Federal Bank has reported a 58.6% year-on-year growth in net profit to Rs 477.8 crore for the quarter ended 31 March on account of lower provisioning. For the same quarter a year ago, the bank had reported a net profit of Rs 301.2 crore.

The bank’s asset quality deteriorated as gross non-performing assets (NPAs) stood at 3.41% compared to 2.71% a quarter ago. Net NPAs stood at 1.19% versus 0.90% in the preceding quarter. Provisions and contingencies stood at Rs 242.3 crore, falling 42.3% quarter-on-quarter and 57.3% year-on-year.

Net interest income rose 16.8% YoY to Rs 1,420.4 crore from Rs 1,216 crore a year ago.

On the backdrop of the rise in Covid-19 cases as a fallout of the second wave, Federal Bank managing director and CEO Shyam Srinivasan declined to give a guidance on the credit growth for the new fiscal. The first quarter of FY22 will be challenging for the business and its operations, he told reporters.

Gross advances touched Rs 1,34,876 crore as of 31 March 2021, up 8.6% from Rs 1,24,153 crore a year ago. Fuelled by gold loans, retail advances grew 18.6% YoY to Rs 44,910 crore. Gold loans grew 70% YoY to reach Rs 15,816 crore.

Srinivasan believes the new fiscal will play out similar to the one before and things will improve as the year progresses.

For the full fiscal, Federal Bank posted a net profit of Rs 1,590 crore, up 3% from Rs 1,542 crore a year ago.

Explaining the reason behind lowering provisioning in the March quarter, Srinivasan said: “We have been providing significantly in the first three quarters without having NPAs, As when the NPAs were recognized in the fourth quarter we used the standard asset provisioning that we made earlier.

The slippages at Rs 1,874 crore in FY21 was along the lines of the previous fiscal. But while the bank had made provisions of Rs 1,000 crore in FY20, it has increased it to Rs 1,500 crore in the subsequent fiscal.