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Federal Bank recorded sharp 59% growth in the net profit to Rs 477.81 crore in the quarter ended March 2021 (Q4FY2021), driven by better margins, robust growth in fee income, stable asset quality and decline in credit cost.
The Net Interest Margins (NIMs) has improved 3.23% in Q4FY2021 over 3.04% in Q4FY2020, supporting healthy 17% growth in the Net Interest Income (NII) of the bank. The bank has also posted strong 22% growth in the core fee income in Q4FY2021. The advances growth of the bank improved to 9%, while bank maintained stable asset quality in Q4FY2021.
Asset quality stable: Asset quality of the bank improved sharply, in absolute terms, for the fifth sequential quarter in Q4FY2021.
Gross NPA has increased 30% on yoy basis to Rs 4602.39 crore, while Net NPA declined 2% on yoy to Rs 1569.28 crore at end March 2021.
Fresh slippages of advances jumped to Rs 1685 crore in Q4FY2021, which includes proforma slippages of Rs 1089 crore. The recoveries, upgradations, write-offs and NPA sales were at Rs 553 crore.
Net fresh additions of Rs 598 crore to GNPA were contributed by retail segment at Rs 301 crore, followed by agriculture at Rs 89 crore, business banking at Rs 73 crore, commercial banking at Rs 135 crore and corporate at Rs 0 crore in Q4FY2021.
The standard restructured advances book of the bank stood at Rs 1618 crore at end March 2021, compared with Rs 1129 crore a quarter ago and Rs 397 crore a year ago.
Provision coverage ratio stood at 65.1% at end March 2021.
| Asset Quality Indicators: Federal Bank |
|
Mar-21 |
Dec-20 |
Sep-20 |
Jun-20 |
Mar-20 |
Variation |
| QoQ |
YoY |
| Gross NPA (Rs Crore) |
4602.39 |
3470.18 |
3552.19 |
3655.59 |
3530.83 |
33 |
30 |
| Net NPA (Rs Crore) |
1569.28 |
757.24 |
1218.14 |
1477.46 |
1607.17 |
107 |
-2 |
| % Gross NPA |
3.41 |
2.71 |
2.84 |
2.96 |
2.84 |
70 |
57 |
| % Net NPA |
1.19 |
0.60 |
0.99 |
1.22 |
1.31 |
59 |
-12 |
| % CRAR - Basel III |
14.62 |
14.31 |
14.64 |
14.17 |
14.35 |
31 |
27 |
| % CRAR - Tier I - Basel III |
13.85 |
13.00 |
13.33 |
13.00 |
13.29 |
85 |
56 |
| Variation in basis points for figures given in percentages and in % for figures in Rs crore |
Business Highlights:
Business growth improves: Business growth of the bank increased at improved pace of 11% yoy at Rs 304523.08 crore at end March 2021. An improvement in the business growth was mainly driven by higher net advances growth of 8% yoy at Rs 131878.6 crore at end March 2021, while the deposits growth also improved to 13% at Rs 172644.48 crore at end March 2021.
Strong retail loan book growth: Gross advances book increased 9% yoy to Rs 134877 crore at end March 2021, as the retail book moved up 19% to Rs 44910 crore, while agriculture loan book increased 23% to Rs 16076 crore and the business banking book expanded 13% to Rs 11890 crore at end March 2021. The commercial banking book rose 11% to Rs 13262 crore, while corporate banking book declined 4% to Rs 48738 crore end March 2021.
Within the retail book, the mortgages jumped 10% to Rs 7852 crore at end March 2021 from Rs 7125 crore at end March 2020. Housing increased 10% to Rs 20020 crore, auto 12% to Rs 3603 crore, personal 21% to Rs 1809 crore, while other retail advances rose 49% to Rs 11626 crore at end March 2021.
CASA ratio improves: CASA deposits of the bank increased 26% at Rs 58370 crore gaining the share in overall deposits to 33.8% at end March 2021 compared to 30.5% a year ago. Within the CASA, the saving deposits increased at strong pace of 22% to Rs 47686 crore, while current account deposits also galloped 47% to Rs 10684 crore at end March 2021. Retail Deposits Ratio stood at 90.3% compared to 92.3% a quarter ago.
Network expansion: Bank has network of 1272 branches and 1957 ATMs at end March 2021.
Book Value per share stood at Rs 80.7 per share at end March 2021, while adjusted Book value (adjusting for NNPA and 10% of restructured advances) was at Rs 72.1 per share at end March 2021.
Quarterly Performance:
Improves NIMs support NII growth: Bank has reported 17% growth in Net Interest Income (NII) at Rs 1420.38 crore for the quarter ended March 2021. The interest earned eased 1% to Rs 3366.34 crore, while interest expenses declined 11% to Rs 1945.96 crore in the quarter ended March 2021.
Non-interest income declines, on dip in treasury income: The non-interest income of the bank declined 35% to Rs 465.37 crore in Q4FY2021. Core fee income of the bank surged 22% to Rs 323 crore, while treasury income dipped 84% to Rs 59 crore in Q4FY2021. Forex income also fell 47% to Rs 40 crore, while recoveries in written off accounts improved 4300% to Rs 44 crore in Q4FY2021.
Net total income fell 2% to Rs 1885.75 crore in the quarter ended March 2021.
Expense ratio rises: The operating expenses of the bank increased 3% to Rs 1000.66 crore in the quarter ended March 2021. Thus, the expense ratio moved up 284 bps yoy to 53.1% in the quarter ended March 2021, causing 8% dip in the operating profit to Rs 885.09 crore in Q4FY2021.
Provisions dips: The provisions and contingencies dipped 57% to Rs 164.95 crore in the quarter under review.
With the dip in provisions, PBT surged 64% to Rs 642.76 crore. The effective tax rate was higher at 25.7% in Q4FY2021 compared to 23.1% in Q4FY2020. Net Profit moved up 59% to Rs 477.81 crore in the quarter ended March 2021.
Financial Performance FY21:
For the year ended March 2021 (FY2021), Bank posted 3% rise in the net profit at Rs 1590.30 crore. The net interest income rose 19% to Rs 5533.71 crore, while non-interest income moved up 1% to Rs 1944.91 crore in FY2021. The operating expenses increased 9% to Rs 3691.72 crore, while provision and contingencies galloped 41% to Rs 1649.63 crore in FY2021. The profit before tax rose 5% to Rs 2137.27 crore in FY2021. The expense ratio declined 193 bps to 49.4% in FY2021 compared to 51.3% in FY2020. After considering 25.6% of effective tax rate, the net profit rose 3% to Rs 1590.30 crore in FY2021.
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