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Last Updated : Jan 19, 2017 06:52 PM IST | Source: CNBC-TV18

See full year credit growth to be at 20-25%: Federal Bank

Speaking to CNBC-TV18 Shyam Srinivasan, Managing Director & Chief Executive Officer, Federal Bank said that the quarter was a good quarter in which they saw 32 percent credit growth on a year on year basis.


Private sector Federal Bank today posted a 26.4 percent rise in net profit at Rs 205.65 crore for third quarter ended December 31, as higher interest income and fewer slippages helped reap gains.


The bank had registered a net profit of Rs 162.72 crore in the year-ago period.


"Total income has increased to Rs 2,544.75 crore for the quarter ended December 31, 2016 from Rs 2,086.07 crore for the same quarter year ago," the bank said in a regulatory filing.

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The interest income of the bank rose to Rs 2,281.42 crore in third quarter, up by 19.9 per cent from Rs 1,903.25 crore a year ago.


Speaking to CNBC-TV18 Shyam Srinivasan, Managing Director & Chief Executive Officer, Federal Bank said that the quarter was a good quarter in which they saw 32 percent credit growth on a year on year basis.


Slippages were controlled during the quarter, and they will continue to be under watch out for Q4. “One should separate demonetisation impact from financial performance.”


The bank doesn’t have big-ticket loans he is worried about unduly.


He expects full year credit growth to be at around 20-25 percent.


Below is the verbatim transcript of Shyam Srinivasan’s interview to Anuj Singhal & Latha Venkatesh on CNBC-TV18.


Latha: That was a pretty set of numbers, but if you can give us some more details. What exactly was the growth in deposits and in particular growth in low cost deposits?


A: The quarter like I pointed out was a very good quarter for us. We had one of our strongest operating performance. Credit growth was 32 percent on year-on-year (YoY) basis and sequentially also it was strong. Deposit growth expectedly was very high. 38 percent was the deposit growth. Low cost deposits in quantum which is important grew about Rs 6,500 crore between current account and saving account, so this is a strong quarter on both accounts.


Latha: You said even your sequential loan growth was strong if you can give us some percentage on numbers?


A: Sequentially, our credit growth was at 7 percent.


Latha: What did all this do to your margins?


A: Margins this quarter was slightly stronger than last 3.32, last quarter was 3.31. It has been trending up and it has been quite strong, one of our better quarters in terms of margins, operating profits, operating performance, balance sheet growth, credit growth as also deposit growth.


Anuj: Would it be fair to say that there has been absolutely no impact of demonetisation or would that be too early to call and would you want to see quarter four and quarter one numbers?


A: I think you must separate that demonetisation impact from the financial performance for the quarter. The demonetisation impact has been factored in it could have been even a better quarter. Largely, the cost impact was not significant we had almost Rs 40 crore odd incremental cost on account of demonetisation be it in the area of shifting cash, carrying specified bank notes (SBNs) in terms of the inability to do business or just wage increases, transportation of cash. The cost impact is closed to Rs 40 crore odd. I am not looking at the opportunity loss of business if you were not distracted, the direct impact of demonetisation but we have factored that in. If that was not there the quarter could have had a slightly differential outcome.


On the credit side, thankfully, the slippage is well controlled for the quarter. We think that is what we have to watch out as we go in to the quarter four and quarter one of next year. Mercifully, we don’t have any large chunks of problems of that nature there are pockets of geographies which have faced challenges which we just have to work through.



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First Published on Jan 19, 2017 02:57 pm
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