Federal Bank on Friday reported a 50% jump in its September quarter consolidated net profit at ₹733.34 crore on the back of healthy growth in both interest and other income streams.
The Kerala-based private sector lender posted a 52% jump in standalone net profit at ₹703.71 crore.
Its MD and CEO Shyam Srinivasan told reporters that this was the strongest-ever quarter in the bank’s history from a profit perspective, adding that the number came despite an increase in the provisions which the lender did to up its provision coverage ratio (PCR).
The PCR moved up to 67.41%, while the total provisions moved up 12.6% to ₹506 crore.
The core net interest income rose 19.1% to ₹1,762 crore, helped by a 20% growth in advances and 0.10% widening in the net interest margin to 3.30%.
Mr. Srinivasan said the bank has reviewed up its net interest margin target for the fiscal by a few basis points to the 3.27-3.35% range.
He further said the bank continues to expect the credit growth to come in at high teens, and the deposit growth to be in the early-teens.
Asked about the deposit growth trailing at 10%, Mr. Srinivasan said there is a “war for deposits” in the market, but said Federal Bank has more headroom because of the lower credit-deposit ratio.
The bank will depend on its branch network and improved distribution channel consisting of specialised relationship managers for deposit mobilisation, its executive director Shalini Warrier said, making it clear that it will up the deposits “responsibly”.
Its other income rose to ₹610 crore from ₹492 crore in the year-ago period through what Mr. Srinivasan termed was all-round growth across lines.
A faster growth on the income line helped the cost-to-income ratio improve to under 50% for the quarter, Mr. Srinivasan said, adding the goal has been achieved one year ahead of the targeted time.
The gross non-performing assets ratio improved to 2.46% as against 3.24% in the year-ago period and 2.69% in the previous quarter.
Mr. Srinivasan said the restructured assets are performing much better than expected and the bank is yet to draw down on the high provisions it has made for them.
The bank will look at raising capital sometime in 2023 depending on the asset growth. He, however, declined to comment on speculations around mergers and acquisition activity.