Federal Bank , a prominent private sector lender, has reported a 14% year-on-year decline in its net profit for the first quarter. The bank's financial performance and asset quality metrics showed some pressure during the period.

Key Financial Highlights

• Net profit decreased to ₹860.00 crore from ₹1,000.00 crore in the same quarter last year.
• Gross Non-Performing Assets (GNPA) ratio increased to 1.91% from 1.84% in the previous quarter.
• Net Non-Performing Assets (NNPA) ratio rose to 0.48% from 0.44% quarter-on-quarter.
• Provisions and contingencies (excluding tax) surged to ₹400.00 crore from ₹130.00 crore in the previous quarter.

Asset Quality

The bank witnessed a slight deterioration in its asset quality during the quarter. The increase in both gross and net NPA ratios indicates some stress in the loan book. However, the levels remain relatively low compared to industry standards, suggesting that Federal Bank's risk management practices are still effective.

Provisioning

Federal Bank significantly increased its provisions and contingencies to ₹400.00 crore, more than tripling the amount from the previous quarter. This substantial rise in provisions could be a precautionary measure taken by the bank to safeguard against potential future risks in the current economic environment.

Investor Information

Federal Bank has published its unaudited financial results for the quarter ended June 30, in compliance with regulatory requirements. The results have been published in "Financial Express" (English) and "Deepika" (Malayalam) newspapers on August 03, as per the bank's regulatory filing.

Despite the challenges faced in Q1, Federal Bank continues to be a significant player in the Indian banking sector. Investors and stakeholders will be keenly watching the bank's performance in the coming quarters to assess its ability to navigate the current economic landscape and return to a growth trajectory.

Federal Bank , a prominent private sector lender, has announced its financial results for the first quarter, showcasing a mixed performance with improvements in certain key metrics but also facing challenges in profitability and asset quality.

Profit and Income

The bank reported a net profit of ₹862.00 crore for the quarter, representing a 15% decrease compared to ₹1,010.00 crore in the previous year. Despite the decline in net profit, the bank achieved its highest ever total business of ₹5.29 lakh crore. Total income saw an uptick, with other income reaching a record ₹1,113.00 crore.

Fee Income and Key Financial Metrics

Federal Bank reported record fee income of ₹786.49 crore, showing a strong 20% year-over-year growth. Key financial metrics included:

Asset Quality

The bank faced challenges with asset quality:

• Gross Non-Performing Asset (NPA) ratio increased to 1.91%
• Net NPA ratio rose to 0.48%
• Provision coverage ratio stood at 74.41%

Notably, the bank experienced elevated slippages, driven largely by the microfinance portfolio, with credit costs at 65 basis points.

Deposits and Advances

Federal Bank maintained strong growth in both deposits and advances:

• Total deposits: ₹2,87,436.00 crore (10% YoY growth)
• Advances: ₹2,45,286.00 crore (9% YoY growth)

CASA and Digital Footprint

The bank's CASA (Current Account Savings Account) ratio improved to 30.35%, with strong savings bank traction. Federal Bank continued to expand its digital footprint, with 93% of transactions processed digitally.

Management Commentary

Shyam Srinivasan, Managing Director & CEO of Federal Bank, stated, "The Board of Directors have considered, reviewed and approved the Consolidated and Standalone Unaudited Financial Results of the Bank for the quarter ended June 30, as recommended by the Audit Committee."

Federal Bank's performance in Q1 reflects its resilience in a challenging economic environment, with record fee income and strong business growth. However, the decrease in profitability and elevated slippages indicate ongoing challenges in managing asset quality. The bank's focus on maintaining a strong capital position, improving operational efficiency, and expanding its digital presence continues to be evident in its financial results, even as it navigates through asset quality pressures.