Federal Bank hits record high after strong Q2 performance

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By Suraj Bediya

After reporting a 52.89% increase in standalone net profit to Rs 703.71 crore in Q2 FY23 from Rs 460.26 crore in Q2 FY22, Federal Bank’s share price increased by 5.01% to Rs 131.05.

In Q2 FY23, the bank’s overall revenue increased 19.62% to Rs 4,630.30 crore from Rs 3,870.90 crore in Q2 FY22. In the second quarter of FY23, operating profit before provisions and contingencies climbed by 32.9% on a yearly to Rs 1,212.24 crore.

In Q2 FY23, net interest income was Rs 1,762 crore, up 19.1% from Rs 1,479 crore in the corresponding quarter last year. In Q2 FY23, the net interest margin increased slightly from Q2 FY22 to Q2 FY23, reaching 3.30%.

From Rs, 292.62 crore in Q2 FY22 to Rs 267.86 crore in Q2 FY23, provisions and contingencies decreased by 8.5%. The provision coverage ratio was 82.76% (including technical write-offs). The quarter’s credit cost was 0.53%.

As of September 30, 2022, the bank’s net value climbed from Rs 17,551.94 crore to Rs 19,617.82 crore. As of the conclusion of the quarter, the bank’s capital adequacy ratio (CRAR), calculated in compliance with Basel III criteria, was 13.84%.

At the conclusion of the quarter, the Bank’s gross and net non-performing assets totaled Rs 4,031.06 and Rs 1,262.35 billion, respectively. As of September 30, 2022, the ratio of gross NPA to gross advances was 2.46%, while the net NPA percentage was 0.78%.

Total advances increased by 19.4% from the amount reported on 30 September 2022 to reach Rs 1,63,957.84 crore. Total deposits increased from Rs. 1,71,994.74 crore as of September 30, 2022, to Rs. 1,89,145.71 crore.

In Q2 FY23, CASA deposits increased 10.74% YoY to Rs 68,873.27 crore, while the CASA Ratio increased to 36.41% from the 36.16% reported in Q2 FY22.

Retail advances increased by 18.38% during the quarter to reach Rs 52,438.89 crore. Agri advances reached Rs 21,090.70 crore, increasing by 17.96%. Banking advances for businesses increased by 17.20% to Rs 13,617.35 crore. Increasing by 18.61% to Rs 16,240 crore, commercial banking. From Rs 48,822.63 crore reported during the same time last year, corporate advances increased 20.70% to Rs 58,928.90 crore.

Compared to Q2 FY22, the return on assets (ROA) for the second quarter of FY23 increased to 1.21%. In the quarter that ended on September 30, 2022, return on equity (ROE) climbed to 14.36% from 10.73% in the same quarter the previous year.

“This has been our strongest quarter to date with very good growth across all key parameters. Strong business momentum has aided meaningful gains in market share. We have delivered the highest ever net profit with ₹ 704 Cr, ROA and ROE are in the right trajectory and the asset quality of the Bank continues to be strong at 2.46% and 0.78%. Credit costs are well controlled at 53 bps. We are encouraged by this and are working to ensure that the trend continues,” commenting on the results, Shyam Srinivasan, managing director & CEO said.

Treasury, corporate or wholesale banking, retail banking, and other banking operations make up Federal Bank’s four business segments. As of 30 September 2022, the Bank had 1305 branches and 1876 ATMs/recyclers.

The scrip hit an all-time high of Rs 132.10 intraday today.