Federal Bank net rises 28 percent as non-core income rises

MUMBAI: South-based Federal Bank on Thursday reported a 28.31 per cent uptick in December quarter net at Rs 333.63 crore on a rise in non-core income. The private sector lender had reported a post tax profit of Rs 260 crore in the year ago period. Its core net interest income went up by 13.40 per cent to Rs 1,077.29 crore on back of a dip in net interest margin to 3.17 per cent as compared to 3.3 per cent in the year-ago, even though the loan growth came at 24.61 per cent growth. Its MD and CEO Shyam Srinivasan explained even though the margins are down as compared to last year, it is steadily moving up over the last three quarters. The non-interest income for the bank moved up by over 51 per cent to Rs 345 crore from the Rs 228.63 crore on the back of a healthy rise in the trading gains as the yields went down amid expectations of pause in rate hikes or cuts as well. However, the drop in yields resulted in a Rs 30 crore jump in provisions towards pensions, its executive director Ashutosh Khajuria told reporters. The overall provisions moved up to Rs 190.12 crore from the year-ago’s Rs 162 crore and Srinivasan added that the bank has upped the buffers for two bad assets resulting in the overall provisioning coverage ratio moving up to 68 per cent. The bank is targeting to continue raising the PCR and take it up to 70 per cent in a year’s time.