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Centrum Broking Report
Federal Bank’s first quarter for financial year 20-21 earnings surprised positively led by net interest income due to higher net interest margin and strong trading gains of Rs 3.0 billion. Hence, pre provision operating profit was a beat at Rs 9.3 billion. Loan growth was soft at 8% YoY though traction in housing and gold loans continued. Current and saving account ratio and registered transferable deposit growth was healthy at 19% to 14% YoY. Slippages were driven by a 20 million dollar corporate account which has been fully provided for.
The quarter saw additional provisions of Rs 1.5 billion of which Covid-19 related were Rs 1.1 billion and standard asset was Rs 370 million. Stressed pool has further reduced QoQ 1.7%. Moratorium declined from 35% to 24% of loans and provisioning on the same is 62 basis points. Common equity tier 1 over 13.0% is strong. See estimated Return on assets and return on equity scale up to 0.9% to 12.2% by FY22.
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