Fedbank Financial Services Limited (FEDFINA) has reported a robust financial performance for the second quarter, with a significant increase in net profit and steady growth in total income.

Key Financial Highlights

Profit Growth and Income

FEDFINA's net profit for Q2 stood at ₹80.15 crore, marking a substantial 24.17% increase from ₹64.55 crore in the same quarter of the previous year. The company's total income rose to ₹535.99 crore, up by 3.26% compared to ₹519.09 crore in Q2 of the previous fiscal. Interest income, a key revenue driver, grew by 5.97% to ₹507.70 crore from ₹479.11 crore year-on-year.

Half-Year Performance

For the first half of the fiscal year, FEDFINA reported a net profit of ₹155.16 crore, showing growth over the ₹134.78 crore recorded in the corresponding period of the previous fiscal year.

Asset Quality and Capital Adequacy

The company maintained a strong asset quality with gross non-performing assets (GNPA) at 1.90% and net NPAs at 1.30%. FEDFINA's capital position remained robust with a capital adequacy ratio of 21.64%, well above regulatory requirements.

Other Key Metrics

• Basic Earnings Per Share (EPS) for Q2 improved to ₹2.15, up from ₹1.74 in the same quarter of the previous year.
• The company allotted 5,90,965 equity shares under its employee stock option schemes during the quarter.

Conclusion

Fedbank Financial Services Limited has demonstrated a strong financial performance in the second quarter, with significant growth in profitability and stable asset quality. The company's ability to increase its interest income and maintain a healthy capital adequacy ratio positions it well for sustained growth in the competitive NBFC sector.

Investors and stakeholders may look forward to the company's continued focus on expanding its loan book while maintaining asset quality in the coming quarters.

Fedbank Financial Services Limited (FEDFINA) has taken a significant step to manage its non-performing assets (NPAs) by selling a pool of Gross Non-Performing Assets (GNPA) worth Rs. 79.45 crore to India SME Asset Reconstruction Company Limited (ISARC). The transaction, which took place on September 26, involved an upfront cash payment of Rs. 32.57 crore, representing approximately 41.00% of the principal outstanding value.

Details of the Asset Sale

The sold portfolio comprises two main components:

1. Small-ticket Loan Against Property (LAP) worth Rs. 55.60 crore
2. Affordable Home Loans worth Rs. 23.85 crore

It's worth noting that the total GNPA amount of Rs. 79.45 crore includes technically written-off principal outstanding value of Rs. 41.09 crore.

Financial Impact

The net carrying outstanding principal value of the sold pool, after Expected Credit Loss (ECL) provisions, stood at Rs. 22.20 crore as of August 31. Additionally, the company will write off the net carrying value of interest, amounting to Rs. 5.14 crore, in the quarter ending September 30.

Market Implications

This strategic move by Fedbank Financial Services is likely aimed at cleaning up its balance sheet and improving its asset quality. By offloading these non-performing assets, the company may be positioning itself for improved financial performance in the coming quarters.

Other Corporate Updates

In related news, FEDFINA has also announced:

1. An analyst/investor meeting with Bajaj AMC on September 26, conducted through video conferencing.
2. The closure of the trading window for designated persons and their immediate relatives from October 1, until 48 hours after the declaration of financial results for the second quarter and half-year ending September 30.

These actions demonstrate FEDFINA's commitment to transparency and compliance with regulatory requirements, including SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and SEBI (Prohibition of Insider Trading) Regulations, 2015.

As the financial sector continues to grapple with asset quality challenges, FEDFINA's proactive approach in managing its NPAs could be seen as a positive step towards maintaining a healthy loan book and potentially improving its financial metrics in the future.