MUMBAI: Private sector lender Federal Bank is expecting to restructure loans worth Rs 3,500 crore, or 2.5-3% of its total advances, after the moratorium ends.

Out of this, corporate loans of around Rs 1,000 are expected to come up for restructuring, Federal Bank chief executive officer Shyam Srinivasan said. The Kerala-based bank's total loan book as of September 2020 was at 1.22 lakh crore.

The bank has already made a provisioning of 10% in the wake of new stress coming from the coronavirus pandemic.

The environment we are operating in will have a somewhat elevated impact on slippages, Srinivasan added.

Just Rs 3 crore of loans slipped into non-performing asset (NPA) in the quarter ended 30 September but this was mainly because of the moratorium on loans. If the Reserve Bank of India's (RBI) moratorium directive wasn't there, about Rs 237 crore of loans would have slipped into NPAs, Srinivasan said.

The bank's gross NPA fell 12bps sequentially to 2.84% of total loans in the quarter ended 30 September while net NPA declined 23 bps to 0.99%. In the year-ago period, gross NPA stood at 3.07% of total loans.

Federal Bank reported a 26.2% fall in net profit over the year-ago period on higher provisioning and contingencies. Profit for the quarter fell to Rs 307.62 crore compared to Rs 416.7 crore a year ago. Total provisions more than doubled to Rs 592 crore from Rs 252 crore a year ago, and the sequential increase was 50%.

Federal Bank strengthened provision coverage ratio (PCR) to 64.65% at the end of September quarter from 58.54% in the previous quarter.

Net interest income was up 22.8% to Rs 1,379.85 crore. Loan growth was 6% year-on-year while net interest margin was at 3.13% in the quarter versus 3.01% a year ago. Deposit growth was 12% in the fiscal second quarter.