Federal Bank Ltd on Thursday said that it has 35% of the total loan book under the three month moratorium, and will focus on preserving capital this year, said it's managing director and chief executive officer Shyam Srinivasan.
Srinivasan was speaking after declaring it's March quarter results. The bank had reported a net profit of ₹301.23 crore for the three months ended 31 March compared to ₹381.51 crore in the year-ago period. Profit was lower on account of higher provisioning against the Covid impact.
Provisions during the quarter increased more than three times to ₹567.50 crore as against ₹177.76 crore in the year-ago quarter. In the October-December quarter, the bank had set aside ₹160.86 crore in provisions. The bank utilised the profit from the sale of Yes bank shares to make additional provisioning against Covid impact this quarter
Srinivasan said that the bank will know by June if more customers will need additional moratorium till 31 August. The bank, he said, will focus on growing it's gold loan book and depsoit franchise this year.
" Loan growth will be driven by strong growth in gold loan buisness and some corproate loans growth. Other segments will see muted growth. So We will not do any outrageous lending this quarter. Instead will focus on preserving capital," he said.
Srinivasan also clarified that the bank is not looking at raising any capital this year as it's capital adequacy ratio remains comfortable at 14.35% as on 31 March.
Federal Bank"s Net interest income, or the difference between interest earned on loans and that paid on deposits, surged 10.90% to ₹1216.01 crore from ₹1096.53 crore in the corresponding period last year.
Other income, which includes core fee income, rose 72.72% to ₹711.11 crore in the three months from ₹411.72 crore a year ago.
Asset quality improved with Gross non-performing assets (NPAs), as a percentage of total advances, falling to 2.84% in the March quarter compared with 2.99% in the December quarter and 2.92% in the year-ago March quarter.
Post-provision, the net NPA ratio was at 1.31% against 1.63% in the October-December quarter and 1.48% in the year-ago quarter.
Srinivasan also clarified that the bank is on track to acquire addtional stake in IDBI Federal Life insurance Co Ltd from IDBI Bank. Currently, Federal Bnk holds 26% stake in the insurnece venture and IDBI holds 48% stake. He expects to complete the transaction over the next 3 months.
Shares of the bank gained 4.27% to close at ₹42.75 apiece, while the benchmark Sensex index gained 1.88% to close at 32,200.59 points