Federal Bank recorded strong 50% growth in thenet profit to Rs 460.26 crore in the quarter ended September 2021 (Q2FY2022),driven by improvement in margins, acceleration in loan growth, stable asset qualityand decline in credit cost. However, the bank has witnessed increase in expenseratio and decline in other income, restricting an increase in net profit inQ2FY2022.The Net Interest Margins (NIMs) improved to3.20% in Q2FY2022 from 3.15% in the previous quarter. The advances growth ofthe bank accelerated to 10%, while credit deposits ratio rose to 79.8% endSeptember 2021. The bank also exhibited an improvement in the asset qualitywith the decline in fresh slippages of advances. Assetquality improves: Asset quality of thebank improved in absolute terms as well as percentage terms in Q2FY2022.
Gross NPA ratio declined 4% on qoq basis to Rs4445.84 crore, while Net NPA also fell 6% on qoq to Rs 1502.44 crore at endSeptember 2021. Fresh slippages of advances declined to Rs 320crore in Q2FY2022, while recoveries, upgradations, write-offs and NPA saleswere ahead at Rs 543 crore. Fresh additions to GNPA were contributed byretail segment at Rs 85 crore followed by agriculture at Rs 98 crore, businessbanking at Rs 49 crore and commercial banking at Rs 88 crore, while slippageswere nil in the corporate segment in Q2FY2022.The standard restructured advances book of thebank stood at Rs 3553 crore at end September 2021, compared with Rs 2574 crorea quarter ago and Rs 441 crore a year ago.Provision coverage ratio improved to 65.4% atend September 2021 compared to 65.0% a quarter ago and 64.7% a year ago. | Asset Quality Indicators: Federal Bank |
| | Sep-21 | Jun-21 | Mar-21 | Dec-20 | Sep-20 | Variation |
| QoQ | YTD | YoY |
| Gross NPA (Rs Crore) | 4445.84 | 4649.33 | 4602.39 | 3470.18 | 3552.19 | -4 | -3 | 25 |
| Net NPA (Rs Crore) | 1502.44 | 1593.24 | 1569.28 | 757.24 | 1218.14 | -6 | -4 | 23 |
| % Gross NPA | 3.24 | 3.50 | 3.41 | 2.71 | 2.84 | -26 | -17 | 40 |
| % Net NPA | 1.12 | 1.23 | 1.19 | 0.60 | 0.99 | -11 | -7 | 13 |
| % PCR | 65.43 | 65.00 | 65.14 | 77.10 | 64.65 | 43 | 29 | 78 |
| % CRAR - Basel III | 14.97 | 14.64 | 14.62 | 14.31 | 14.64 | 33 | 35 | 33 |
| % CRAR - Tier I - Basel III | 14.09 | 13.87 | 13.85 | 13.00 | 13.33 | 22 | 24 | 76 |
| Variation in basis points for figures given in percentages and in % for figures in Rs crore |
BusinessHighlights:
Businessgrowth improves: Business growth of thebank improved to 10% yoy at Rs 306399.38 crore at end September 2021. Animprovement in the business growth was mainly driven by acceleration inadvances growth to 9% yoy at Rs 134404.63 crore at end September 2021, whilethe deposits growth also improved to 10% at Rs 171994.75 crore at end September2021.
Strongretail loan book growth:Gross advances book increased 10% yoy to Rs 137313 crore at end September 2021,as the retail book moved up 12% to Rs 44264 crore, while agriculture loan bookincreased 20% to Rs 17890 crore and The business banking book expanded 10% toRs 12457 crore at end September 2021. The commercial banking book expanded 12%to Rs 13851 crore and corporate banking book rose 4% to Rs 48851 crore endSeptember 2021.
Within the retail book, the mortgages jumped 11%to Rs 7973 crore at end September 2021 from Rs 7206 crore at end September2020. Housing increased 13% to Rs 20824 crore, auto 20% to Rs 3840 crore,personal 6% to Rs 1736 crore, while other retail advances rose 9% to Rs 9892crore at end September 2021. CASAratio improves: CASA deposits of thebank increased 18% at Rs 62191 crore gaining the share in overall deposits to 36.2% at endSeptember 2021 compared to 33.7% a year ago. Within the CASA, the savingdeposits increased at strong pace of 16% to Rs 51381 crore, while currentaccount deposits also galloped 28% to Rs 10810 crore at end September 2021.Retail Deposits Ratio improved to 93.7% from 92.7% sequentially.
Networkexpansion: Bank has network of 1272branches and 1874 ATMs at end September 2021.
BookValue per share stood at Rs84.4 per share at end September 2021, while adjusted Book value (adjusting forNNPA and 10% of restructured advances) was at Rs 75.5 per share at endSeptember 2021.
Quarterly Performance:
NIIimproves on higher NIMs: Bankhas reported 7% growth in Net Interest Income (NII) at Rs 1479.42 crore for thequarter ended September 2021. The interest earned declined -3% to Rs 3379.25crore, while interest expended also dipped -10% to Rs 1899.83 crore in thequarter ended September 2021.
Non-interestincome declines, on dip in treasury income: The non-interest income of the bank declined -1% to Rs 444.36crore in Q2FY2022. Core fee income of the bank surged 26% to Rs 323 crore,while treasury income dipped 50% to Rs 71 crore in Q2FY2022. Forex income improved56% to Rs 50 crore in Q2FY2022.
Net total income increased 5% to Rs 1923.78crore in the quarter ended September 2021. Expenseratio jumps: The operating expensesof the bank surged 20% to Rs 1058.99 crore in the quarter ended September 2021.Thus, the expense ratio moved up 679 bps yoy to 55.0% in the quarter endedSeptember 2021, causing -9% dip in the operating profit to Rs 864.79 crore inQ2FY2022.
Provisionsdip: The provisions andcontingencies dipped -54% to Rs 159.20 crore in the quarter under review,
With the jump in provisions, PBT surged 49% toRs 619.46 crore. The effective tax rate was flat at 25.7% in Q2FY2022 comparedto 25.8% in Q4FY2020. Net Profit galloped 50% to Rs 460.26 crore in the quarterended September 2021.Financial Performance H1FY2022:
For the halfyear ended ended September 2021(H1FY2022), Bank posted 17% jump in the net profit at Rs 827.55 crore. The netinterest income rose 8% to Rs 2897.85 crore, while non-interest income moved up6% to Rs 996.14 crore in H1FY2022. The operating expenses increased 15% to Rs1992.39 crore, while provision and contingencies declined -15% to Rs 788.79crore in H1FY2022. The profit before tax increased 17% to Rs 1112.81 crore inH1FY2022. The expense ratio increased 320 bps to 51.2% in H1FY2022 compared to48.0% in H1FY2021. After considering 25.6% of effective tax rate, the netprofit moved up 17% to Rs 827.55 crore in H1FY2022. | Federal Bank: Results |
| Particulars | 2109 (3) | 2009 (3) | Var % | 2109 (6) | 2009 (6) | Var % | 2103 (12) | 2003 (12) | Var % |
| Interest Earned | 3379.25 | 3487.90 | -3 | 6734.96 | 6932.05 | -3 | 13757.91 | 13210.75 | 4 |
| Interest Expended | 1899.83 | 2108.05 | -10 | 3837.11 | 4255.76 | -10 | 8224.20 | 8561.85 | -4 |
| Net Interest Income | 1479.42 | 1379.85 | 7 | 2897.85 | 2676.29 | 8 | 5533.71 | 4648.90 | 19 |
| Other Income | 444.36 | 449.36 | -1 | 996.14 | 940.67 | 6 | 1852.69 | 1931.41 | -4 |
| Net Total Income | 1923.78 | 1829.21 | 5 | 3893.99 | 3616.96 | 8 | 7386.40 | 6580.31 | 12 |
| Operating Expenses | 1058.99 | 882.65 | 20 | 1992.39 | 1735.08 | 15 | 3691.72 | 3375.61 | 9 |
| Operating Profits | 864.79 | 946.56 | -9 | 1901.60 | 1881.88 | 1 | 3694.68 | 3204.70 | 15 |
| Provisions & Contingencies | 245.33 | 532.09 | -54 | 788.79 | 929.65 | -15 | 1557.41 | 1172.17 | 33 |
| Profit Before Tax | 619.46 | 414.47 | 49 | 1112.81 | 952.23 | 17 | 2137.27 | 2032.53 | 5 |
| Provision for tax | 159.20 | 106.85 | 49 | 285.26 | 243.84 | 17 | 546.97 | 489.75 | 12 |
| PAT | 460.26 | 307.62 | 50 | 827.55 | 708.39 | 17 | 1590.30 | 1542.78 | 3 |
| EPS*(Rs) | 8.8 | 5.9 | | 7.9 | 6.7 | | 7.6 | 7.3 | |
| * Annualized on current equity of Rs 420.30 crore. Face Value: Rs 2, Figures in Rs crore |
| Source: Capitaline Corporate Database |
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