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Mumbai: Federal Bank Ltd on Friday said that it expects 2.5-3% of its loan book to be restructured once the moratorium ends. However, the bank has seen an increase in collections to pre-covid levels, said Shyam Srinivasan, managing director and chief executive, Federal Bank, in an interview after the quarterly results announcement.

“Of the 3,500 crore of restructuring, less than a third will be corporate, and the balance will be retail, small business, and commercial loans. The bank has already made a 10% provision in the current quarter," he said.

The Kerala-based lender reported a 26% year-on-year (y-o-y) fall in net profit on higher provisioning. Net profit dropped to 308 crore in the September quarter from 417 crore a year ago. Its total provisioning rose to 592 crore from 252 crore a year ago.

The bank’s gross non-performing assets stood at 2.84% compared with 3.07% a year ago. However, core fee income witnessed a sharp rise from 171 crore in the June quarter to 288 crore in Q2.

Advances remained flat at 6%, while deposits grew 12.3% y-o-y. Gold loans witnessed strong growth of 24%. “There is no substantial pick up in credit. It will take one more quarter before it improves. We have shed our corporate big-ticket loans this quarter because of repayments," said Srinivasan.

The bank’s capital adequacy stood at 14.6% at the end of September 2020. The management said it does not aim to raise capital in the short term.

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