Private sector lender Federal Bank has launched a feature-rich savings bank product for women.
“The savings scheme is called Mahila Mitra Plus and provides a curated set of features, designed to make financial planning and investments easy for women,” it said in a statement on Thursday.
The special features include exclusive preferential interest rates on housing loans, processing fee waiver for home loans, complimentary and customised insurance cover.
“Women are also encouraged to open savings accounts in the names of their minor children through the provision of two zero balance savings accounts,” it further said.
With the economy opening up, the asset quality of private banks improved in the September quarter. Further, banks efforts in reducing slippages, improved collections, better recoveries from written off accounts and RBI mandated loans recast also helped banks keep a lid on NPAs.
While the year on year NPA figures of most banks were higher than the last quarter’s figures, they are not comparable as after the Supreme Court‘s stay on classifying loans that were standard as on August 31 from NPAs banks had reported NPAs under proforma figures.
The drop
HDFC Bank, India’s largest private sector lender, reported a drop in gross non-performing assets (GNPAs) to Rs 16,346 crore during July-September against Rs 17,099 crore in the preceding quarter. Provisions and contingencies also dropped to Rs 3,924.70 crore during the quarter compared with Rs 4,830.84 crore in the June quarter. GNPA ratio fell to 1.35 per cent as of September from 1.47 per cent in the June quarter. It was 1.08 per cent in the same quarter, a year ago.
ICICI Bank‘s gross non-performing assets fell to 4.82 per cent of gross advances as on September 30, against 5.15 per cent in the June quarter. Net NPAs (bad loans) also fell to 0.99 per cent from 1.16 per cent sequentially in the September quarter.
Federal Bank‘s asset quality improved on a sequential basis as gross NPA came at 3.24% as against 3.50% in the previous quarter. Its net NPA stood at 1.12% from 1.23% quarter-on-quarter (QoQ). However, the gross NPA during the year-ago quarter stood at 2.84% whereas net NPA at 0.99%. Provisions (other than tax) and contingencies declined to Rs 245 crore as against Rs 543 crore in the previous quarter and Rs 532 crore in the year-ago quarter.
Axis Bank’s gross NPAs came in at 3.53% in the second quarter, lower than 3.85% in the June quarter and 4.18% in the previous year period. Meanwhile, the net NPA ratio during the quarter stood at l.08%.
Kotak Mahindra Bank’s gross NPAs during the second quarter stood at 3.19% compared with 3.56% in the June quarter. However, it was higher than 2.70% in the year-ago quarter. Meanwhile, the net NPA improved to 1.06% versus 1.28% on a sequential basis, and remained flat on a year-on-year basis.
GNPAs of banks will rise to 8-9 per cent this fiscal, well below the peak of 11.2 per cent seen at the end of fiscal 2018, with the COVID-19 relief measures such as restructuring dispensation, and the Emergency Credit Line Guarantee Scheme (ECLGS) helping limit the rise, according to CRISIL Ratings.
GNPAs as at March-end 2021 had declined to 7.5 per cent against 8.2 per cent as at March-end 2020.
With about 2 per cent of bank credit expected under restructuring by the end of this fiscal, stressed assets ― comprising gross NPAs and loan book under restructuring ― should touch 10-11 per cent (against March-end 2021 estimate of about 9 per cent), the credit rating agency said.
The net profit of private banks rose 26 per cent year on year in the July-September 2021 quarter and 21.9 per cent sequentially over March-June 2021 (Q1), as the pandemic ebbed and economic recovery has taken hold.
The 12 private lenders posted a collective net profit of Rs 21,965 crore during the second quarter.
Provisions and contingencies of the lenders that have declared results fell both 22 per cent year on year and 30.2 per cent quarter on quarter to Rs 12,805 crore. The provisions include those for one time restructuring of loans announced by the RBI in May.
Net interest income was up 10.8 per cent y-o-y and 2.5 per cent sequentially. Other income rose 15.7 per cent to Rs 22,638 crore.
Gross non-performing assets grew 1.1% to Rs 1.73 lakh crore y-o-y, but fell 3.5 per cent sequentially from about Rs 1.8 lakh crore in the June quarter.
Net NPAs rose by 27.5 per cent y-o-y to Rs 42,895 crore, but fell sequentially by 7.3 per cent from Rs 46,280 crore in June 2021.
ICICI Bank posted a higher-than-expected 29.6% on-year rise in net profit to Rs 5510 crore in July-September, which was highest in the bank’s history. As the bank maintained 17% growth in advances, and further improved on net interest income and margins, asset quality ratios provided additional support to the bottomline by keeping provision costs low.
Axis Bank reported an over 86% year-on-year rise in net profit to Rs 3130 crore for the September quarter, benefiting from an improvement in asset quality, which led to a fall in provisioning. The bank expects consumer and business confidence to continue to trend upward in Oct-Mar on the back of a rise in vaccination coverage and as the economy opens up, pent-up demand and spends materialise.
Federal Bank posted a higher than expected net profit of Rs 460 crore in the September quarter, led by a fall in overall provisions as the lender reported improvements in asset quality. The bank’s net profit rose 49.6 per cent on year, and 25.3 per cent on quarter. This was supported by a faster-than-industry credit growth that fuelled a rise in core ratios such as net interest income and net interest margins.
Yes Bank’s net profit jumped 74 per cent year-on-year in the September quarter to Rs 230 crore on the back of a sharp fall in provisioning. Going ahead, a sharp reduction in overdue loans and sustained momentum in loan recoveries and upgrades augurs well for the overall asset quality of the bank.
RBL Bank posted a 78.6 per cent on-year fall in net profit for the September quarter at Rs 30 crore due to higher provisions amid an increase in bad loans. For April-June, the private sector lender had reported a net loss of Rs 460 crore. Slippages, gross non-performing assets ratios, and provisions had peaked in the reporting quarter, and the lender was on track to see growth, the bank said.
“Our platform is strong, our fintech arrangements are robust and improving and we will keep investing into that,” says Shyam Srinivasan, MD & CEO, Federal Bank.
Tell us a little bit about how the second quarter looked overall. Q2 was a good quarter for Federal Bank. All of us know that the biggest test for a bank in very challenging times is the quality of the credit and I am quite pleased. For many quarters, we have been quite consistent about the underwriting and it is interesting that in a time like this, it shows up as a good portfolio. Our slippages were low and the recovery upgrades were higher than the slippages in this quarter. So, we had a writeback in provisions and there was no credit provision. Having said that, we increased our standard asset provision for the stress book or the restructured book. We just prudently built up coverage over a period of time.
Credit growth was modest. Deposit growth was excellent. Savings growth was excellent. Our other income did very well. So many bricks that we have been laying over many quarters are beginning to show up well. The most satisfying part is that in challenging times, we came out better than what many expected of us. It gives us confidence that we can perform even better from here. So on balance, Q2 was a good platform to spring into growth. Hopefully India and the economy is on a trend up. We think we can tap into that and start gaining share, which we have been doing consistently and hopefully Q3 onwards the trajectory and the momentum is strong.
How are the recoveries shaping up and how they are likely to pan out going forward? I would think the earlier signs of a recovering economy are two things – one is how is our existing client servicing and their dues, particularly on products that are extremely important to them like home loans and vehicle loans; the second is how consumption is playing out. Both are showing good signs of recovery. People were clearing their dues and we saw a good pick up in retail and small business momentum. These are usually signs of optimism and activity happening in the economy. There are pockets like contact businesses which are still going through their own challenges,
I would say on balance there is a positive trend and as Gati Shakti and other big developments start kicking into the country and long-term infra kicks in, we would see even corporate credit growing. Once that goes, that snowballs into incremental growth across the chain. We have to be a little watchful of how the next two-three quarters play out but early signs of recovery are visible through better consumption, particularly in new-age segments. The recovery upgrades have been strong and one can see spends going up.
Debit card spends have picked up back to pre-pandemic levels. I would think the signs of recovering a healing economy is visible and suddenly with well over 100 crore people vaccinated at least one time, the worst fear probably is behind us.
Could you give us a sense of how that credit growth is likely to shape up? Do you anticipate it to be significantly higher based on the uptick in the consumption economy? We should look at two things in credit growth; one is the aggregate credit growth which still is in the 6-7% year-on-year. But if one disaggregates the credit growth and looks at how some segments are growing, one begins to see pick up in retail, in small businesses as well as commercial banking. It is only the large ticket corporate credits that have not picked up. But that is heavily led by corporates who have access to cheaper money through other instruments and that is not showing as credit growth.
Second is that as the investment cycle picks up and which could be two to three quarters out, credit will come back to early teens.
How are you looking at the ROA as well as the ROE? Firstly let me begin with digital. You have probably been watching our digital progress. I am not talking about digital in terms of the number of transactions that are digital; that is now a given and it is well over 80-85%. But what is important is how we as a bank have chosen to work with digital. We chose fintech partnerships as a very meaningful part of our incremental growth and we went out and created a super technology architecture which enables fintechs to plug and play with us fast. We have tied up with a couple of new banks, we have arrangements with some of the best brokerage houses, credit card platforms. All of that are beginning to give us momentum on new business building.
As I mentioned in our investor call, well over three lakh accounts have been built on the newer bank platforms. Of course, these are early days. There has been only 90-1,000 days since this started growing but it is evident that that platform is working and customers are able to onboard themselves literally unaided.
So the fintech journey of the bank is well and truly on and certainly in the passage of time, that will only get better. We are well capitalised. Thankfully our credit quality holds back. We grew 10% year-on-year in the first half and I would think the second half usually tends to be better. So, it should get somewhere in the early teens but we will have to watch out how the next two quarters play out. We are more optimistic about the opportunities ahead. Our platform is strong, our fintech arrangements are robust and improving and we will keep investing into that.
Federal Bank reported a 49.6 per cent jump in its standalone net profit at ₹460.26 crore in the second quarter of the fiscal from ₹307.62 crore in the corresponding period a year ago.
This was aided by higher net interest income and lower provisions.
For the quarter-ended September 30, 2021, Federal Bank reported a net interest income growth of 7.2 per cent to ₹1,479.42 crore versus ₹1,379.85 crore a year ago.
Other income marginally fell by 1 per cent on an annual basis to ₹444.46 crore in the second quarter of 2021-22.
Net interest margin stood at 3.2 per cent as on September 30, 2021.
Provisions fell by 53.9 per cent to ₹245.33 crore in the second quarter compared to ₹532.09 crore a year ago.
Asset quality
Gross non-performing assets stood at 3.24 per cent of gross advances as on September 30, 2021 from 2.84 per cent on September 30, 2020. It, however, fell on a sequential basis from 3.5 per cent as on June 30, 2021.
Net NPA stood at 1.12 per cent of net advances at the end of the second quarter from 0.99 per cent a year ago and 1.23 per cent as on June 30, 2021.
Provision Coverage Ratio (including technical write-offs) stood at 79.33 per cent.
“We witnessed strong traction in NIM and pick-up in NII on the back of good credit growth in certain segments. Strong recovery and upgrades helped in virtually no credit cost for the quarter,” said Shyam Srinivasan, Managing Director and CEO, Federal Bank, adding that the digital story of the bank continues to prosper with fintech partnerships progressing well and contributing to over 50 per cent of new accounts booked.
Gross non-performing assets (NPAs) as a percentage of gross advances are seen at 3.24%, compared to 2.84% in the year-ago period and 3.50% in the preceding quarter. The net NPA ratio stood at 1.12%, against 0.99% in Q2 of FY21 and 1.23% in Q1FY22.
Federal Bank on Friday reported a 49.62% year-on-year increase in its standalone net profit for the second quarter ended September to Rs 460.26 crore, mostly due to lower provisioning and higher income. The lender had reported a net profit of Rs 307.62 crore in the year-ago period and Rs 367.29 crore in Q1FY22.
Fresh slippages in the quarter under review was contained to Rs 320 crore along with recoveries and upgrade of Rs 421 crore, leading to an improvement in the asset quality, bank officials said.
Gross non-performing assets (NPAs) as a percentage of gross advances are seen at 3.24%, compared to 2.84% in the year-ago period and 3.50% in the preceding quarter. The net NPA ratio stood at 1.12%, against 0.99% in Q2 of FY21 and 1.23% in Q1FY22.
Provisions and contingencies were lower at Rs 245.33 crore, compared with Rs 532.09 crore in the year-ago period. The provision coverage ratio (including technical write-offs) is reported at 79.33%.
Shyam Srinivasan, MD & CEO, said the bank has delivered a very encouraging performance braving a lot of odds. “We witnessed strong traction in NIM and pick-up in NII on the back of a good credit growth in certain segments. Strong recovery and upgrades helped in virtually no credit cost for the quarter. CASA growth of 18% YoY led the CASA ratio to reach to an all-time high of 36%. This further strengthens the granularity of our deposit portfolio. Inward remittances continue to be a strong forte for the bank with a market share of 20.54%,” he said.
Srinivasan said the digital story of the bank continues to prosper with fintech partnerships progressing well and contributing to more than 50% of the new accounts booked.
The bank earned net interest income of Rs 1,479.42 crore for the quarter ended September 30, 2021.
The capital adequacy ratio computed as per Basel III guidelines stood at 14.97% at the end of the quarter.
Everything in the P&L works. Our interest income is Rs 1,479 crore, other income is Rs 444 crore, slippages is Rs 320 crore and provision is Rs 250 crore. We don’t have any lumpy one-off that makes things happen. It is a granular franchise.
Kerala-based Federal Bank reported a net profit of Rs 460.26 crore for the second quarter of the fiscal. The lender also reported higher net interest income and lower slippages. Excerpts from the post-result virtual press meet held by MD & CEO Shyam Srinivasan.
Fresh slippages are contained to Rs 320 crore for the quarter. Does that mean that the worst is over regarding the pandemic?
We have continuously fortified our capabilities and for years we have been fairly conservative as far as credit quality is concerned. In an improving environment, we will lead and in a falling environment we will fall the least. Given India’s level of vaccination and way of dealing with the crisis, I hope the worst is over.
Last quarter, we had much higher-than-normal run rate in slippages of Rs 640 crore because of one-and-a-half month of Q1 were non-functional. As the economy opened up, our efforts doubled. We had much recovery and upgrades than incremental slippage in Q2. Our quality of portfolio is getting as pristine as it should be.
What contributed to your profit this quarter?
Everything in the P&L works. Our interest income is Rs 1,479 crore, other income is Rs 444 crore, slippages is Rs 320 crore and provision is Rs 250 crore. We don’t have any lumpy one-off that makes things happen. It is a granular franchise.
What is your sense on the restructured book?
For our bank, a majority of the restructured book, nearly 90% or so, is secured. If you have secured book, then I think slippages is low. Mostly, these are housing loans and the probability of default is lower. Our slippage is lower than our recovery and despite that we have provided more on our standard assets, which includes our restructured book. We have created extra provision.
Opportunities are quite strong and we believe that the market is quite ready for growth. In the second half, we will see higher run rate than the first half.
Outlook on gold loan portfolio?
We remain very optimistic. In the first quarter, gold loans and gold prices saw a dip, but now have started stablising. We have grown 26% year to date (YTD) and we expect gold loans to grow 25-30% for the full year.
What is the share of gold loan to total advances and how much gold does the bank hold?
Gold loan is 11% of the total portfolio and the bank holds 49-50 tonne of gold in custody.
What is the update on the credit card issuance?
We had to stop issuance due to the Mastercard issue, but then within a month we were able to get Visa and then Rupay on board. We also have a partnership with FPL and now we are doing about 400-500 cards a day. We have a base of about 32,000 cards and an outstanding of about Rs 35 crore.
New Delhi, Private sector lender Federal Bank on Friday reported nearly 55 per cent jump in its consolidated net profit at Rs 488 crore for the second quarter of this fiscal ended September 30. The bank had posted a net profit of Rs 315.70 crore in the year-ago period.
Total income (consolidated) during the July-September period of 2021-22, however, was down at Rs 4,013.46 crore, as against Rs 4,071.35 crore in the same period of 2020-21, Federal Bank said in a regulatory filing.
The bank’s asset quality showed an impairment with the gross non-performing assets (NPAs or bad loans) rising to 3.22 per cent of the gross advances as of September 30, 2021 from 2.80 per cent in the year-ago period.
Likewise, the net NPAs were also higher at 1.15 per cent as against 0.99 per cent.
In absolute value, the gross NPAs stood at Rs 4,558.19 crore by the end of September 2021 quarter, up from Rs 3,591.72 crore in the corresponding period a year ago.
Value of net NPAs were at Rs 1,595.78 crore, up from Rs 1,249.85 crore.
Provisions for bad loans and contingencies for the reported quarter came down to Rs 264.53 crore, from Rs 565.46 crore in the year-ago quarter.
Shares of Federal Bank were trading at Rs 100.80 apiece on BSE, up 4.40 per cent from the previous close.
Federal Bank reported a 49.6 per cent jump in its standalone net profit to ₹460.26 crore in the second quarter of the fiscal from ₹307.62 crore in the corresponding period a year ago.
This was aided by higher net interest income and lower provisions. For the quarter ended September 30, 2021, Federal Bank reported net interest income grew by 7.2 per cent to ₹1,479.42 crore versus ₹1,379.85 crore a year ago.
Other income marginally fell by 1 per cent on an annual basis to ₹444.46 crore in the second quarter of 2021-22. Provisions halved and fell by 53.9 per cent to ₹245.33 crore in the second quarter of the fiscal compared to ₹532.09 crore a year ago.
Asset quality saw some deterioration.
Gross non performing assets were at 3.24 per cent of gross advances as on September 30, 2021 from 2.84 per cent on September 30, 2020. It was however, lower on a sequential basis from 3.5 per cent as on June 30, 2021.
Net NPA was at 1.12 per cent of net advances at the end of the second quarter from 0.99 per cent a year ago and 1.23 per cent as on June 30, 2021.
CASA is seen at Rs 62,191 crore during the second quarter, a y-o-y increase of 18%.
Federal Bank’s deposits and advances grew by 10 % year-on-year (y-o-y) during the second quarter of the current fiscal, the bank said in a regulatory filing.
The Kerala-based lender said that at the end of the September 2021 quarter, total deposits stood at Rs 1,71,995 crore, as against Rs 1,56,747 crore in the year-ago period. Meanwhile, advances at the end of the second quarter stands at Rs 1,37,309 crore, compared to Rs 1,25,209 crore in the second quarter of the last fiscal.
CASA is seen at Rs 62,191 crore during the second quarter, a y-o-y increase of 18%. CASA ratio is reported at 36.16 %. Liquidity coverage ratio is reported at 225.94 % for the September quarter, compared to 266.27 % for the year-ago period and 215.96% for Q1 of the fiscal.
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