Private lender Federal Bank’s fiscal third-quarter net profit fell 5% to Rs 955 crore compared to Rs 1,007 crore a year ago, mainly due to higher provisions to cover future risk.

The Kochi-headquartered bank made provisions of Rs 292 crore during the quarter ended December 2024, after adjustment of regular provisions and provisions write-back. This stood at Rs 91 crore in the year-ago period. The provision coverage ratio rose to 74.21% from 71.08%.

"In alignment with our commitment to building a robust foundation, we have undertaken accelerated provisioning for certain riskier asset classes this quarter," managing director and CEO KVS Manian said.

The lender’s net interest income (NII) grew 15% YoY to Rs 2,431 crore in the December quarter

Net interest margin (NIM) stood at 3.11%, down marginally from 3.19% in Q3 FY24.

The lender's asset quality improved, with gross non-performing assets (NPA) ratio falling to 1.95% at the end of December 2024 from 2.29% a year back. 

Net NPA ratio stood at 0.49% against 0.64% at the end of the third quarter last fiscal year.

Operating profit stood at Rs 1,570 crore against Rs 1,437 crore, led by a 14.5% expansion in net interest income at Rs 2,431 crore. 

Total net advances grew 15.6% year-on-year to Rs 2.30 lakh crore while total deposits rose 11.2% to Rs 2.66 lakh crore at the end of December.