The Federal Bank (FEDERALBNK) Q4 98/99 earnings summary

Executive summary

• FY99 net profit was Rs.2.53 crore, sharply below Rs.50.28 crore in FY98, amid higher NPA provisions, income derecognition and reduced interest spread.

• Total business funds grew by Rs.665 crore to above Rs.11,000 crore; average credit-deposit ratio was 56%.

• A Rs.75 crore transfer from revenue and other reserves supported FY99 results; Rs.52.3 crore was used for provisions and contingencies relating to earlier years.

Financial highlights

• Total income was Rs.972.42 crore, comprising interest earned of Rs.859.44 crore and other income of Rs.112.98 crore; FY98 total income was Rs.794.12 crore.

• Interest expense rose to Rs.771.57 crore from Rs.563.72 crore; operating expenses were Rs.151.47 crore and provisions and contingencies Rs.46.86 crore.

• Deposits increased 5.6% to Rs.6,782 crore; advances increased 7.8% to Rs.4,227.7 crore at 31 March 1999.

• Dividend recommended at 10%, subject to RBI approval, versus 35% in the prior year; reported EPS was Rs.1.16 annualised.

Outlook and guidance

• Lower-cost deposits expected as substantial high-cost Non-Resident Non-Repatriable deposits are repaid by March 2000; retail credit growth expected to improve spreads and profitability.

• Loan-loss provisions were expected to decline; retail advances and 17 newly launched retail loan products were identified as growth drivers.

• The bank expected 80% of business to be transacted in an automated environment by March 2000.