Federal Bank Q2 net falls; Asset quality improves

Federal Bank Q2 net falls; Asset quality improves

Federal Bank share price jumped over 5% Monday morning session as investors expect improvement in asset quality and other key parameters in the near future.
For the September quarter, the lender reported a 26.2% on-year decline in profit, impacted by significant step up in provisions to further strengthen the balance sheet, but there was an improvement in asset quality.
Profit for the quarter declined to Rs 307.62 crore, compared to Rs 416.7 crore in the year-ago period. The strong growth in NII, other income and operating profit limited the decline in profit.

Net interest income surged 22.8% on-year to Rs 1,379.85 crore with muted loan growth of 6% YoY and net interest margin at 3.13% for the quarter, while deposit growth was 12% in Q2.
Provisions and contingencies increased by 135.2% on-year to Rs 592.06 crore in the quarter ended September 2020, and the sequential increase was 50%.

Asset quality has seen improvement with gross non-performing assets (NPA) falling 12bps sequentially to 2.84% in Q2FY21, while net NPA declined 23 bps QoQ to 0.99% at the end of September quarter.
Non-interest income increased 21% on-year to Rs 509.33 crore and pre-provision operating profit climbed 40% to Rs 1,006.53 crore in Q2FY21.

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