‘Retail’ becomes saviour for Federal Bank this time

Bank will start current year with significantly lower stress, says CEO


KOCHI: The retail portfolio has been the lone performer for Federal Bank this time as it generated a segment income of Rs417.35 crore for the fourth quarter ending March 31, 2018 even as both treasury and corporate portfolios staged dismal performance contributing segment losses of Rs30.63 crore and Rs188.75 crore respectively.

Both treasury and corporate portfolios had turned in positive income of Rs68.4 crore and Rs95.52 crore respectively for the corresponding quarter in the previous period.

Slippages this time were primarily due to seven large corporate exposures in the restructured standard book. The bank said that the significant part of impact in the restructured standard book was driven by new norms on stressed assets.

While slippages during the quarter was to the tune of Rs872 crore, a big chunk of this – Rs604 crore was from the corporate portfolio (though Rs404 pertains to recognition from restructured books primarily of six years and more old).

Shyam Srinivasan (shown in the picture), managing director & CEO of the bank said the revised framework for resolution of stressed assets, being a new regulation, had impacted the bank’s bottom line figure.

The largest bank in Kerala with an asset base of Rs1.39 lakh crore and controlling more than half of the combined asset base of the Kerala-based banks, Federal Bank reported a contraction of 43.5 per cent in its standalone net profit at Rs144.99 crore for the quarter ending March 31, 2018 on increased provisioning in corporate loans.

The bank had posted a net profit of Rs256.59 crore for the same period last year. The standalone net profit for the full year 2017-18 was still marginally up at Rs878.85 crore compared with Rs830.79 crore the bank recorded for the previous full year.

Total advances for the year registered a growth of 26 per cent to reach Rs93,172.60 crore, whereas the current and savings account (CASA) grew by 17 per cent year-on-year to reach Rs37,252 crore.

Deposit portfolio increased by 14.67 per cent from Rs97,664.57 crore as on March 31, 2017 to Rs1,12 lakh crore as on March 31, 2018. The net worth of the bank grew by 37.06 per cent to Rs12, 138.49 crore as against Rs8,856.47 crore in the previous year.

The capital adequacy ratio (CRAR) of the bank, computed as per Basel III guidelines, stood at 14.70 per cent as on March 31, 2018 meaning that the bank has enough room to grow with the given capital base..

Commenting on the financial performance, Srinivasan said, “Our core franchise across all segments – corporate, SME and retail, as well as our granular liability profile, is growing robustly in a broad-based manner across products, verticals and geographies. Having turned the corner with respect to the recognition of NPAs from the restructured standard book this quarter, the bank is confident of meeting the expectations of its stakeholders and will start the current year with significantly lower stress.”


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