Results     03-May-24
Analysis
Federal Bank
High employee provisions hits bottomline, core business remain healthy
Federal Bank has reported flat net profit at Rs 906.30 crore for the quarter ended March 2024 (Q4FY2024). The bottomline of the bank was impacted due to provisions of Rs 162.21 crore for employee wage hike. The bank has posted healthy 15% growth in net interest income (NII), while the core fee income of the bank also improved 11% in Q4FY2024. The Net Interest Margin (NIM) of the bank was steady on sequential basis at 3.21% in Q4FY2024, while eased from 3.36% in the corresponding quarter of previous year.
On business front, the bank as has posted 19% growth in business with strong 20% surge in loan book. The asset quality of the bank was stable in Q4FY2024. Bank has substantially improved the credit to deposit ratio to 85.0% at end March 2024 from 83.6% at end March 2023. However, the CASA ratio of the bank has declined to 29.4% at end March 2024 from 32.7% at end March 2023.

Asset quality improves: The bank has maintained stable asset quality in Q4FY2024.

The fresh slippages of loans stood at Rs 371 crore in Q4FY2024 compared with 496 crore in previous quarter and Rs 454 crore in the corresponding quarter last year.

The recoveries and upgradations of NPAs stood at Rs 450 crore, while the write-off of loans was at Rs 21 crore in Q4FY2024.

The standard restructured loan book of the bank stood at Rs 2027 crore end March 2024.

Provision coverage ratio was steady at 71.08% at end March 2024 compared to 71.08% a quarter ago and 70.02% a year ago.

The capital adequacy ratio of the bank stood at 16.1% with Tier I ratio at 14.6% at end March 2024.

The risk weighted assets of the bank has increased 21% YoY to Rs 181073 crore end March 2024,

Asset Quality Indicators: Federal Bank

 

Mar-24

Dec-23

Sep-23

Jun-23

Mar-23

Variation

QoQ

YoY

Gross NPA (Rs Crore)

4528.87

4628.79

4436.05

4434.77

4183.77

-2

8

Net NPA (Rs Crore)

1255.33

1284.37

1229.81

1274.59

1205.01

-2

4

% Gross NPA

2.13

2.29

2.26

2.38

2.36

-16

-23

% Net NPA

0.60

0.64

0.64

0.69

0.69

-4

-9

% PCR

71.08

71.08

71.03

70.02

70.02

0

106

% CRAR - Basel III

16.13

15.02

15.50

14.28

14.81

111

132

% CRAR - Tier I - Basel III

14.61

13.48

13.79

12.54

13.02

113

159

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 19% YoY to Rs 467111 crore end March 2024, driven by 20% surge in advances to Rs 214577 crore. Deposits rose 18% to Rs 252534 crore at end March 2024.

CASA deposits ratio declines: The CASA deposits of the bank increased 6% YoY to Rs 74200 crore at end March 2024. The current account deposits increased 17% to Rs 15275 crore, while saving account deposits rose 4% to Rs 58114 crore end March 2024. The CASA ratio declined to 29.4% at end March 2024 compared to 32.7% at end March 2023. The term deposits have increased 25% to Rs 178334 crore end March 2024.

Strong loan growth: Advances growth was driven by retail loans rising 20% YoY to Rs 67435 crore at end March 2024, while credit to agriculture increased 28% to Rs 28097 crore and MSME 35% to Rs 23962 crore at end March 2024. The corporate credit has increased 15% to Rs 95083 crore end March 2024.

Investment book of the bank jumped 24% YoY to Rs 60860 crore at end March 2024.

Margins improve: The bank has showed 78 bps YoY increase in cost of deposits to 5.90%, while yield on advances moved up 35 bps YoY to 9.48% in Q4FY2024. Thus, the NIM has declined 15 bps YoY to 3.21%.

Branch expansion: The bank has added 86 branches and 53 ATMs in Q4FY2024, taking overall tally to 1504 branches and 2015 ATM`s end March 2024.

Book value of the bank stood at Rs 119.4 per share at end March 2024, while the adjusted book value (net of NNPA and 10% of restructured advances) was Rs 113.4 per share at end March 2024.

Quarterly Performance

NII rises on strong loan growth: Bank has recorded 27% increase in the interest earned at Rs 5978.35 crore, while interest expenses increased 35% to Rs 3783.24 crore in Q4FY2024. NII improved 15% to Rs 2195.11 crore in the quarter ended March 2024.

Healthy growth in the core fee income: Bank has posted 11% growth in core fee income to Rs 573 crore, while the forex income jumped 81% to Rs 47 crore. However, the treasury income declined -30% to Rs 134 crore, allowing 3% rise in the overall non-interest income to Rs 753.88 crore in the quarter ended March 2024.

Expense ratio jumps: The operating expenses of the bank increased 41% to Rs 1838.64 crore, as other expenses moved up 34% to Rs 951.75 crore, while employee expenses zoomed 49% to Rs 886.89 crore in Q4FY2024. Cost to income ratio jumped to 62.3% in Q4FY2024 compared with 49.5% in Q4FY2023, causing 17% dip in the Operating Profit to Rs 1110.35 crore.

Provisions and contingencies decline: The bank has written back provisions of Rs 94.60 crore. The loan loss provisions declined -91% to Rs 7 crore, while the bank has written back standard asset provisions of Rs 50 crore and other provisions of Rs 67 crore. Investment provisions rebounded to Rs 15 crore

Effective tax rate declined to 24.8% in Q4FY2024 from 25.9% in Q4FY2023. Net Profit was flat YoY to Rs 906.30 crore during quarter ended March 2024.

Financial Performance FY2024

Bank has posted 24% increase in net profit to Rs 3720.60 crore in the year ended March 2024 (FY2024). The net interest income increased 15% to Rs 8293.48 crore, while non-interest income moved up 32% to Rs 3079.27 crore, pushing up net total income by 19% to Rs 11372.75 crore in FY2024. The operating expenses increased 30% to Rs 6198.27 crore, while provision and contingencies dipped 74% to Rs 196.10 crore, allowing profit before tax to increase 23% to Rs 4978.38 crore in FY2024. The cost-to-income ratio jumped to 54.5% in FY2024 compared to 49.9% in FY2023. An effective tax rate declined to 25.3% in FY2024 compared to 25.6% in FY2023. The net profit has increased 24% to Rs 3720.60 crore in FY2024.

Federal Bank: Results

Particulars

2403 (3)

2303 (3)

Var %

2403 (12)

2303 (12)

Var %

Interest Earned

5978.35

4720.74

27

22188.26

16803.63

32

Interest Expended

3783.24

2811.45

35

13894.78

9571.47

45

Net Interest Income

2195.11

1909.29

15

8293.48

7232.16

15

Other Income

753.88

733.86

3

3079.27

2330.00

32

Net Total Income

2948.99

2643.15

12

11372.75

9562.16

19

Operating Expenses

1838.64

1308.58

41

6198.27

4767.77

30

Operating Profits

1110.35

1334.57

-17

5174.48

4794.39

8

Provisions & Contingencies

-94.60

116.66

LP

196.10

749.89

-74

Profit Before Tax

1204.95

1217.91

-1

4978.38

4044.50

23

EO

0.00

0.00

-

0.00

0.00

-

PBT after EO

1204.95

1217.91

-1

4978.38

4044.50

23

Provision for tax

298.65

315.30

-5

1257.78

1033.91

22

PAT

906.30

902.61

0

3720.60

3010.59

24

EPS*(Rs)

14.9

14.8

 

15.3

12.4

 

Adj BV (Rs)

113.4

94.6

 

113.4

94.6

 

* Annualized on current equity of Rs 487.22 crore. Face Value: Rs 2, Figures in Rs crore

LP: Loss to profit

Source: Capitaline Corporate Database

 

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