We are consistently trying to improvise overall picture of the bank, said Shyam Srinivasan, Managing Director & Chief Executive Officer at Federal Bank while talking to CNBC-TV18.
" The net interest margin (NIM) in Q3 and Q4 will be better than Q2. We will be able to maintain loan growth in high teens, close to 20 percent," Srinivasan said after Federal Bank reported 53 percent rise in net profit at Rs 703.71 crore for the July-September period.
"We don't lend to segments with low rating and riskier loans," he said.
The net interest margin stood at 3.3 percent in July-September quarter, while loan growth stood at 20.7 percent year-on-year.
On the asset quality front, the lender reported an improvement as the gross non-performing assets (NPAs or bad loans) fell to 2.46 percent of the gross advances as of end-September 2022 from 3.24 per cent by end of September 2021. In absolute terms, the gross NPAs stood at Rs 4,031.06 crore, as against Rs 4,445.84 crore.
The net NPAs fell to 0.78 percent (Rs 1,262.35 crore) from 1.12 percent (Rs 1,502.44 crore).
Provisions for bad loans and contingencies for September 2022 quarter came down to Rs 267.86 crore, as against Rs 292.62 crore parked aside for the year-ago period.
Srinivasan said that the rise in NIM was majorly due to repo rate transmission.
In general, interest rate increases by banks are expected to boost earnings.
In the last policy, Reserve Bank of India (RBI) increased benchmark policy rates by 50 bps. With this repo rate hike and three previous increases, the overall lending rates have surged by at least 190 basis points.
Meanwhile, provisions of Federal Bank came in at Rs 267.8 crore versus Rs 292.6 crore year-on-year and versus Rs 166.7 crore quarter-on-quarter. Treasury income were reported at Rs 80 crore versus Rs 25 crore quarter-on-quarter and versus Rs 88 crore year-on-year.
Net worth of the bank increased from Rs 17,551.94 crore to Rs 19,617.82 crore, as on September 30, 2022. Capital Adequacy Ratio of the bank, computed as per Basel III guidelines stood at 13.84 percent as at the end of the quarter.
In a separate development, Federal Bank has hiked lending rates by 2 basis points (bps) across tenures
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