Federal Bank Q3 net hit by one-time provision, up 4%

Moneycontrol Bureau

South based Federal Bank on Thursday reported a muted growth in its third quarter (October-December) net profit that has risen only by 4% year-on-year to Rs 211 crore. The lender took a one-time hit on a corporate account, which borrowed around Rs 1400 crore from a consortium of banks. This dented its profit margin. Net interest income too dropped nearly 6% to Rs 497 crore.

"With a credit exposure of Rs 200 crore, a corporate account slipped into non-performing asset category," Shyam Srinivasan, MD & CEO, Federal Bank told moneycontrol.com.

"We have provided for it to the tune of 40%.  This was the main reason behind the muted profit growth. However, we expect slightly better pick-up in loan growth by March. We are cautiously growing our book. Credit growth would be around 14-15% in FY13 but the annualized growth between October and December will be around 20%. We are focusing more on retail business," he said.

During quarter, the bank's loan book expanded nearly 19% y-o-y to Rs 39,500 crore. Retail loans grew 24% y-o-y to Rs 12,00 crore. Net interest margin was at 3.47% versus 3.58% in the previous quarter.

Provisions including tax fell 16% to Rs 183 crore. Credit related provisions stood at Rs 92 crore, little changed from Q3, FY12. The drop in provisions despite a one-time hit came on the back of Federal Bank's lower provisioning coverage ratio, which decreased to 75% compared with 80% a year back.

Gross non-performing asset ratio stood at 3.85% as against 3.83% in July-September quarter. Net NPA ratio rose sharply from 0.68 to 0.92% sequentially suggesting that loan provisions were higher. Net NPA is determined after deducting provisions from gross NPAs.

Total deposits increased by 10% to Rs 51,610 crore. Federal Bank, known for its NRI customer base, clocked a growth of 35% to Rs 14,230 crore in its deposit base.

saikat.das@network18online.com