Federal Bank Q1 net plunges 44%, way below mkt estimate

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26 Aug, 2025 12:21

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Moneycontrol Bureau

South based private sector lender - Federal Bank's first quarter (April-June, FY14) net profit plunged more than 44 percent year-on-year to Rs 106 crore on the back of a huge surge in provisions and contingences that jumped three-times to Rs 245 crore as against Rs 63 crore a year ago.

The net interest income (NII) or the difference between interest earned and paid out, rose nearly 4 percent to Rs 510 crore.

The earnings were way below the market expectations. According to a CNBC TV18 poll estimate, net profit was expected to grow by 6 percent instead of a dip.

During the quarter, the bank incurred a tax expense of Rs 50 crore as against Rs 93 crore a year back. The profit before tax dipped more than 45 percent y-o-y to around Rs 155 crore.

However, the other income component saved the lender from further erosion of profits. It shot up 74 percent y-o-y to Rs 216 crore from Rs 124 crore in the corresponding quarter of the previous year.

The bank expanded its loans at a slower pace of about 8 percent y-o-y to Rs 41,263 crore. However, retail loans grew 21 percent to Rs 13,200 crore while loans to small and medium enterprises (SMEs) rose 20 percent. This suggests that the lender did not expand loans to corporates.

In absolute term, the gross non-performing assets (NPAs) increased more than 5 percent y-o-y to Rs 1,483 crore. Net NPAs spiked more than 58 percent y-o-y to Rs 374 crore. The rise in net NPAs suggested higher degree of provisions. Net NPAs are derived at after deducting provisions from gross NPAs.

Federal Bank grew its total deposits by 13 percent y-o-y to around Rs 57,000 crore. The bank, known for its non-resident Indian customer base, got a good chunk of deposits from NRIs especially when the Indian rupee had dropped to a record low of 61.21/ USD. It is a common phenomenon for NRIs to remit higher amount to India when the rupee is falling against other major currencies.

Non-resident external (NRE) deposits soared 51 percent to Rs 15,108 crore while NRI deposits cloaked a growth of 32 percent to Rs 17,000 crore.

Federal Bank shares rose nearly 1 percent on Friday to close at Rs 382 on NSE. Since last one year, they dropped about 11 percent as compared with a rise of 3 percent in the Bank Nifty – the broader index for banking stocks.

saikat.das@network18online.com