Federal Bank missed analyst expectations
to report a 43.5 percent year-on-year (YoY) drop in net profit at Rs 145 crore
for the March quarter because of an increase in provisions and worsening asset
quality.
Net profit in
the same quarter last year had shot up 2,400 percent to Rs 256.6 crore due to
substantially lower provisions and reduction in non-performing assets (NPAs).
Slippages were
to the tune of Rs 872 crore for the fourth quarter, of which Rs 492 crore was
from one account, said the bank.Provisions grew
by almost 203 percent to Rs 371.53 crore in the March quarter, on a
year-on-year basis.
Net interest income
(interest earned minus interest expended) grew 11 percent to Rs 933.22 crore
from Rs 842 crore in the same quarter last year. A Reuters analyst poll
had estimated net profit growth of 14 percent to Rs 293.7 crore and NII at Rs
1,008.7 crore for the quarter.
The bank also made
provisions for the increase in the gratuity ceiling for employees after a
government notification enhanced it to Rs 20 lakh from Rs 10 lakh.
In its earnings
statement, the bank said it has made gratuity provisions taken to the tune of
Rs 18 crore in Q4 and that a similar amount will be spread over each of
the next three quarters with a total of Rs 72 crore.
Asset quality
During the quarter,
the gross non-performing assets (NPAs) worsened to 3 percent of total loans
from 2.52 percent in the December quarter and 2.33 percent a year back. Net NPA rose to 1.69
percent in the March quarter compared to 1.28 percent a year ago and 1.36
percent in the December quarter.
The
Board of Directors has recommended a dividend of 50 percent at Rs 1 per equity
share for FY18, subject to the approval at its Annual General Meeting.
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