Kerala-based private sector lender Federal Bank today reported a huge jump in its March quarter net at Rs 256.59 crore, driven majorly by a sharp reduction in non-performing assets.
The Kochi-headquartered bank had a post-tax net of Rs 10.26 crore in the year-ago period. For the full fiscal, it notched up a 78 per cent profit rise at Rs 866 crore.
"We have been very conservative with our lending during the year and have avoided certain areas, which is now benefitting us," managing director and chief executive Shyam Srinivasan told PTI over phone from the headquarters.
Slippages during the reporting quarter more than halved to just Rs 244 crore from Rs 532 crore in the year ago period, and the gross non-performing assets ratio improved to 2.33 per cent from 2.84 per cent. The recovery and upgrades stood at Rs 180 crore, while Rs 29 crore of loans were written-off.
Provisions came down to a third at Rs 122.70 crore from the year-ago period's Rs 388.64 crore, he said.
Srinivasan said the bank is confident of maintaining its performance on the asset quality front in the new fiscal year and expects a further improvement in NPAs.
The bank plans to raise Rs 2,500 crore in equity capital through various routes in fiscal 2018, he said, adding it will be seeking shareholders' nod for the same soon.
The bank's core tier-I capital stood at 12.39 per cent and Srinivasan said it is burning capital at up to 0.35 per cent per quarter, Srinivasan said.
Helped by a 26 per cent growth in advances and an increase in the cheaper current and saving account deposits to 32.7 per cent, its net interest margin grew to 3.42 per cent, and the bank is targeting to maintain it above 3.25 per cent levels in fiscal 2018.
He explained the flush of deposits post-note-ban helped the net interest margins, which may wear off this year.
For fiscal 2018, it is targeting a growth of over 20 per cent in both advances in deposits, Srinivasan said.
Post-demonetisation, costs also came down with the cost to income ratio dipping 4 percentage points sequantially to 51 per cent.
Having identified business banking as a growth vertical, Federal Bank has started a process of addressing the needs of business, commercial and institutional banking.
The bank will be staying away from long tenor loans, especially in sectors like infrastructure, Srinivasan said.
When asked about reports of Kerala government launching a bank, Srinivasan said he does not look at it as a challenge.
The bank scrips rallied a whopping 13.58 per cent to Rs 107.45 on the BSE, as against a 0.37 per cent correction in the benchmark Sensex.
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