REG - Federal Bank Ltd The - 1st Quarter Results
SDF-24/ /2018-19 17th July 2018
To,
The London Stock Exchange
Dear Sir,
We enclose herewith the UnAudited Financial Results of the Bank for the period ended June 30, 2018 which was approved at the Bank's Board of Directors meeting held on 17th July 2018.
Kindly take the same on your record.
For The Federal Bank Limited
Girish Kumar G
Company Secretary
B S R & Co. LLP
M.M. Nissim & Co.
Chartered Accountants
Chartered Accountants
5th Floor, Lodha Excelus
Barodawala Mansion, B-Wing,
Apollo Mills Compound
3rd Floor, 81,
N.M. Joshi Marg, Mahalaxmi
Dr. Annie Besant Road,
Mumbai- 400 011
Worli, Mumbai- 400 018
Limited Review Report on Unaudited Quarterly Standalone Financial Results of The Federal Bank Limited pursuant to the Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
To the Board of Directors of
The Federal Bank Limited
1. We have reviewed the accompanying Statement of Unaudited Standalone Financial Results ('the Statement') of The Federal Bank Limited ('the Bank') for the quarter ended 30 June 2018, attached herewith, being submitted by the Bank pursuant to the requirement of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 ('Listing Regulations'), except for the disclosures relating to consolidated Pillar 3 disclosure as at 30 June 2018, including leverage ratio and liquidity coverage ratio under Basel III Capital Regulations as have been disclosed on the Bank's website and in respect of which a link has been provided in the Statement and have not been reviewed by us. Attention is drawn to the fact that the figures for the 3 months ended 31 March 2018 as reported in these financial results are the balancing figures between audited figures in respect of the full previous financial year and the published year to date figures up to the third quarter of the previous financial year. The figures up to the end of the third quarter of previous financial year had only been reviewed and not subjected to audit.
2. This Statement is the responsibility of the Bank's management and has been approved by the Board of Directors of the Bank in their meeting held on 17 July 2018. Our responsibility is to issue a report on the Statement based on our review.
3. We conducted our review in accordance with the Standard on Review Engagement (SRE) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Institute of Chartered Accountants of India. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the Statement is free of material misstatement. A review is limited primarily to inquiries of the Bank's personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and accordingly, we do not express an audit opinion.
4. The Financial results incorporate the relevant returns of 113 Branches and Treasury Branch reviewed by either of us and un-reviewed returns in respect of 1,139 branches. These Branches cover 60.80% of the advances portfolio (excluding outstanding of asset recovery branches and food credit advance) of the Bank and 50.79% of non-performing advances of the bank.
5. Without qualifying our conclusion, we draw attention to Note No. 9 regarding exercise of the option by the Bank by spreading the provision for Mark to Market (MTM) losses over four quarters resulting into carrying forward of un-amortised MTM losses of ₹ 4,420.48 Lakhs as at 30 June 2018 for amortisation in remaining quarters.
6. Based on our review conducted as mentioned in paragraphs 3 and 4 above, nothing has come to our attention that causes us to believe that the accompanying Statement prepared in accordance with applicable accounting standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and other recognized accounting practices and policies has not disclosed the information required to be disclosed in terms of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, including the manner in which it is to be disclosed, or that it contains any material misstatement or that it has not been prepared in accordance with the relevant prudential norms issued by the Reserve Bank of India in respect of income recognition, asset classification, provisioning and other related matters.
For B S R & Co. LLP
For M.M. Nissim & Co.
Chartered Accountants
Chartered Accountants
Firm's Registration No: 101248W / W-100022
Firm's Registration No: 107122W
Akeel Master
Sanjay Khemani
Partner
Partner
Membership No: 046768
Membership No: 044577
Mumbai
Mumbai
17 July 2018
17 July 2018
THE FEDERAL BANK LIMITED
REGD.OFFICE: P.B.NO. 103, FEDERAL TOWERS, ALUVA-683101
(CIN: L65191KL1931PLC000368)
STANDALONE UNAUDITED FINANCIAL RESULTS FOR THE QUARTER ENDED JUNE 30, 2018
(` in Lakhs)
Particulars
Quarter ended
30.06.2018
31.03.2018
30.06.2017
31.03.2018
Unaudited
Audited
(Refer Note 12 below)Unaudited
Audited
1. Interest earned (a)+(b)+(c)+(d)
266,738
254,797
232,409
975,286
(a)
Interest/discount on advances/bills
207,944
195,106
178,775
753,878
(b)
Income on investments
50,715
51,695
46,829
191,744
(c)
Interest on balances with Reserve Bank of India and other inter bank funds
2,523
1,840
2,367
9,581
(d)
Others
5,556
6,156
4,438
20,083
2. Other income
27,086
31,417
32,910
115,912
3. TOTAL INCOME (1+2)
293,824
286,214
265,319
1,091,198
4. Interest expended
168,732
161,475
152,342
617,005
5. Operating expenses (i)+(ii)
64,800
65,882
57,192
245,090
(i)
Employees cost
34,502
33,081
29,845
124,247
(ii)
Other operating expenses
30,298
32,801
27,347
120,843
6. TOTAL EXPENDITURE (4+5)
(excluding provisions and contingencies)233,532
227,357
209,534
862,095
7. OPERATING PROFIT (3-6)
(Profit before provisions and contingencies)60,292
58,857
55,785
229,103
8. Provisions (other than tax) and contingencies
19,915
37,153
23,644
94,717
9. Exceptional items
-
-
-
-
10. Profit from Ordinary Activities before tax
(7-8-9)40,377
21,704
32,141
134,386
11. Tax expense
14,106
7,205
11,126
46,501
12. Net Profit from Ordinary Activities after tax (10-11)
26,271
14,499
21,015
87,885
13. Extraordinary items (net of tax expense)
-
-
-
-
14. Net Profit for the period (12-13)
26,271
14,499
21,015
87,885
15. Paid-up Equity Share Capital
(Face value ` 2/- per Equity Share)39,552
39,443
38,846
39,443
16. Reserves excluding Revaluation Reserve
1,181,080
17. Analytical Ratios
(i)
Percentage of shares held by Government of India
NIL
NIL
NIL
NIL
(ii)
Capital Adequacy ratio (%)
Under Basel III
14.50
14.70
15.28
14.70
(iii)
Earnings per Share (EPS) (in `)
(a) Basic EPS (before and after extra ordinary items)
1.33*
0.74*
1.21*
4.62
(b) Diluted EPS (before and after extra ordinary items)
1.32*
0.73*
1.19*
4.56
(iv)
NPA Ratios
a) Gross NPA
286,882
279,562
186,794
279,562
b) Net NPA
162,022
155,196
106,126
155,196
c) % of Gross NPA
3.00
3.00
2.42
3.00
d) % of Net NPA
1.72
1.69
1.39
1.69
(v)
Return on Assets (%)
0.20*
0.11 *
0.19 *
0.75
* Not Annualised
Segment Information@
(` in Lakhs)
Particulars
Quarter ended
30.06.2018
31.03.2018
30.06.2017
31.03.2018
Unaudited
Audited
(Refer Note 12 below)Unaudited
Audited
Segment Revenue:
Treasury
62,296
60,888
63,776
239,556
Corporate/Wholesale Banking
112,799
103,194
90,641
378,695
Retail Banking
114,264
116,178
106,978
454,386
Other Banking operations
4,465
5,954
3,924
18,561
Unallocated
-
-
-
-
Total Revenue
293,824
286,214
265,319
1,091,198
Less: Inter Segment Revenue
-
-
-
-
Income from Operations
293,824
286,214
265,319
1,091,198
Segment Results (net of provisions):
Treasury
9,796
(3,063)
12,740
25,650
Corporate/Wholesale Banking
1,914
(18,875)
(1,822)
(13,797)
Retail Banking
28,323
41,735
20,825
120,093
Other Banking operations
750
2,822
890
5,251
Unallocated
(406)
(915)
(492)
(2,811)
Profit before tax
40,377
21,704
32,141
134,386
Segment Assets
Treasury
3,145,414
3,510,841
2,971,047
3,510,841
Corporate/Wholesale Banking
5,249,962
5,072,766
3,979,638
5,072,766
Retail Banking
4,593,053
4,539,627
4,040,982
4,539,627
Other Banking operations
1,184
533
3,000
533
Unallocated
678,484
707,628
648,897
707,628
Total
13,668,097
13,831,395
11,643,564
13,831,395
Segment Liabilities
Treasury
2,981,393
3,348,514
2,778,773
3,348,514
Corporate/Wholesale Banking
5,005,327
4,849,217
3,792,853
4,849,217
Retail Banking
4,380,781
4,341,585
3,848,458
4,341,585
Other Banking operations
4
1
-
1
Unallocated
50,716
71,055
60,699
71,055
Total
12,418,221
12,610,372
10,480,783
12,610,372
Capital employed:
(Segment Assets - Segment Liabilities)
Treasury
164,021
162,327
192,274
162,327
Corporate/Wholesale Banking
244,635
223,549
186,785
223,549
Retail Banking
212,272
198,042
192,524
198,042
Other Banking operations
1,180
532
3,000
532
Unallocated
627,768
636,573
588,198
636,573
Total
1,249,876
1,221,023
1,162,781
1,221,023
@
For the above segment reporting, the reportable segments are identified into Treasury, Corporate/Wholesale Banking, Retail Banking and Other Banking Operations in compliance with the RBI guidelines.
Notes:
1
The above Standalone Unaudited Financial Results for the quarter ended June 30, 2018 were reviewed by the Audit Committee and approved by the Board of Directors at its meeting held on July 17, 2018. These Results have been subjected to "Limited review" by the Statutory Central Auditors of the Bank and an unqualified review report has been issued.
2
The Bank has made provision for Non Performing Assets as stipulated under Reserve Bank of India (RBI) norms. Further, provision for standard assets including requirements for exposures to entities with Unhedged Foreign Currency Exposures and provision for restructured advances have been made as per RBI guidelines.
3
The Bank has followed the same significant accounting policies in the preparation of the interim financial results as those followed in the annual financial statements for the year ended March 31, 2018.
4
In accordance with RBI Circular DBR.No.BP.BC.1/21.06.201/2015-16 on Basel III Capital Regulations dated July 01, 2015 and RBI Circular DBR.No.BP.BC.80/21.06.201/2014-15 dated March 31, 2015 - 'Prudential Guidelines on Capital Adequacy and Liquidity Standards - amendments', Banks are required to make Pillar 3 disclosure requirements including Leverage Ratio disclosure requirements that are to be made along with the publication of Financial Results. Accordingly, such applicable disclosures have been placed on the website of the Bank which can be accessed at the following link: http://www.federalbank.co.in/regulatory-disclosures. These disclosures have not been subjected to audit or review by the Statutory Central Auditors of the Bank.
5
The Business operations of the Bank are largely concentrated in India and for the purpose of Segmental reporting, the bank is considered to operate only in domestic segment, though the bank has its operations in International Finance Service Centre (IFSC) Banking Unit in Gujarat International Finance Tec-city (GIFT). The business conducted from the same is considered as a part of Indian operations.
6
Other income includes fees earned from providing services to customers, commission from non-fund based banking activities, earnings from foreign exchange and derivative transactions, selling of third party products, profit on sale of investments (net), recoveries from advances written off etc.
7
During the quarter ended June 30, 2017 , the Bank had issued 215,517,241 equity shares of ` 2 each for cash pursuant to a Qualified Institution Placement (QIP) as per the relevant provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations at ` 116.00 per share aggregating to ` 250,000 Lakhs (including share premium). This resulted in an increase of ` 4,310.35 Lakhs in Share Capital and ` 242,077.64 Lakhs (net of issue expenses) in Share premium account.
8
During the quarter ended June 30, 2018, the Bank has allotted 5,480,555 equity shares of ` 2 each, pursuant to the exercise of stock options by employees.
9
On marking to market its investments as at June 30, 2018 in Government Securities held under Available for Sale and Held for Trading category, the Bank has incurred net depreciation of ` 5,893.97 Lakhs. As permitted vide RBI Circular DBR.No.BP.BC.113 /21.04.048/2017-18 dated June 15, 2018, the Bank has exercised the option of spreading the provision for such Marked to Market (MTM) losses equally over four quarters commencing from current quarter. Accordingly, during the quarter ended June 30, 2018, ` 1,473.49 Lakhs has been charged to the profit and loss account towards such MTM losses and the balance unamortised MTM Loss of ₹ 4,420.48 Lakhs has been carried forward, which shall be amortised in remaining quarters.
10
Ministry of Labour and Employment, Government of India on March 29, 2018 has enhanced the gratuity ceiling to an employee under Payment of Gratuity Act, 1972 to ` 20 Lakhs from earlier limit of ` 10 lakhs. This change has resulted to an incremental gratuity liability amounting to ` 7,143.90 lakhs. As per the RBI circular DBR.BP.9730/21.04.018/2017-18 dated April 27, 2018 the Bank has an option to spread the impact of change in gratuity ceiling over four quarters beginning with the quarter ended March 31, 2018. The Bank had availed the option to spread the incremental gratuity expenditure over four quarters beginning with the quarter ended March 31, 2018. Accordingly, during the quarter ended March 31, 2018 the Bank has charged to the profit and loss account an amount of ` 1,785.97 Lakhs and there was an unamortised gratuity expenditure of ₹ 5,357.93 Lakhs. Based on the correspondence with the Reserve Bank of India (RBI) during the quarter ended June 30, 2018, the Bank has charged to the profit and loss account the entire unamortised gratuity expenditure of ₹ 5,357.93 Lakhs.
11
Pursuant to Board approved policy on preparation of segment information, the Bank, with effect from quarter ended September 30, 2017, has revised the basis of preparation of segment information related to the allocation of RIDF deposits from Treasury segment to Corporate/Wholesale Banking and Retail Banking segments and allocation of provision related to advances on a direct identification basis for more appropriate presentation of the segment results. Figures for the previous periods have been regrouped / reclassified to conform to current period's classification. The impact of above regrouping / reclassification on segment results for the quarter ended June 30, 2017, is summarized in the table below:
(` in Lakhs)
(Decrease) / Increase
Standalone
Quarter ended
30.06.2017
Treasury
(91)
Corporate/Wholesale Banking
(4,818)
Retail Banking
4,171
Other Banking operations
738
Unallocated
-
The above regrouping / reclassification has no impact on the overall profit of the bank for the quarter ended June 30, 2018 or the previous periods/year.
12
The figures of the quarter ended March 31, 2018 are the balancing figures between the audited figures in respect of the full Financial Year upto March 31, 2018 and the unaudited published year to date figures upto December 31, 2017 being the date of the end of the third quarter of the financial year, which were subjected to Limited Review.
13
Previous period's / year's figures have been regrouped / reclassified, where necessary to conform to current period's classification.
SHYAM SRINIVASAN
Mumbai
MANAGING DIRECTOR & CEO
July 17, 2018
(DIN: 02274773)
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