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Federal Bank Reports Strong Q1 Profit Growth: Rs 880 cr, a 39% Increase

Aluva-based private lender Federal Bank witnessed a substantial 38.77% surge in its consolidated net profit for the June quarter, reaching Rs 880.12 crore. In comparison, the net profit for the same period last year was Rs 634.22 crore, while the preceding March quarter reported Rs 953.91 crore. On a standalone basis, Federal Bank’s net profit rose by 29% to Rs 854 crore. The bank expressed optimism, expecting its loan book to grow by 18% in FY24.

During the quarter, Federal Bank’s consolidated core net interest income increased by 19.57% to Rs 1,918.59 crore. This growth was driven by a 21% increase in advances and a slight narrowing of the net interest margin to 3.15%. The bank’s other income also rose to Rs 732 crore from Rs 453 crore in the same period last year, with core fee income reaching Rs 535 crore compared to Rs 441 crore previously.

Shyam Srinivasan, the bank’s CEO and managing director, highlighted that the net interest margins had declined due to rate hikes by the RBI. However, he expressed confidence in achieving a margin of 3.30% in FY24. Srinivasan noted that the bank faced higher slippages in the April-June period as Covid-19 restructured accounts transitioned into non-performing assets (NPAs). The overall capital adequacy ratio stood at 14.72% as of June 30, and the bank is actively working on plans to raise capital in FY24, although the quantum and method are yet to be decided.

Regarding its non-banking lending subsidiary, Fedfina, Srinivasan mentioned that it is reconsidering its initial public offering (IPO) plans. He stated that Fedfina is growing well, and Federal Bank, owning 74% of the subsidiary, will continue to be the majority shareholder.


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