Home / News / India /  Federal Bank Q2 net profit rises 53%, asset quality improves; shares surge

Federal Bank on Friday reported an about 53% rise in its standalone net profit for the second quarter ended September 2022 or Q2 FY23 to 703.7 crore as compared to 460.3 crore from the year-ago quarter. Shares of Federal Bank were trading more than 3% higher at 128 apiece on the BSE in afternoon deals.

Meanwhile, the lender's net income interest (NII), which is the difference between the interest earned and expended, rose about 19% to 1,762 crore from 1,479.4 crore year-on-year (YoY). On the other hand, its net interest margin (NIM) improved to 3.30%, higher by 10 bps YoY and 8 bps QoQ.

Federal Bank's asset quality also showed improvement as gross non-performing assets (NPA) came at 2.46% as compared to 2.69% from the previous quarter. While, its net NPA dipped to 0.78% from 0.94% quarter-on-quarter (QoQ). The bank said that its gross NPA at 2.46% was lowest in 24 quarters and its net NPA was lowest in 34 quarters.

Its provision and contingencies rose to 267.8 crore from 166 crore on a sequential basis, however, dipped as compared to 292 crore in the September 2021 quarter. Meanwhile, its capital adequacy ratio (%) Under Basel III stood at 13.84% from 14.57% QoQ and 14.97% YoY.

Earlier this month, the bank had released provisional business update for the quarter ending September (Q2 FY23). Federal Bank’s total deposits in Q2 rose at a relatively slower pace of 3.16% sequentially with growth in current and saving accounts (CASA) deposits at 2%. Gross advances grew by 6.2% quarter-on-quarter (q-o-q) in Q2, comparing favourably with 4.6% growth in Q1. Year-on-year (y-o-y), advances rose by 19%.

Effective 1 October, Federal Bank has raised interest rates on savings bank deposits across various buckets, but still has a wide gap to bridge compared to the Reserve Bank of India’s (RBI) repo rate hiking trajectory.

Federal Bank’s shares have outperformed in 2022 so far as the bank stock has gained more than 49% in YTD terms as compared to about 2% fall in benchmark BSE Sensex.

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