New NPA norms spook Federal Bank numbers, net plunges 43.5% (Eds: Adding management quotes and more details)
Mumbai, May 9 (PTI) Mid-sized private sector lender Federal Bank today reported a 43.49 per cent plunge in March quarter net at Rs 145 crore, largely due to the provisions impact on recast assets that slipped into NPAs following the recent changes in bad loan recognition norms.
The Kochi-based lender reported fresh slippages of Rs 872 crore as against an expected under-Rs 400 crore, which resulted in provisions or the money set aside to cover losses, soaring to Rs 371 crore from Rs 122.70 crore a year ago.
Managing director and chief executive Shyam Srinivasan said the February 12 Reserve Bank notification resulted in Rs 492 crore of loans slipping into the non-performing assets from being a standard restructured advances.
The restructured assets which slipped into NPA were loans given out to the infrastructure, power and roadways sectors in the heady days of 2010-12, he added.
This alone contributed Rs 150 crore to the provisions, he said, adding there was another impact to the tune of Rs 30 crore on account of unrealised interest.
The gross non-performing assets ratio moved up to 3 per cent 2.33 per cent a year ago.
Srinivasan said "a bulk" of the impact coming out of the RBI circular has already been taken in the March quarter and added it is targeting to restrict slippages to under Rs 1,200 crore in this current fiscal year.
For the full year, net grew marginally to Rs 878.85 crore from Rs 830.79 crore.
It reported a credit growth of nearly 26 per cent for the fiscal, driven largely by working capital loans to corporates which grew by over 36 per cent, Srinivasan said, adding these corporate loans are of over Rs 25 crore and consisted largely of short-term working capital loans.
The banks share of inward remittances has more than doubled to 15 per cent now from 7 per cent, he said, adding 40 per cent of its deposit-base consists of non-resident funds.
Net interest margin narrowed down to 3.11 per cent due to a reduction in interest payments from NPA accounts but the bank exuded confidence of pulling it back to historical average of 3.20-3.25 per cent.
The overall capital adequacy of the bank stood at 14.70 per cent in March.
The bank is all set to announce an investment into its non-bank lending subsidiary Fed Fina whose book stands at Rs 1,450 crore, he said, elaborating that the infusion and a new management will help it focus on the retail segment.
The bank has also decided to start unsecured lending including growing its Rs 400-crore personal loan book and also venture into credit cards, he said.
Two bidders have evinced interest for buying into the insurance arm IDBI Federal Life and expects the process to be completed by July.
The bank scrip closed 2.27 per cent down at Rs 101.15 on the BSE as against a 0.29 per cent gain on the benchmark. PTI AA BEN BEN BEN BEN