Results     14-Jul-23
Analysis
Federal Bank
Healthy loan across segments and asset quality
Federal Bank has reported 42% growth in net profit at Rs 853.74 crore for the quarter ended June 2023 (Q1FY2024). The bank has posted 20% growth in net interest income (NII), while the core fee income of the bank improved 34% in Q1FY2024. The Net Interest Margin (NIM) of the bank moderated to 3.15% in Q1FY2024 from 3.31% in the previous quarter and 3.22% in the corresponding quarter of previous year.

On business front, the bank as has posted accelerated 21% growth in business with strong 21% surge in loan book. The asset quality of the bank was stable in Q1FY2024. The credit to deposit ratio has moderated to 83.9% at end June 2023 from 84.2% at end June 2022. The CASA ratio of the bank has declined to 31.8% at end June 2023 from 32.7% end March 2023 from 36.8% at end June 2022.

Asset quality improves: The bank has maintained stable asset quality in Q1FY2024.

The fresh slippages of loans stood at Rs 501 crore in Q1FY2024 compared with 454 crore in previous quarter and Rs 463 crore in the corresponding quarter last year.

The recoveries and upgradations of NPAs stood at Rs 246 crore, while the write-off of loans was at Rs 5 crore in Q1FY2024.

The standard restructured loan book of the bank eased to Rs 2568 crore end June 2023.

Provision coverage ratio was steady at 70.02% at end June 2023 compared to 70.02% a quarter ago and 65.03% a year ago.

The capital adequacy ratio of the bank stood at 14.3% with Tier I ratio at 12.5% at end June 2023.

Asset Quality Indicators: Federal Bank

 

Jun-23

Mar-23

Dec-22

Sep-22

Jun-22

Variation

QoQ

YoY

Gross NPA (Rs Crore)

4434.77

4183.77

4147.85

4031.06

4155.33

6

7

Net NPA (Rs Crore)

1274.59

1205.01

1228.59

1262.35

1420.25

6

-10

% Gross NPA

2.38

2.36

2.43

2.46

2.69

2

-31

% Net NPA

0.69

0.69

0.73

0.78

0.94

0

-25

% PCR

70.02

70.02

69.19

67.41

65.03

0

499

% CRAR - Basel III

14.28

14.81

13.35

13.84

14.57

-53

-29

% CRAR - Tier I - Basel III

12.54

13.02

12.13

12.62

13.31

-48

-77

Variation in basis points for figures given in percentages and in % for figures in Rs crore

 

Business Highlights:

Business growth accelerates: The business of the bank has increased 21% YoY to Rs 409090 crore end June 2023, driven by 21% surge in advances to Rs 186594 crore. Deposits rose 21% to Rs 222496 crore at end June 2023.

CASA deposits ratio declines, as term deposit jumps: The CASA deposits of the bank increased 5% YoY to Rs 70854 crore at end June 2023. The terms deposits of the bank have jumped 31% to Rs 151642 crore. The CASA ratio declined to 31.8% at end June 2023 compared to 36.8% at end June 2022.

Strong loan growth: Advances growth was driven by retail loans rising 17% YoY to Rs 58422 crore at end June 2023, while credit to agriculture increased 26% to Rs 25112 crore and MSME 23% to Rs 17555 crore at end June 2023. The corporate credit has also moved up 22% to Rs 85505 crore end June 2023.

Investment book of the bank jumped 26% YoY to Rs 51942 crore at end June 2023.

Margins improve: The bank has showed sharp 112 bps YoY increase in cost of deposits to 5.32%, while yield on advances also surged 127 bps YoY to 9.21% in Q1FY2024. NIM has eased 7 bps YoY to 3.15%.

Branch expansion: The bank has added 11 branches and 4 ATMs in Q1FY2024, taking overall tally to 1366 branches and 1920 ATM`s end June 2023.

Book value of the bank stood at Rs 105.6 per share at end June 2023, while the adjusted book value (net of NNPA and 10% of restructured advances) was Rs 98.4 per share at end June 2023.

Quarterly Performance

NII growth slows as NIM eases: Bank has recorded 38% increase in the interest earned at Rs 5024.53 crore, while interest expenses zoomed 53% to Rs 3105.94 crore in Q1FY2024. NII improved 20% to Rs 1918.59 crore in the quarter ended June 2023.

Healthy growth in the core fee income: Bank has posted strong 34% growth in core fee income to Rs 505 crore, while the treasury income jumped 1542% to Rs 197 crore. However, the forex income declined 52% to Rs 30 crore. The overall non-interest income jumped 62% to Rs 732.41 crore in the quarter ended June 2023.

Expenses ratio improves: The operating expenses of the bank increased 24% to Rs 1348.65 crore, as other expenses moved up 25% to Rs 731.91 crore, while employee expenses also increased 24% to Rs 616.74 crore in Q1FY2024. Cost to income ratio improved 50.9% in Q1FY2024 compared with 52.7% in Q1FY2023, helping the Operating Profit to increase 34% to Rs 1302.35 crore.

Provisions and contingencies decline: The bank has showed -7% decline in provisions to Rs 155.58 crore. The loan loss provisions increased 21% to Rs 182 crore, while investment provisions were marginal at Rs 2 crore and bank has reversed standard asset provisions of Rs 29 crore.

Effective tax rate was nearly steady to 25.6% in Q1FY2024 from 25.5% in Q1FY2023. Net Profit rose by 42% YoY to Rs 853.74 crore during quarter ended June 2023.

Financial Performance FY2023:

Bank has posted 59% increase in net profit to Rs 3010.59 crore in the year ended March 2023 (FY2023). The net interest income increased 21% to Rs 7232.16 crore, while non-interest income moved up 12% to Rs 2330.00 crore, pushing up net total income by 19% to Rs 9562.16 crore in FY2023. The operating expenses increased 11% to Rs 4767.77 crore, while provision and contingencies dipped 39% to Rs 749.89 crore, allowing profit before tax to increase 59% to Rs 4044.50 crore in FY2023. The cost-to-income ratio improved to 49.9% in FY2023 compared to 53.3% in FY2022. An effective tax rate was steady at 25.6% in FY2023 compared to 25.5% in FY2022. The net profit has increased 59% to Rs 3010.59 crore in FY2023.

Federal Bank: Results

Particulars

2306 (3)

2206 (3)

Var %

2303 (12)

2203 (12)

Var %

Interest Earned

5024.53

3628.86

38

16803.63

13660.76

23

Interest Expended

3105.94

2024.35

53

9571.47

7698.80

24

Net Interest Income

1918.59

1604.51

20

7232.16

5961.96

21

Other Income

732.41

452.62

62

2330.00

2089.09

12

Net Total Income

2651.00

2057.13

29

9562.16

8051.05

19

Operating Expenses

1348.65

1083.76

24

4767.77

4293.20

11

Operating Profits

1302.35

973.37

34

4794.39

3757.85

28

Provisions & Contingencies

155.58

166.68

-7

749.89

1221.77

-39

Profit Before Tax

1146.77

806.69

42

4044.50

2536.08

59

EO

0.00

0.00

-

0.00

0.00

-

PBT after EO

1146.77

806.69

42

4044.50

2536.08

59

Provision for tax

293.03

206.03

42

1033.91

646.26

60

PAT

853.74

600.66

42

3010.59

1889.82

59

EPS*(Rs)

16.1

11.3

 

14.2

8.9

 

Adj BV (Rs)

98.4

83.8

 

94.6

81.1

 

* Annualized on current equity of Rs 423.63 crore. Face Value: Rs 2, Figures in Rs crore

Source: Capitaline Corporate Database

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