South-focused private sector lender Federal Bank today posted a marginal increase in March quarter net profit at Rs 280.53 crore on dip in core income, but reported improvement in asset quality.
The Kerala-headquartered bank had registered a post-tax net of Rs 277.29 crore in the year-ago period. The overall income was up 9.77 percent at Rs 2,214.28 crore for the reporting period.
Its core net interest income came down 0.30 percent to Rs 623.23 crore while a rise in treasury profits pushed up the other income 71.52 percent to Rs 306 crore. A dip in the fresh net slippages to Rs 179 crore from the year ago quarter's Rs 212 crore, coupled with recoveries and upgrades of Rs 121 crore, helped improve the gross non-performing assets ratio to 2.04 percent as against 2.46 percent in the year-ago period.
This was largely due to a 3-year old strategy of the bank to stay away from problematic assets, its managing director and chief executive Shyam Srinivasan has said.
He added that in order to improve the quality of the book, the bank has had to face the challenge of restricting its growth. The provisions were up 32.13 percent to Rs 188.62 crore during the reporting period. The net interest margin improved 0.11 percent over the preceding quarter to 3.31 percent, and Srinivasan said it is targeting to maintain it in the 3.2-3.3 percent band.
Its loan book grew 18 percent in FY15 and is expected to clock a growth of up to 21 percent in FY16, Srinivasan said. The overall capital adequacy stood at a comfortable 15.46 percent at the end of March 2015 and there is no plan to raise fresh capital, he said, adding that the board has passed an enabling resolution to raise up to Rs 2,000 crore from long-term bonds for infrastructure and affordable housing.
Srinivasan said the bank is not on the lookout for any acquisition, but may consider some select portfolios, but will concentrate on building its business organically.
The bank scrip closed 2.24 percent up at Rs 130.15 on BSE as against the 0.62 percent correction in the benchmark.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
