Federal Bank’s Q1 PBT declines 8.9% to Rs 537.76 cr on rise in provisions

Private sector lender has posted 8.9 per cent drop in profit before tax (PBT) at Rs 537.76 crore for the first quarter (Q1) ended June 2020 (Q1FY21). This is primarily due to the rise in provisions and contingencies.

It had posted a PBT of Rs 590.72 crore in the quarter ended June 2019 (Q1FY20).

The bank’s stock closed 2.45 per cent lower at Rs 49.85 per share on the BSE.

Its net profit for the reporting quarter rose to Rs 400.77 crore, from Rs 384.21 crore in Q1FY20.

The net interest income grew 12.33 per cent year-on-year (YoY), from Rs 1,154.18 crore in Q1FY20 to Rs 1,296.44 crore in Q1FY21. Other income, comprising fee and commission, grew 24.74 per cent to reach Rs 488.37 crore in Q1FY21.

The provisions (factoring in non-performing assets, or NPAs) and contingencies more than doubled to Rs 394.62 crore in Q1FY21, from Rs 192.04 crore in Q1FY20. The provision coverage ratio, including technical write-offs, of stood at 75.09 per cent at the end of June.

Referring to the impact of the pandemic, its Managing Director and Chief Executive Officer Shyam Srinivasan said the aggregate provision against the likely impact of the pandemic stood at Rs 1,863 crore as of June 30. The amount of loans under moratorium stood at 24 per cent by value, down from 35 per cent a few months ago.

The asset quality of the bank improved during the fourth quarter. The gross NPAs declined to 2.96 per cent in Q1FY21, from 2.99 per cent in Q1FY20. The net NPAs were at 1.22 per cent in June, down from 1.49 per cent in June 2019.

The total deposits rose 17 per cent at Rs 1.55 trillion and net advances grew 8.27 per cent YoY to reach Rs 1.21 trillion as of June 30.

The capital adequacy ratio stood at 14.17 per cent as of June 30, with tier I at 13 per cent. The Kerala-based bank does not envisage capital-raising activity in the near future. It will continue to evaluate options, added Srinivasan.

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