Federal Bank Second Quarter net income rises 53%, Stocks go up

On Friday, The Federal Bank reported that its net profit in the second quarter ended September 2022, i.e. the second quarter of fiscal year 2023, increased by around 53% to Rs 703.7 billion from Rs 460.3 billion in the same period last year. . Federal Bank shares were trading more than 3% higher at Rs 128 a share in BSE in afternoon trading.

On the other hand, net interest income (NII) of lenders, which is the difference between interest earned and interest expended, increased by about 19% YoY from Rs 1,479.4 billion to Rs 1,762 billion YoY. Meanwhile, net interest margin (NIM) improved to 3.30%, up 10 basis points year-on-year and up by 8 basis points quarter-on-quarter.

The Federal Bank’s asset quality also showed improvement, with total non-performing assets (NPA) at 2.46% from 2.69% in the previous quarter. Net NPA decreased from 0.94% to 0.78% sequentially. Gross NPA was the lowest in 24 quarters at 2.46%, and net NPA was the lowest in 34 quarters, according to the bank.

Provisions and contingent liabilities increased from Rs.166 million to Rs.267.8 billion on a continuous basis but decreased compared to Rs.292 million in the September quarter 2021. Meanwhile, the Basel III capital adequacy ratio (%) was 13.84% versus 14.57% quarter-on-quarter and 14.97% year-on-year.

From October 1, the Federal Bank has increased interest rates on savings deposits across multiple sectors, but has yet to close a significant gap compared to the Reserve Bank of India’s (RBI) repo interest rate hike.
Federal Bank shares have outperformed in 2022 as they are up more than 49% year-to-date, compared to a decline of about 2% in benchmark BSE Sensex.