Federal Bank posts 9% dip in profit before tax

Private sector lender Federal Bank has posted 8.9 per cent drop in profit before tax (PBT) at ~537.76 crore for the first quarter (Q1) ended June 2020 (Q1FY21). This is primarily due to the rise in provisions and contingencies.

It had posted a PBT of ~590.72 crore in the quarter ended June 2019 (Q1FY20). The bank’s stock closed 2.45 per cent lower at ~49.85 per share on the BSE. Its net profit for the reporting quarter rose to ~ 400.77 crore, from ~384.21 crore in Q1FY20. The net interest income grew 12.33 per cent year-on-year (YOY), from ~1,154.18 crore in Q1FY20 to ~1,296.44 crore in Q1FY21. Other income, comprising fee and commission, grew 24.74 per cent to reach ~488.37 crore in Q1FY21.

The provisions (factoring in non-performing assets, or NPAS) and contingencies more than doubled to ~394.62 crore in Q1FY21, from ~192.04 crore in Q1FY20. The provision coverage ratio, including technical write-offs, of Federal Bank stood at 75.09 per cent at the end of June. Referring to the impact of the Covid19 pandemic, its Managing Director and Chief Executive Officer Shyam Srinivasan said the aggregate provision against the likely impact of the pandemic stood at ~1,863 crore as of June 30. The amount of loans under moratorium stood at 24 per cent by value, down from 35 per cent a few months ago.

The asset quality improved during Q4. Gross NPAS declined to 2.96 per cent in Q1FY21, from 2.99 per cent in Q1FY20. Net NPAS were at 1.22 per cent in June, down from 1.49 per cent in June 2019. The total deposits rose 17 per cent at ~1.55 trillion and net advances grew 8.27 per cent YOY to reach ~1.21 trillion as of June 30.

The bank does not envisage capital-raising activity in the near future. It will continue to evaluate options, added Srinivasan.