The Hindu Business Line : Marginal rise in Federal Bank net

Coimbatore, July 31 Federal Bank’s net profit increased by 1.81 per cent to Rs 68.15 crore for the quarter ended June 2008 compared to Rs 66.94 crore achieved during the corresponding quarter of the earlier fiscal.

The marginal increase in net profit has been attributed to higher provisioning of Rs 131.79 crore towards depreciation on investments held in trading books.

While the interest income increased 34.20 per cent to Rs 745.12 crore (Rs 555.22 crore), other incomes slipped 7.92 per cent to Rs 96.21 crore (Rs 104.48 crore).

The operating profit was up 34.55 per cent to Rs 253.52 crore (Rs 188.43 crore).

The growth in total income is said to be due to an increase in interest income in spite of a slip in trading income from securities and equity portfolios.

Prudent asset-liability management initiatives enabled the bank to improve its net interest margin to 3.8 per cent, bank sources said and added that the focus was more towards low cost retail deposits than on purchased funds, resulting in reduction in the cost of deposits over March 2008.

Despite the increase in operating expenses to Rs 120.88 crore (Rs 104.81 crore) (due to branch expansion and migration of operating system to core banking system), the bank managed to contain the cost-to-income ratio at 32.28 per cent against 35.74 per cent in the previous fiscal.

Total business increased by 32.67 per cent to Rs 47,178 crore, with deposits accounting for Rs 26,893 crore and advances of Rs 20,285 crore.

Advances growth has been driven by retail and SME advances.

Retail loan products extended to individuals grew 36.58 per cent to Rs 5,940 crore, forming 29.28 per cent of total advances.

“We have started to build retail asset franchisee in a big way”, Mr Raju Hormis, AGM, said.

The bank’s wholly owned subsidiary Fedbank Financial Services sources retail assets from all major cities.

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