Federal Bank held its conference call on 19th January 2009 to discuss on the company’s performance for nine months ended December 2008.
Highlights
- Federal bank for the third quarter ended Dec’08 reported 89% increase in Net interest income at Rs 384.59 crore. The 94% spurt in other income at Rs 164.81 crore took the growth of operating profit by whopping 129% to Rs 384.41 crore.
- Robust growth in Net interest income and non interest income took the Net profit up by 98% to Rs 203.89 crore compared to Rs 102.92 crore in the corresponding previous quarter.
- It’s other income increased by whopping 94% to Rs 164.81 crore for the quarter. This included Rs 64 crore on sale of Investments, Rs 23 crore on recovery from written on accounts, Rs 14 crore from foreign exchange transaction and Rs 26 crore on commission and brokerage.
- Its operating expense that includes staff cost and other expense rose by 36% to Rs 164.99 crore. The staff cost increased largely due to the introduction of performance linked incentive scheme from October 1st 08 onwards. The bank estimates amount of Rs 20 crore towards this for the quarter and had made a provision of the same which has been included in staff cost.
- Provisions & contingencies (including provision for NPA) increased by 45% to Rs 49.97 crore for the quarter. This included Rs 134 crore provisions for NPA, Rs 30 crore for wage revision, Rs 99 crore on write back on investments and Rs 20 crore write back on agriculture loan waiver.
- The Net Interest Margin of the Bank for the nine months ended December 2008 is at 4.41% (excluding the recent rights issue – 4.14%) as against 3.36% in December 2007. The NIM also improved on q-o-q basis from 4.38% on September’08.
- The yield on advances stood at 13.05%, Yield on assets at 12.25%, Cost of funds at 7.11% for the quarter ended December’08.
- The Cost to Income ratio improved to 30.81% as on December 2008 from 38.43% in December 2007.
- Total business of the Bank reached Rs 48811 crore, showing an increase of 19.65% from the corresponding period of the previous fiscal.
- Total deposits increased by 16.81% to Rs 27258 crore by end of December 2008.
- The savings and current deposits increased to Rs 5960 crore and Rs 1508 crore as on December’08 compared to Rs 4600 crore and Rs 1490 crore a year ago. This took the low cost deposit ratio (CASA) to 27% from 23% in the corresponding previous year.
- The NRI deposits constituted 20% of the total deposits. The NRI SB carries a interest of 3.5%, while the deposits in foreign currency carries rate of Libor +100 bps.
- Net Advances went up by 23.43% to Rs 21553 crore as on 31st December 2008 from Rs 17462 crore as on 31st December 2007. The growth was mainly driven by retail and SME advances.
- The retail advances of the Bank grew by 35.40% on y-o-y basis and reached Rs 7000 crore forming 32.48% of the total advances. Out of these Rs 4000 crore constitute housing and Rs 900 crore loan against gold and rest on other mortgage loans and car loans. The retail portfolio of the bank remains largely secured.
- The bank restructured Rs 23 crore of assets during the quarter ended December’08 and for the nine months the cumulative amount stood at Rs 45 crore.
- The advances to priority sector reached Rs 9676 crore as on 31st December 2008 from Rs 6849 crore as on 31st December 2007, thereby recording a y-o-y growth of 41.28%. Lending to Agriculture sector recorded an impressive y-o-y growth of 30.16% over December 2007 position and reached Rs 3107 crore.
- Top five Sector exposures: steel Rs 900 crore, commercial real estate Rs 850 crore, textile Rs 820 crore, oil Rs 704 crore and Power Rs 600 crore. The bank as a policy caps any single sectors exposure not to be above 5%.
- The Credit deposit ratio for the period stood at 80%.
- The investments increased by 21% to Rs 9713 crore. Out of which Rs 5600 crore remain in HTM and Rs 4100 crore in AFS constituting short term non SLR securities. The duration of AFS remains 2.7 years. Investments in G- Secs stands at Rs 1700 crore as on December ’08.
- The Capital Adequacy (CRAR) of the Bank at stands at 19.85% as on December ’08, against the regulatory minimum of 9%. The Tier-1 (core CRAR) capital works out to 17.23%. The CRAR has increased from 13.12% a year ago and the Tier I remained at 9.38% during December’07. However it has declined from q-o-q basis from 20.85% during September ’08 with a Tier I capital of 17.99%.
- Bank holds Rs 189.72 crore in Investment Fluctuation Reserve to take care of depreciation in the HTM category, though this is not required to be kept as per RBI guidelines.
- The Bank’s Gross NPA ratio increased to 2.83% as on December ’08 compared to 2.76% as on December ’07 and 2.62% As on September ’08. Net NPA ratio stood at 0.33% as on December ’08, as against 0.29% as on December ’07 and lower from 0.40% On September’08 respectively.
- The total provisions held against non-performing advances, expressed as a % of gross NPAs amounted to 87.72% at the end of the third quarter of FY 2008-09.
- The total number of branches and ATMs had increased to 608 and 590 respectively, as on date. The Bank holds licenses to open another 72 branches. Bank plans to open around 30 branches and 50 ATMs by the end of this fiscal. Almost 43% of the business comes from Kerala and rest 57% from outside Kerala.
- The business per employee and profit per employee as on December 31, 2008 has improved to Rs 642 Lacs and Rs 6.83 Lacs respectively from Rs 584 Lacs and Rs 5.15 Lacs respectively as on December 31, 2007. The employee base as on December’08 stood at 7500.
- The banks focus moving forward will be to increase CASA and maintain good Asset quality. It has targeted to touch Rs 1 lakh business by FY011.