The Federal Bank Ltd. reported earnings below analysts' estimates for the fourth quarter of the previous financial year.
The private sector bank's standalone net profit stood at Rs 906 crore in the three-month period ending March, according to an exchange filing on Thursday. Analysts polled by Bloomberg had a consensus estimate of Rs 962.6 crore. Sequentially, the profit was down 10%.
Net interest income or core income rose 15% to Rs 2,195 crore. Other income was up 2.7% to Rs 754 crore.
The numbers may have had some wrinkles because of some one-offs and the impact on account of certain wage-related matters in terms of pension, Chief Executive Officer Shyam Srinivasan said in a post-results media call.
Federal Bank Q4 FY24 Earnings Highlights (Standalone)
Net profit at Rs 906 crore versus Rs 903 crore (YoY).
Net interest income rose 15% to Rs 2,195 crore versus Rs 1,909 crore (YoY).
Gross non-performing asset at 2.13% versus 2.29% (QoQ).
Net NPA at 0.6% versus 0.64% (QoQ).
The lender's asset quality improved, with the gross non-performing-asset ratio improving 16 basis points quarter-on-quarter to 2.13%. The net NPA ratio stayed flat at 0.6%, compared with 0.64% in the previous quarter.
Its operating expense rose 41% year-on-year to Rs 1,838.6 crore. Employee costs rose 48% year-on-year to Rs 886.8 crore and other opex rose 34% year-on-year to Rs 951.7 crore. Fresh slippages fell 27% quarter-on-quarter to Rs 352 crore.
The bank wrote off provisions worth Rs 94.6 crore in the quarter ended March. In the same quarter last year, the provisions stood at Rs 116.6 crore.
The current account and savings account ratio improved quarter-on-quarter to 32.68%, compared with 30.63% in the last quarter. On a yearly basis, it narrowed 330 basis points. The net interest margin, a core profitability indicator, contracted 2 basis points sequentially to 3.21%.
The bank's net advances grew 20% year-on-year to Rs 2.09 lakh crore. Retail advances were up 20% to Rs 67,435.3 crore, business banking advances grew 21% to Rs 17,072.6 crore and commercial banking grew 27% to Rs 21,486.7 crore.
Total deposits grew 18% year-on-year to Rs 2.13 lakh crore. Capital adequacy ratio of the bank stood at 16.13% for the quarter ended March. "The market-share gains on assets and deposits are sustainable and growable," Srinivasan said.
The bank recommended a dividend of 60% per equity share with a face value of Rs 2, subject to approvals.
In March, Federal Bank stopped customer onboarding for its co-branded credit cards. NDTV Profit previously reported that the Reserve Bank of India's concerns with data storage forced the bank to shut its deal with OneCard.
Srinivasan said that the bank is in process of getting necessary clearances from the RBI for issuing co-branded credit cards. "Once we put necessary guardrails in place for fintechs, growth will continue."
Shares of the bank were trading 3.23% higher at Rs 167.85 apiece on the NSE, compared to a 0.4% advance in the benchmark Nifty 50 at 1:27 p.m.
Succession Planning
Srinivasan said the bank's board has appointed a panel to finalise the prospective names of internal and external candidates for the position of the managing director and CEO. "The process is underway. and the board is in advanced stages to submit names to (the) RBI," he said.
After the third-quarter results, Srinivasan had said that the RBI was not inclined to offer a one-year extension to him for the role of MD and CEO. Hence, as part of succession planning, the board will send new candidates' names to the regulator by April or early May. NDTV Profit had reported earlier that veteran banker KVS Manian was being tapped for the CEO's office.
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