Federal Bank Q1 Profit Falls 15% to ₹862 Crore Amid Higher Provisions

Quick Summary

• Net Profit Decline: Federal Bank reported a 15% decline in Q1 net profit,amounting to Rs 862 crore,compared to Rs 1,010 crore during the same quarter last year.
• Provisions Increase: Provisions and contingencies surged to Rs 400 crore, up from Rs 144 crore last year, due to heightened slippages in agriculture and microfinance sectors.
• Asset Quality: Gross non-performing assets ratio improved to 1.91%, down from 2.11% year-on-year. Fresh slippages amounted to Rs 658 crore predominantly from agri and MFI loans.
• Key Financial Metrics:

– Pre-provision operating profit stood at Rs 1,556 crore (up by 3.7% YoY).
– Net Interest Margin (NIM) fell to its lowest in five quarters at 2.94%; expected recovery in Q2 cited by executives.
– Total income grew by approx.7.64%, with net interest income showing modest growth of only around 2%.- Other income rose substantially by over +22%, driven partially by a steep rise (+275%) in profits from investment sales.

• Advances Growth & Retail Focus: Advances increased by approx. +9% YoY; retail advances grew faster (+15%), fueled partly via gold loans projected for further expansion during festive seasons (20%-25% growth target for these).
• Corporate Portfolio Growth Outlook: corporate advances expanded moderately (+4%) aiming an eventual conservative growth-range without margin dilution ~8/10%.
• total deposits clocked an overall increase spanning c FY(+/+) .

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