RBI imposes penalties on BoI and Federal Bank

Reserve Bank of India (RBI) on Friday said it has imposed a penalty of Rs 5.72 crore on Federal Bank for deficiencies in regulatory compliance.

A  penalty of Rs 70 lakh has also been imposed on Bank of India for non-compliance with certain provisions of Know Your Customer (KYC) norms and instructions on 'compliance function in banks' issued by RBI, it said in a statement.

About Federal Bank, RBI said the bank failed to ensure that no incentive (cash or non-cash) was paid to its staff engaged in insurance broking/corporate agency services by the insurance company, according to a separate statement.

RBI had carried out Statutory Inspection for Supervisory Evaluation (lSE) of the bank with reference to its financial position as on March 31, 2020.

In another statement, RBI said a fine of Rs 7.6 lakh has been imposed on Dhani Loans and Services Limited, Gurugram for non-compliance with KYC norms.

RBI said the penalities are based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the two banks and Dhani Loans and Services with their customers.

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Federal Bank Q3 results: Net profit rises by 29%

 

Private sector lender Federal Bank reported a 29 per cent rise in net profit at Rs 522 crore for the December quarter as against Rs 404 crore in the year-ago period owing to a fall in provisions by nearly half.

Operating profit fell 4.4 per cent at Rs 914 crore against Rs 956 crore.

Net interest margin however improved 7 basis points sequentially to 3.27 per cent while net interest income rose 7 per cent at Rs 1539 crore in the quarter under review against Rs 1437 crore in the year-ago period.

The lender's gross non-performing assets stood at 3.06 per cent at the end of December, compared with 2.71 per cent a year back. Gross NPA was 3.24 per cent at the end of September 2021 quarter. Net NPA was at 1.05 per cent as against 1.12 per cent three months back and 0.6 per cent a year back.

Provision was lower at Rs 214 crore for the December quarter compared with Rs 414 crore in the year ago period. The provision coverage ratio fell to 79.62 per cent against 86.32 per cent a year earlier.The bank's advances grew by 12% year-on-year to Rs 1.41 lakh crore.

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Federal Bank net profit jumped 50% on lower provisions

 

Private sector lender Federal Bank reported a near 50 per cent jump in net profit for the September quarter on lower provisions and improvement in asset quality even as its total income shrunk.

The market gave a thumbs up to the numbers with the shares rising to their 52-week high of Rs 105.6 on BSE. The prices settled at Rs 104.5, which is about 8 per cent higher than the previous close.

The net profit stood at Rs 460 crore compared with Rs 308 crore in the year-ago period. Total income fell about 3 per cent at Rs 3824 crore from Rs 3937 crore.

Operating profit fell by about 9 per cent at Rs 865 crore from Rs 947 crore over the same period. However, a 54 per cent lower provisions at Rs 245 crore helped the net profit surge. Amortisation of the Rs 166 crore of additional liability on account of revision in family pension also helped.

The bank's asset quality improved on a sequential basis with the gross non-performing assets ratio being at 3.24 per cent at the end of September as compared with 3.50 per cent a quarter ago. Its net NPA stood at 1.12 per cent as against 1.23 per cent earlier.

The lender's net interest income, the difference between interest earned and interest expended, rose about 7 per cent at Rs 1,479 crore. Net interest margin for the quarter rose to 3.2 per cent from 3.13 per cent in the year-ago period.

"Our credit cost was negative in this quarter helped by reduced slippages and higher recovery and upgrade," managing director Shyam Srinivasan said.

The lender's gross advances grew 9.7 per cent year-on-year to Rs 1.37 lakh crore while deposits rose at almost the same rate to Rs 1.72 lakh crore.

Its current and savings account ratio to total deposits reached 36 per cent, an all-time high for the bank, Srinivasan said.

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Federal Bank posts 13% decline in Q1 net profit

Private sector lender Federal Bank on Friday posted a 12.87 per cent decline in its consolidated net profit for the June 2021 quarter to Rs 356.76 crore, as provisioning for stressed assets soared due to the reverses of the second wave.

On a standalone basis, its net profit declined to Rs 367.29 crore from the year-ago period's Rs 400.77 crore. The absence of a regulatory dispensation, like a moratorium, and a second consecutive financial blow taken by the stressed segments have led to increased trouble for lenders, the bank management said.The fresh slippages surged to Rs 640 crore as against the usual run-rate of about Rs 400 crore per quarter, which resulted in a corresponding increase in the provisioning that led to the profit decline.

Federal Bank Managing Director and CEO Shyam Srinivasan said the bank has been setting aside 65 per cent on a non-performing asset (NPA) even though it has recourse to lower provisioning under the accounting norms, and added that this resulted in credit provisioning of Rs 460 crore.The overall provisioning came at Rs 641.83 crore as against Rs 394.62 crore in the year-ago period and the last quarter's Rs 242.33 crore.

The bank's asset quality showed deterioration as the gross non-performing assets (NPAs) rose to 3.50 per cent of the gross advances by the end of June 2021, from 2.96 per cent as of June 2020.Net NPAs or bad loans, however, remained stable at 1.23 per cent as against 1.22 per cent a year ago.

He said that given the difficulties faced by the people, it advised borrowers to recast their loans under the windows presented by the RBI. The COVID-19-related restructuring stood at Rs 2,414 crore with a bulk Rs 1,422 crore coming from retail portfolio, Rs 200 crore from gold loans and Rs 339 crore from business banking.

Srinivasan said there is no lumpy slippage in the bank's fresh slippages, and they include Rs 50 crore of gold loans as well. Lending against the previous metal is one of the most secure businesses because of the loan to value mix and the bank is sure of the additional provisions coming back, he said.

"Given the extended lockdown in certain geographies and the challenges clients had, we did not want to, beyond a point, push the customers to make the payment. If they could not, we restructured or it became NPA," Srinivasan said about the gold loans, adding that the NPA on this book is only 0.3 per cent.

The bank expects the overall credit costs, which stand at 1.36 per cent on an annualised basis as of now, to narrow down over the fiscal year to up to 1.10 per cent, Srinivasan said. He expects a reduction in NPAs and money being set aside for them in the remainder of the quarters.The write-offs stood at Rs 430 crore for the quarter as against Rs 380 crore a year ago, but Srinivasan hinted at limited concern on this line going forward by saying that the bank writes-off assets only once a year.

The overall credit growth came at 6.98 per cent during the quarter and it is aiming to "nudge" the double-digit mark for the fiscal. Total deposits grew 9.33 per cent.Its core net interest income grew 9.41 per cent to Rs 1,418 crore on an expansion in the net interest margin to 3.15 per cent. The non-interest income grew 33.13 per cent to Rs 650.15 crore on treasury gains and recovery from a lumpy NPA of the past.

The overall performance has been pleasing given the conditions, said Srinivasan pointing out that the operating profit of Rs 1,135.18 crore (up 21.75 per cent) is the highest ever.The bank said its board of directors also approved allotment of 10,48,46,394 equity shares at an issue price of Rs 87.39 apiece to International Finance Corporation (IFC) and its related entities for Rs 916.25 crore.It has allotted 31,453,918 shares to IFC; and 36,696,238 each to IFC Financial Institutions Growth Fund, LP (FIG) and IFC Emerging Asia Fund, LP (EAF).

With the allotment of these shares, the bank's paid-up equity share capital stands increased from the current level of 199,62,83,783 equity shares to 210,11,30,132 equity shares of Rs 2 each, Federal Bank said.Its overall capital adequacy stood at 14.64 per cent as of June 30, but will rise to 15.3 per cent after the Rs 916 crore infusion done by World Bank Group member IFC on Friday to pick up a 4.99 per cent stake, Srinivasan said.He added that the new shareholder has plans for making the bank's business more sustainable.

The bank started selling credit cards to its existing customers in June but soon faced a setback as Mastercard, its sole franchisee partner, was barred from issuing cards. Work to integrate with other two operators Visa and Rupay is already underway and by the end of September, it will be back to selling cards.With regard to FedFina, its non-bank lending subsidiary, the stress is higher because it recognised three commercial realty accounts as NPAs during the quarter, Srinivasan said.He added that one of them has already been upgraded and the company does not do big-ticket lending any more. FedFina's net grew five per cent to Rs 15 crore.

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Federal Bank Q3 results: Profit declines 8%

Federal Bank on Wednesday posted an 8.2 per cent decline in net profit to Rs 404.10 crore for the third quarter ended December 2020, mainly due to higher provisioning for bad loans.

The private sector lender had registered a profit of Rs 440.64 crore in the year-ago period.

Total income, however, improved to Rs 3,941.36 crore during the third quarter as against Rs 3,738.22 crore a year ago, Federal Bank said in a regulatory filing.

Gross non-performing assets (NPAs) declined to 2.71 per cent of the total advances during the quarter, compared to 2.99 per cent at the end of the third quarter of 2019-20.

Net NPAs of the bank also fell to 0.60 per cent of the total assets in October-December 2020 as against 1.63 per cent a year ago.

Despite the decline in bad loans, provisions other than tax and contingencies increased more than two-fold to Rs 420.62 crore as against Rs 160.86 crore during the same period last fiscal.

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Federal Bank Q2 results: Net profit falls 26%

Federal Bank's profit fell 26% year on year as the bank stepped up provisions to deal with likely rise in slippages due to the economic impact caused by the Covid 19 pandemic.

Net profit dropped to Rs 308 crore in the quarter ended September 2020 from Rs 417 crore a year ago as the bank more than doubled provisions in the period. Total provisions increased to Rs 592 crore from Rs 252 crore a year ago and up 50% compared to the quarter ended June.

CEO Shyam Srinivasan said the bank has made upfront provisions of 10% of its expected loans to be restructured according to Reserve Bank of India (RBI) norms.

"We expect 2.5% to 3% of our loan book to be restructured with RBI specified norms. This quarter we restructured loans worth Rs 26 crore and have got requests for Rs 360 crore worth of loans to be restructured," Srinivasan said.

Slippages were masked by the RBI directed moratorium on loans with a mere Rs 3 crore of loans slipping into NPAs. Srinivasan said if not for the moratorium about Rs 237 crore of loans would have slipped into NPAs. As a result of the moratorium the bank's gross NPA ratio dropped to 2.84% of total loans from 3.07% a year ago.

The bank's total loan book as of September was at Rs 1.22 lakh crore and 2.5% to 3% loans would mean Rs 3500 crore will be restructed out of which Rs 1000 crore will be corporate loans, Srinivasan said.

"The environment we are operating in will have a somewhat elevated impact on slippages," Srinivasan said.

On the business side Federal Bank's net interest income increased 23% to Rs 1380 crore while othe income rose 21% to Rs 509 crore.

Net interest margin or the difference the yield a bank earns on loans and that it pays on deposits improved to 3.13% in September versus 3.01% a year ago.

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Federal Bank Q1 net profit up 4%

Federal Bank's net profit rose 4.3% to Rs.400.77 crore for the quarter ended 30 June 2020 on the back of rise in net interest income and other income.

Net interest income rose 12.3% year-on-year (YoY) to Rs.1296 crore in Q1 June 2020 over Rs.1154 crore in Q1 June 2019. Other income grew 24.7% YoY to Rs.488.37 crore for the quarter ended 30 June against Rs.391.52 crore for the same quarter last year.

Commenting on the results and financial performance, Shyam Srinivasan, Managing Director & CEO, Federal Bank said "We believe we have delivered a very healthy outcome in arguably the toughest operating conditions in well over 100 years. The Bank has been exemplar, braved all challenges and held fort all along and that is encouraging. The net NPA is down to 1.22% which is the lowest for the Bank in last 20 quarters. Cost to income has improved substantially and that augurs well for the Bank. Overall an encouraging quarter, given the challenging environment and truly motivates us to ensure sensible growth with abundant caution."

Provisions and contingencies more than doubled to Rs.394.62 crore in Q1 June 2020 from ₹192.04 crore in Q1 June 2019. Federal Bank said that the aggregate provision against the likely impact of Covid-19, including the RBI mandated provision, as of 30 June 2020 stands at Rs.186.30 crore.

On the asset quality front, the ratio of gross NPAs to gross advances stood at 2.96% as on 30 June 2020 as against 2.84% as on 31 March 2020 and 2.99% as on 30 June 2019. The ratio of net NPAs to net advances stood at 1.22% as on 30 June 2020 as against 1.31% as on 31 March 2020 and 1.49% as on 30 June 2019.

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Federal Bank Q4 results: Net profit drops 21%

Federal Bank's net profit fell 21% due to a sharp rise in provisioning as the bank set aside money to deal with stress from the Covid 19 crisis.

Net profit fell to Rs 301 crore in March 2020 from Rs 382 crore a year ago.

Provisions increased to Rs 568 crore in March 2020 from Rs 178 crore a year ago and higher than Rs 161 crore in the quarter ended December.

Of the total provisions Rs 93 crore were Covid related which were higher than the Rs 30 crore required under RBI regulations.

Gross non-performing assets (NPAs), as a percentage of total advances, were stable at 2.84% in the March quarter compared with 2.92% a year-ago.

"To face any unfavorable situation that may arise due to the pandemic, we have increased the provisions substantially and strengthened the balance sheet. On the business front, the bank has achieved robust growth in the retail segment with housing and gold loans growing handsomely," said Shyam Srinivasan, CEO, Federal Bank.

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