Private sector lender Federal Bank on Tuesday reported a net profit of ₹384 crore in the June quarter of FY20, 46% higher than the same period last year, owing to higher other income and net interest income.
While its other income grew 45% year-on-year (y-o-y) to ₹392 crore, its net interest income – the difference between interest earned and expended – grew 18% y-o-y to₹1,154 crore in Q1 FY20.
The bank also set aside ₹192 crore as provisions in the June quarter of FY20, down 3.5% y-o-y. Federal Bank’s asset quality slightly improved as its gross bad loans as a percentage of gross advances stood at 2.99%, down one basis point from the same period last year.
Shyam Srinivasan, managing director and chief executive, Federal Bank said that while the bank has been watchful of credit growth in certain stressed sectors, retail continues to go do well.
“These stressed sectors include the long-gestation and capital intensive infrastructure projects and therefore we have to be mindful of them," said Srinivasan.
Federal Bank’s total deposits increased by 19.14% y-o-y to reach ₹1.32 lakh crore, its net advances grew by 18.81% y-o-y to ₹1.12 crore as on 30 June, 2019. Its current account and saving account (CASA) deposits stood at₹41,675.84 crore and CASA as a percentage of total deposits stood at 31.44%.
The bank’s total exposure to the non-bank and housing finance companies (HFCs)constitute 14.4% of its total loans.
“We are open to looking at good securitized assets. However, we are not looking at lumpy transactions, maybe ₹100-150 crore. We have not come across assets to the tune of say₹2,000 crore that is of high quality and is available. In the June quarter we had one such transaction of about ₹150 crore," said Srinivasan.
Srinivasan said that the bank’s NBFC approach over the last many quarters has been more quality-led. “If a borrower comes to us with request for new lines of credit and we are not comfortable with that then we decline," he said.
While Srinivasan said that Federal Bank has an exposure to stressed mortgage lender Dewan Housing Finance Corporation Ltd (DHFL), he declined to spell out how much it is. The account is standard at the moment, he added.
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