Federal Bank Q3 Results: Profit, NII jump to record highs as asset quality improves

Federal Bank on Monday reported a net profit of Rs 803.6 crore for the quarter ended December 2022, an increase of 54 per cent compared with the corresponding period a year ago. The bank staged a strong all-round performance with a record net interest income (NII) on the back of lower credit costs and better asset quality.   

The private sector lender's net interest income -- or the difference between interest earned and interest paid -- came in at an all-time high of Rs 1,956.5 crore, marking year-on-year growth of 27.1 per cent and far exceeding analysts' estimates. 

According to Zee Business research, the bank was estimated to report net interest income of Rs 1,810 crore. 

“An all-round strong operating performance has helped us deliver the highest ever quarterly profit. The credit cost has improved on the back of continued strong asset quality," said Shyam Srinivasan, Managing Director and CEO, Federal Bank.

Federal Bank's net interest margin (NIM) -- a key measure of profitability for lenders -- came in at 3.49 per cent for the thee-month period, up 22 bps compared with the year-ago period. 

The bank reported a record quarterly operating profit, up 39.4 per cent on year at Rs 1,274.2 crore.  

The lender's asset quality improved, as its gross non-performing assets (NPAs) -- or bad loans -- as a percentage of total loans eased to 2.43 per cent for the October-December period,  from 2.46 per cent the previous quarter and 3.06 per cent for the quarter ended December 2021. 

Net non-performing assets stood at Rs 1,228.6 crore, down 2.7 per cent on a quarter-on-quarter basis and down 16.5 per cent on a year-on-year basis, according to the filing.

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The Federal Bank stock built on the day's gains after the earnings announcement, which was during market hours, rising by as much as Rs 4.9 or 3.5 per cent to Rs 143.4 apiece on BSE.   

Federal Bank shares rewarded investors with a return of 17.2 per cent in the quarter ended December 2022, outperforming the Sensex, which rose 5.9 per cent.

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