Federal Bank Q1 net profit drops 36% at Rs 141 crore

By Pratik Bhakta

MUMBAI: Federal Bank said its quarterly profits fell 3.5 per cent as it set aside more funds for bad loans due to default by a metal company, and a surging yields that ate into its profits from government securities.

The bank said net profit for the June quarter fell to Rs 141 crore, from Rs 220 crore a year earlier. Provisioning for bad loans jumped to Rs 153 crore from Rs 22 crores a year earlier.

“The two major reasons for the increasing provisioning are the slippage of one large account along with 2 or 3 large accounts being under stress and yields rising over the last one week and this has eaten into our net profits,” said Ashutosh Khajuria, Executive Director, Federal Bank.

However, the net interest income, or the difference between the interest earned and paid out for funds, rose 7.19% to Rs.604.76 crore.

Since the bad loans for a particular metal company has already been recognised, subsequent quarters will not see much spike in bad loans because of that, said Khajuria.

The current account and savings account deposits grew 18.65% to Rs 22,553 crore, and loans climbed 10.61 per cent to 16,034 crore.