Federal Bank Q3 Results: Profit, NII beat expectations, asset quality improves; Stock jumps 9%

Shares of Federal Bank Ltd. surged as much as 9% on Friday, January 16, in response to its quarterly results for the October-December period. The stock has snapped a five-day losing streak, after this move. The stock has declined in seven out of the last eight sessions prior to Friday.

The lender's Net Interest Income (NII) or core income grew by 9% from last year to ₹2,653 crore. The numbers are marginally higher than the ₹2,563 crore estimate from the CNBC-TV18 poll.

Net profit for the period increased by 9% from last year to ₹1,041 crore, also marginally higher than the CNBC-TV18 poll of ₹1,000 crore.

Federal Bank's asset quality improved on a sequential basis, with Gross Non-Performing Assets (NPAs) improving to 1.72% from 1.83% in September, while Net NPA improved to 0.42% from 0.48% last quarter.

In absolute terms, Gross NPAs improved to ₹4,447 crore from ₹4,532 crore last quarter, while Net NPAs improved to ₹1,068 crore from ₹1,165.2 crore in September.

Provisions for the quarter remained largely unchanged at ₹332 crore from ₹363 crore last quarter and ₹292 crore last year.

Slippages at the end of the December quarter improved to ₹443 crore from ₹584 crore during the second quarter last year.

Advances for the quarter increased by 11% from last year and 4.5% sequentially to ₹2.55 lakh crore, led by the commercial banking and corporate & institutional banking.

Deposits for the quarter grew by 11.8% from last year to ₹2.97 lakh crore. The figure was up 3.1% from the September quarter as well.

Fee income increased by over 18.5% year-on-year to ₹896.47 crore, while CASA ratio improved to 32.07%, up 106 basis points sequentially and 191 basis points from last year.

Shares of Federal Bank are now trading with gains of 8.6% after the earnings announcement at ₹268.1, back towards its recent record high of ₹271.1. The stock is up 36% in the last one month.