Federal Bank delivered a mixed performance in the second quarter of FY2024, with net profit declining by 9.51% year-on-year to ₹992 crore, despite maintaining strong growth in its core banking operations.
Quarterly Financial Snapshot
The private sector lender's financial results revealed several key trends. While the bottom line faced pressure, the bank demonstrated resilience in its fundamental banking activities with net interest income (NII) climbing 18% to ₹2,195 crore compared to the same period last year.
What Drove the Profit Decline?
The primary factors behind the profit contraction were significant increases in provisions and rising operational expenses. Provisions surged to ₹411.66 crore during the July-September quarter, marking a substantial jump from ₹113.82 crore in the corresponding period last year.
Asset Quality Shows Improvement
Despite the profit dip, Federal Bank maintained healthy asset quality metrics. Gross Non-Performing Assets (NPAs) improved to 2.26% of gross advances, down from 2.44% in the same quarter last year. Net NPAs also showed positive movement, declining to 0.64% from 0.73% year-on-year.
Operational Performance Highlights
- Net Interest Margin: Remained stable at 3.24%
- Operating Profit: Increased 5.4% to ₹2,068 crore
- Business Growth: Total business expanded 19% to ₹4.77 lakh crore
- Deposit Growth: Total deposits grew 18% to ₹2.60 lakh crore
- Advance Growth: Gross advances increased 20% to ₹2.17 lakh crore
Management Perspective and Outlook
The bank's leadership emphasized the underlying strength of the business, pointing to consistent growth across key parameters. The results reflect the challenging operating environment while demonstrating the bank's ability to maintain growth momentum in its core lending and deposit-taking activities.
Federal Bank continues to focus on digital transformation and customer service enhancement while navigating the current economic landscape. The mixed quarterly results highlight both the challenges and opportunities facing the Indian banking sector as institutions balance growth objectives with risk management.
