| Federal Bank 1QFY21 Highlight | 1QFY21 | 4QFY20 | 1QFY20 | YoY (%) | QoQ (%) |
| Interest Income | 3444 | 3397 | 3229 | 7% | 1% |
| Interest Expenses | 2148 | 2181 | 2075 | 4% | -2% |
| Net Interest Income | 1296 | 1216 | 1154 | 12% | 7% |
| Other Income | 488 | 711 | 392 | 24% | -31% |
| Operating Expenses | 852 | 968 | 763 | 12% | -12% |
| Total Income | 3933 | 4108 | 3621 | 9% | -4% |
| Total Expenses | 3000 | 3149 | 2838 | 6% | -5% |
| Operating Profit | 932 | 959 | 783 | 19% | -3% |
| Total Provision | 532 | 658 | 399 | 33% | -19% |
| Net Profit | 401 | 301 | 384 | 4% | 33% |
| Net interest Margin (%) | 3.07% | 3.04% | 3.15% | (8)bps | 3 bps |
| Cost to income ratio (%) | 47.76% | 50.22 | 49.36% | (160) bps | (246) bps |
| Federal Bank Balance sheet | 1QFY21 | 1QFY20 |
| Capital | 399 | 397 |
| Reserve and Surplus | 14524 | 13264 |
| Deposits | 154938 | 132537 |
| Borrowings | 11237 | 9951 |
| Other Liability and Provision | 4723 | 4188 |
| Total | 185821 | 160338 |
| Cash and Balance with RBI | 5887 | 6449 |
| Balance with bank, Money at call | 14054 | 2791 |
| Investments | 34749 | 31810 |
| Advances | 121297 | 112032 |
| Fixed Assets | 460 | 469 |
| Other Assets | 9374 | 6787 |
| Total | 185821 | 160338 |
Result Highlight:
- Net Interest Income up 12% to Rs 1,296.4 crore and Net profit up 4% to Rs 400.77 crore.
- Gross NPA at 2.96% from 2.84% in the previous quarter and Net NPA at 1.22% from 1.31% .
- Provisions at Rs 394.6 crore from Rs 567.5 crore in the previous quarter and Rs 192 crore last year.
- Made additional net provisions of Rs 93 crore against the likely impact of Covid-19.
- Fresh slippages during the quarter is Rs180cr vs 280cr in Q4FY20
- Loan growth at ~8.3% YoY to Rs 1.21 t. Deposits grew at 17% YoY. Retail deposits forms 92% of total deposits.
- CASA grew at 19% YoY and improved to 32.02% vs 30.5% in 4QFY20.
- Moratorium Update: Overall, 35% of the loan portfolio has availed moratorium as on 12th Jul’20 while Net moratorium stands at 24%.
Concall Highlight:
- Bank maintain their strategy of keeping deposit base granularized and diversified with record numbers across CASA.
- Robust traction in saving account deposit especially NR saving account deposits help the Bank’s liability franchise to strengthen. Bank focuses on growing retail deposits while curtailing bulk deposit.
- Loan book growth remained curtailed at 8.3% affected by COVID-19 and weak macros.
- Disbursed Rs 10bn (as on 14.07.20 Rs 12.5 billion) though only 70%-75% of eligible customers opted for it with some customers utilizing the funds to pay their moratorium dues.
- Under the Retail moratorium book, significant number of customers have substantial balances available.
- NIMs were supported by growth in favorable products like Gold and restrained growth from low yielding products like Corporate and Housing while robust growth in low cost deposits also aided NIM levels.
- Pension provisioning will remain vulnerable to yield movements sometimes warranting further provisioning while also warranting for write backs.
- For FY21, Bank expects recoveries to remain dull with only Rs 100 crore expected for Q2FY21 as against the usual run-rate of Rs 250 crore-Rs 300 crore per quarter
View:
Bank has reported good set of numbers with strong liability franchise and substantial improvement in slippage and operating cost. Management highlighted that Q2FY21 will provide the real stress as moratorium is likely to be lifted in August 2020. Company is actively reviewing its overall cost structure which is reflecting in Q1FY21 financial results (lowest cost-income ratio in last 24 quarters). No specific guidance is given by the management regarding the same.
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