAs improved to stood at Rs 1,867.94 crore, or 2.42 per cent from 2.92 per cent, while net NPAs slipped to Rs 1,061.26 crore, or 1.39 per cent down from 1.69 per cent and the provision coverage ratio rose to 70.26 per cent.
Whether the bank has any exposure to the 12 large stressed accounts named by RBI,he answered in the affirmative. "We've exposure to four of the 12 accounts, all steel firms. But for all practical purposes three of them are closed as we have sold them to ARCs and technically written off.
"Together our exposure to these four accounts are about Rs 160 crore. And have provided more than 50 per cent to the remaining single account," Srinivasan said adding they've set aside Rs 23 crore for this account.
During the quarter, it sold Rs 193 crore NPAs to asset reconstruction companies, he said, adding the bank has also made excess accelerated provisions to its telecom accounts.
Total deposits rose 18.13 per cent to Rs 95,838.84 crore, driven by NRE deposits growth of 16.34 per cent while Casa deposits grew 20.33 per cent to Rs 32,048.03 crore or 33.44 per cent of the total up from 32.83 per cent.
Total business increased 22.74 per cent to Rs 1,72,145.95 crore.
On the asset side, while SME advances registered a growth of 9.54 per cent to touch Rs 16,786.45 crore, large corporate advances grew 45.59 per cent to Rs 30,126.86 crore.
He admitted that there is stress in its Rs 3,000-crore education loan book but it's of no worry, gold loan book stood at Rs 2000 crore and agri gold loan book at Rs 3,500 crore.
Total income grew 17.20 per cent to Rs 26,53.20 crore, other income recorded 31.34 per cent to Rs 3,29.10 crore.
The core net interest income grew 15.68 per cent to Rs 800.68 crore while net interest margin stood at 3.13 per cent.
The bank footprint rose to 1,252 branches and 1,678 ATMs and when asked whether future expansion will be branch led, Srinivasan said the bank will have distribution heavy and branch-light approach.
On the reported plan to sell its life insurance arm IDBI Federal Life, he said they are focused on discovering the embedded value of the company to help foreign partner exit.
Srinivasan said the 29.08 per cent advances growth was driven primarily by the good show retail lending, which crossed Rs 1,000 crore. But he was quick to add that there are some stress in the home & auto loans and loan against properties segment.
Total income rose to Rs 2,653.19 crore for the quarter from Rs 2,263.84 crore, helping its interest income rise to Rs 2,324.09 crore, up from Rs 2,013.77 crore, while other income rose to Rs 329.10 crore from Rs 250.07 crore.
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