Private sector lender Federal Bank reported a 25 per cent (year-on-year) jump in its net profit to Rs 1,006.74 crore in the third quarter of financial year 2024 due to strong growth in other income.
Sequentially, the profit rose by 5.53 per cent from Rs 954 crore in Q2 FY24.
The other income of the bank rose 61.53 per cent to Rs 862.56 crore from Rs 534 crore. Net Interest Income rose 8.51 per cent (Y-o-Y) to Rs 2,123 crore from Rs 1,956.53 crore in the year-ago period. The total income of the lender increased by 32.72 per cent to Rs 6,592.66 crore from Rs 4,967.25 crore.
The asset quality of the Thrissur-based lender slipped, with Gross Non-Performing Assets (GNPA) ticking up to 2.29 per cent compared to 2.26 per cent in Q2 FY24. Whereas the Net NPA stayed flat at 0.64 per cent across the time period.
During the quarter, the bank saw fresh slippages worth Rs 479 crore compared to Rs 398 crore in Q3 FY23 and Rs 365 crore in Q2 FY24.
“Out of the fresh slippages in the quarter, nearly Rs 70 crore came from one large account which is likely to see a recovery in Q4 FY24,” said Shyam Srinivasan, Managing Director & CEO of Federal Bank.
Further, the Net Interest Margin (NIM) of the bank dropped to 3.19 per cent compared to 3.55 per cent in Q3 FY23, mainly on account of tight liquidity and high cost of deposit.
The deposits of the bank grew by 19 per cent (Y-o-Y) to Rs 2.39 trillion, whereas the credit rose by 18 per cent to Rs 1.99 trillion. Srinivasan added that the growth in deposits was coming from client money and not from bulk money.
Also, on account of the change in regulatory mandate, sequentially, the risk-weighted assets (RWA) of the lender rose by 7 per cent to Rs 1.81 trillion. Srinivasan noted that the RWA has moved up for all players because of the mandatory requirement from the Reserve Bank of India, and the bank was not outside of the ordinary in this case.
Recently, the Reserve Bank of India has increased the risk weight on unsecured loans to moderate the growth of such loans.
Further, speaking on the succession plans, Srinivasan said that a formal search for a successor is underway. As a part of its search, the bank is also considering external candidates along with those from the bank, and the names of the candidates will be sent to the RBI by the end of April or early May.
Recently, the RBI had turned down a request from Federal Bank seeking an extension for Srinivasan by one year, whose current tenure expires on September 22, 2024.
First Published: Jan 16 2024 | 6:48 PM IST