Results     17-Oct-23
Analysis
Federal Bank
Continues healthy performance
Federal Bank has reported strong 36% surge in net profit at Rs 953.82 crore for the quarter ended September 2023 (Q2FY2024). The bank has posted healthy 17% growth in net interest income (NII), while the core fee income of the bank also improved 30% in Q2FY2024. The Net Interest Margin (NIM) of the bank improved on sequential basis to 3.16% in Q2FY2024 from 3.15% in Q1FY2024, while eased from 3.30% in the corresponding quarter of previous year.

On business front, the bank as has posted 21% growth in business with strong 20% surge in loan book. The asset quality of the bank has further improved in Q2FY2024. Bank has witnessed decline in the credit to deposit ratio to 84.2% at end September 2023 from 86.7% at end September 2022 due to sharp growth in the deposits. The CASA ratio of the bank has eased to 31.2% at end September 2023 from 31.8% end June 2023 and 36.4% at end September 2022.

Asset quality improves: The bank has continued to improve asset quality with fresh slippages of loans under control in Q2FY2024.

The fresh slippages of loans stood at Rs 373 crore in Q2FY2024 compared with 501 crore in previous quarter and Rs 390 crore in the corresponding quarter last year.

The recoveries and upgradations of NPAs stood at Rs 359 crore, while the write-off of loans was at Rs 13 crore in Q2FY2024.

The standard restructured loan book of the bank declined to Rs 2420 crore end September 2023.

Provision coverage ratio improved to 71.03% at end September 2023 compared to 70.02% a quarter ago and 67.41% a year ago.

The capital adequacy ratio of the bank stood at 15.5% with Tier I ratio at 13.8% at end September 2023.

Asset Quality Indicators: Federal Bank

 

Sep-23

Jun-23

Mar-23

Dec-22

Sep-22

Variation

QoQ

YTD

YoY

Gross NPA (Rs Crore)

4436.05

4434.77

4183.77

4147.85

4031.06

0

6

10

Net NPA (Rs Crore)

1229.81

1274.59

1205.01

1228.59

1262.35

-4

2

-3

% Gross NPA

2.26

2.38

2.36

2.43

2.46

-12

-10

-20

% Net NPA

0.64

0.69

0.69

0.73

0.78

-5

-5

-14

% PCR

71.03

70.02

70.02

69.19

67.41

101

101

362

% CRAR - Basel III

15.50

14.28

14.81

13.35

13.84

122

69

166

% CRAR - Tier I - Basel III

13.79

12.54

13.02

12.13

12.62

125

77

117

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

 

Business Highlights:

Healthy business growth: The business of the bank has increased 21% YoY to Rs 428836 crore end September 2023, driven by 20% surge in advances to Rs 195968 crore. Deposits galloped 23% to Rs 232868 crore at end September 2023.

CASA deposits ratio eases, but retail deposits driving overall deposits growth: The CASA deposits of the bank rose 5% YoY to Rs 72589 crore at end September 2023. The current account deposits increased 26% to Rs 14182 crore, while saving account deposits rose 1% to Rs 56672 crore end September 2023. The CASA ratio declined to 31.2% at end September 2023 compared to 36.4% at end September 2022. The term deposits have increased 31% to Rs 160279 crore end September 2023. Core deposits accounts for 97.87% of total deposits. NRE Term Deposits up by 10% YoY end September 2023.

Strong loan growth: Advances growth was driven by retail loans rising 18% YoY to Rs 62009 crore at end September 2023, while credit to agriculture increased 24% to Rs 25115 crore and MSME 32% to Rs 21056 crore at end September 2023. The corporate credit also surged declined 17% to Rs 87788 crore end September 2023. Within the loan book, CV/CE book grew at 67% YoY and 11% QoQ, business banking loan grew at 18% YoY and 6% QoQ and MFI portfolio crosses Rs 2300 crore.

Investment book of the bank moved up 27% YoY to Rs 55169 crore at end September 2023.

Margins improve sequentially: The bank has showed 116 bps YoY increase in cost of deposits to 5.52%, while yield on advances also surged 106 bps YoY to 9.35% in Q2FY2024. The NIM has declined 14 bps YoY, but improved 1 bps QoQ  to 3.16% in Q2FY2024.

Branch expansion: The bank has added 23 branches and 17 ATMs in Q2FY2024, taking overall tally to 1389 branches and 1937 ATM`s end September 2023. The employee base of the bank has jumped to 14270 employees end June 2023.

Book value of the bank stood at Rs 111.7 per share at end September 2023, while the adjusted book value (net of NNPA and 10% of restructured advances) was Rs 105.6 per share at end September 2023.

Quarterly Performance

NII rises to record high levels: Bank has recorded 36% increase in the interest earned at Rs 5455.28 crore, while interest expenses zoomed 50% to Rs 3398.86 crore in Q2FY2024. NII improved 17% to record high level of Rs 2056.42 crore in the quarter ended September 2023.

Healthy growth in the core fee income: Bank has posted strong 30% growth in core fee income to Rs 578 crore. The treasury income was flat at yoy at Rs 70 crore, while forex income declined 13% to Rs 82 crore. The overall non-interest income increased 20% to Rs 730.42 crore in the quarter ended September 2023.

Expenses ratio rises: The operating expenses of the bank increased 26% to Rs 1462.39 crore, as other expenses moved up 30% to Rs 836.08 crore, while employee expenses increased 21% to Rs 626.31 crore in Q2FY2024. Cost to income ratio increased to 52.5% in Q2FY2024 compared with 48.9% in Q2FY2023. The Operating Profit increased 9% to Rs 1324.45 crore.

Provisions and contingencies decline: The bank has showed 84% decline in provisions to Rs 43.90 crore. The loan loss provisions declined 70% to Rs 61 crore, while the bank has reversed investment provisions Rs 6 crore and standard asset provisions of Rs 11 crore in Q2FY2024.

Effective tax rate was steady at 25.5% in Q2FY2024 from 25.5% in Q2FY2023. Net Profit jumped 36% YoY to Rs 953.82 crore during quarter ended September 2023.

Financial Performance H1FY2024

Bank has posted 39% increase in net profit to Rs 1807.56 crore in the half year ended September 2023 (H1FY2024). The net interest income increased 18% to Rs 3975.01 crore, while non-interest income moved up 38% to Rs 1462.83 crore, pushing up net total income by 23% to Rs 5437.84 crore in H1FY2024. The operating expenses increased 25% to Rs 2811.04 crore, while provision and contingencies dipped 54% to Rs 199.48 crore, allowing profit before tax to increase 39% to Rs 2427.32 crore in H1FY2024. The cost-to-income ratio deteriorated to 51.7% in H1FY2024 compared to 50.6% in H1FY2023. An effective tax rate was flat at 25.5% in H1FY2024 compared to 25.5% in H1FY2023. The net profit has increased 39% to Rs 1807.56 crore in H1FY2024.

Shyam Srinivasan, Managing Director & CEO, Federal Bank said “The Q2 Results are a sigma of many of our initiatives coming together well and has helped us deliver our highest ever profits. Some of the marquee investments we raised in Q2 are a true testimony to our governance, social and environmental commitment standards. We are pleased to deliver on our commitments made to them and do stay determined to make continued progress on all our chosen areas in pursuit of our vision of being the Most Admired Bank.”

Federal Bank: Results

Particulars

2309 (3)

2209 (3)

Var %

2309 (6)

2209 (6)

Var %

2303 (12)

2203 (12)

Var %

Interest Earned

5455.28

4020.78

36

10479.81

7649.64

37

16803.63

13660.76

23

Interest Expended

3398.86

2258.95

50

6504.80

4283.30

52

9571.47

7698.80

24

Net Interest Income

2056.42

1761.83

17

3975.01

3366.34

18

7232.16

5961.96

21

Other Income

730.42

609.52

20

1462.83

1062.14

38

2330.00

2089.09

12

Net Total Income

2786.84

2371.35

18

5437.84

4428.48

23

9562.16

8051.05

19

Operating Expenses

1462.39

1159.11

26

2811.04

2242.87

25

4767.77

4293.20

11

Operating Profits

1324.45

1212.24

9

2626.80

2185.61

20

4794.39

3757.85

28

Provisions & Contingencies

43.90

267.86

-84

199.48

434.54

-54

749.89

1221.77

-39

Profit Before Tax

1280.55

944.38

36

2427.32

1751.07

39

4044.50

2536.08

59

EO

0.00

0.00

-

0.00

0.00

-

0.00

0.00

-

PBT after EO

1280.55

944.38

36

2427.32

1751.07

39

4044.50

2536.08

59

Provision for tax

326.73

240.67

36

619.76

446.70

39

1033.91

646.26

60

PAT

953.82

703.71

36

1807.56

1304.37

39

3010.59

1889.82

59

EPS*(Rs)

15.7

11.6

 

14.9

10.8

 

14.2

8.9

 

Adj BV (Rs)

105.6

86.1

 

105.6

86.1

 

94.6

81.1

 

* Annualized on current equity of Rs 484.97 crore post preferential allotment of 7.27 crore equity shares to IFC

Face Value: Rs 2, Figures in Rs crore

Source: Capitaline Corporate Database

 

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