The Federal Bank (FEDERALBNK) Q4 97/98 earnings summary

Executive summary

• Total working funds exceeded Rs. 10,000 crore, up from Rs. 7,602 crore; deposits and advances grew at roughly twice the domestic banking system’s rate.

• Net profit reached Rs. 50.28 crore versus Rs. 46.23 crore in FY1996-97, despite narrower interest spreads and higher provisions for non-performing advances.

Financial highlights

• Gross profit rose 41.7% YoY to Rs. 92.7 crore; total income was Rs. 794.12 crore versus Rs. 650.23 crore, and net profit was Rs. 50.28 crore versus Rs. 46.23 crore.

• Interest earned increased to Rs. 701.58 crore from Rs. 578.75 crore; other income rose to Rs. 92.54 crore from Rs. 71.48 crore.

• Provisions and contingencies were Rs. 42.46 crore versus Rs. 19.14 crore; reported EPS was Rs. 23.16.

• Actual total income and net profit were below the January 1996 rights-issue projections by 27.8% and 63.3%, respectively, mainly due to lower spreads.

Outlook and guidance

• Customer delight, shareholder wealth creation and excellence across banking operations were stated as priorities for the years ahead.

• A three-year IT plan targeted automation of about 80% of business within two years; Fedsoft was operational in 40 branches.

• Fedbank Financial Services planned to assess infrastructure investment opportunities in power, roads and telecom, with future resource raising dependent on funding costs and market conditions.