Federal Bank Q2 profit up 36% on strong interest income

Kochi, Oct. 24:The net profit of Federal Bank has risen by 36 per cent to Rs 191.16 crore (Rs 140.40 crore) during the second quarter of 2011-12. The bank has delivered substantial growth in its top-line and bottom-line despite a challenging macroeconomic environment, the bank said.

The growth in profit was mainly supported by a spurt in interest income, which grew by close to 40 per cent to Rs 1,368 crore. The bank has become the most profitable from Kerala, among its peers in both the public and private space, a press release issued here has said.

‘Other income' down

While there was a spurt in interest income, ‘other income' declined by close to 19 per cent to Rs 117 crore. However, the handsome growth in interest-based income enabled the total income to grow by 32 per cent to Rs 1,485 crore.

This was supported by net interest margin which stood at 3.77 per cent for the quarter. Low-cost deposits, comprising CASA and NRE deposits, grew by 15 per cent to Rs 14,794 crore.

The total business of the bank grew by 27 per cent to Rs 80,870 crore. Reflecting the macroeconomic challenges, deposits grew at a faster pace than deposits. Deposits rose by 31 per cent to Rs 36,116 crore while advances grew at 22 per cent to Rs 33,607 crore. The growth was mainly contributed by advances to the SME and retail sectors, which grew by 29 per cent and 28 per cent, respectively.

Lower NPA

While the bank could reduce the gross NPAs (non-performing assets) to 3.61 per cent, the net NPAs declined to 0.58 per cent at the end-September 2011. Despite the good profit numbers, the bank was able to increase the provisions held against NPAs to 82.97 per cent.

While the net worth of the bank has increased to Rs 5,446 crore, the capital adequacy ratio, as computed by the Basel II guidelines, stood at 15.05 per cent.

The Tier-I core capital was at 14.03 per cent. Taking Vision 2015 as the cornerstone for all its policy actions, the bank has created a ‘Corporate Social Responsibility' cell.