Federal Bank’s Q2 net profit slips 26%
Private sector lender Federal Bank on Friday reported a 26.2 per cent decline in net profit at ~307.6 crore for the second quarter ended September over the same period a year ago. This is primarily due to a sharp rise in provisions and contingencies.
Sequentially, the Kochi-headquartered bank had posted a net profit of ~400.77 crore in the quarter ended June 30 (Q1FY21). Its stock closed 0.97 per cent higher at ~52.25 per share on the BSE.
The bank said it expects up to 3 per cent of its loan book (about ~350 crore) to come up for restructuring under the Covid-19 regulatory package. Of this, corporate loans are expected to be around ~1,000 crore.
The bank’s Managing Director and Chief Executive Officer Shyam Srinivasan said the loan portfolio comprises one third each of retail credit, business (up to ~25 crore), and corporate on the book. Executive Director Ashutosh Khajuria said the bank made provisions of 10 per cent in the September quarter. The bank’s net interest income grew 23 per cent to ~1,380 crore in the second quarter. The net interest margin improved to 3.12 per cent in the September quarter from 3.01 per cent in the year-ago period. Other income, comprising fee and commission, grew by 21 per cent to reach ~509 crore in Q2FY21. The provisions (factoring in nonperforming assets, or NPAS) and contingencies more than doubled to ~592.06 crore in Q2FY21, from ~251.77 crore in the same period a year ago.