REG - Federal Bank Ltd The - Half-year Report
SDF-24/ /2018-19 16TH October 2018
To,
The London Stock Exchange
Dear Sir,
We enclose herewith the Un-Audited Financial Results of the Bank for the period ended September 30, 2018 which was approved at the Bank's Board of Directors meeting held on 16th October 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 and standalone year to date 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 of
The Federal Bank Limited ('the Bank') for the quarter ended 30 September 2018 and year to date results for the period from 1 April 2018 to 30 September 2018 ('the Statement'), 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 September 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.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 16 October 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" specified under section 143(10) of the Companies Act, 2013. 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 114 Branches and Treasury Branch reviewed by either of us and un-reviewed returns in respect of 1,138 branches. These Branches cover 59.53% of the advances portfolio (excluding outstanding of asset recovery branches and food credit advance) of the Bank and 63.46% of non-performing advances of the bank.
5. Without qualifying our conclusion, we draw attention to Note No. 8 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 ₹ 2,946.99 Lakhs as at 30 September 2018 for amortisation in remaining quarters.
Limited review report on unaudited quarterly standalone financial results and standalone year to date results of The Federal Bank Limited pursuant to the Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (continued)
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 Listing Regulations 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
16 October 2018
16 October 2018
THE FEDERAL BANK LIMITED
REGD.OFFICE: P.B.NO. 103, FEDERAL TOWERS, ALUVA-683101
(CIN: L65191KL1931PLC000368)
STANDALONE UNAUDITED FINANCIAL RESULTS FOR THE QUARTER AND HALF YEAR ENDED SEPTEMBER 30, 2018
(` in Lakhs)
Particulars
Quarter ended
Half year ended
Year ended 31.03.2018
30.09.2018
30.06.2018
30.09.2017
30.09.2018
30.09.2017
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
Audited
1. Interest earned (a)+(b)+(c)+(d)
276,492
266,738
237,960
543,230
470,369
975,286
(a)
Interest/discount on advances/bills
221,051
207,944
185,900
428,995
364,675
753,878
(b)
Income on investments
48,834
50,715
45,000
99,549
91,829
191,744
(c)
Interest on balances with Reserve Bank of India and other inter bank funds
2,089
2,523
2,586
4,612
4,953
9,581
(d)
Others
4,518
5,556
4,474
10,074
8,912
20,083
2. Other income
32,289
27,086
28,722
59,375
61,632
115,912
3. TOTAL INCOME (1+2)
308,781
293,824
266,682
602,605
532,001
1,091,198
4. Interest expended
174,245
168,732
148,069
342,977
300,411
617,005
5. Operating expenses (i)+(ii)
64,776
64,800
60,292
129,576
117,484
245,090
(i)
Employees cost
30,893
34,502
31,274
65,395
61,119
124,247
(ii)
Other operating expenses
33,883
30,298
29,018
64,181
56,365
120,843
6. TOTAL EXPENDITURE (4+5)
(excluding provisions and contingencies)239,021
233,532
208,361
472,553
417,895
862,095
7. OPERATING PROFIT (3-6)
(Profit before provisions and contingencies)69,760
60,292
58,321
130,052
114,106
229,103
8. Provisions (other than tax) and contingencies
28,882
19,915
17,677
48,797
41,321
94,717
9. Exceptional items
-
-
-
-
-
-
10. Profit from Ordinary Activities before tax
(7-8-9)40,878
40,377
40,644
81,255
72,785
134,386
11. Tax expense
14,274
14,106
14,274
28,380
25,400
46,501
12. Net Profit from Ordinary Activities after tax (10-11)
26,604
26,271
26,370
52,875
47,385
87,885
13. Extraordinary items (net of tax expense)
-
-
-
-
-
-
14. Net Profit for the period (12-13)
26,604
26,271
26,370
52,875
47,385
87,885
15. Paid-up Equity Share Capital
(Face value ` 2/- per Equity Share)39,612
39,552
39,091
39,612
39,091
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
NIL
NIL
(ii)
Capital Adequacy ratio (%)
Under Basel III
13.29
14.50
14.63
13.29
14.63
14.70
(iii)
Earnings per Share (EPS) (in `)
(a) Basic EPS (before and after extra ordinary items)
1.34*
1.33*
1.35*
2.67*
2.58*
4.62
(b) Diluted EPS (before and after extra ordinary items)
1.33*
1.32*
1.33*
2.65*
2.53*
4.56
(iv)
NPA Ratios
a) Gross NPA
318,453
286,882
194,897
318,453
194,897
279,562
b) Net NPA
179,629
162,022
106,638
179,629
106,638
155,196
c) % of Gross NPA
3.11
3.00
2.39
3.11
2.39
3.00
d) % of Net NPA
1.78
1.72
1.32
1.78
1.32
1.69
(v)
Return on Assets (%)
0.19*
0.20*
0.24 *
0.39*
0.43 *
0.75
* Not Annualised
Segment Information@
(` in Lakhs)
Particulars
Quarter ended
Half year ended
Year ended 31.03.2018
30.09.2018
30.06.2018
30.09.2017
30.09.2018
30.09.2017
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
Audited
Segment Revenue:
Treasury
61,715
62,296
58,686
124,011
122,462
239,556
Corporate/Wholesale Banking
118,582
112,799
94,157
231,381
184,798
378,695
Retail Banking
123,312
114,264
109,591
237,576
216,569
454,386
Other Banking operations
5,172
4,465
4,248
9,637
8,172
18,561
Unallocated
-
-
-
-
-
-
Total Revenue
308,781
293,824
266,682
602,605
532,001
1,091,198
Less: Inter Segment Revenue
-
-
-
-
-
-
Income from Operations
308,781
293,824
266,682
602,605
532,001
1,091,198
Segment Results (net of provisions):
Treasury
3,468
9,796
10,902
13,264
23,642
25,650
Corporate/Wholesale Banking
4,999
1,914
6,405
6,913
4,583
(13,797)
Retail Banking
33,062
28,323
22,789
61,385
43,614
120,093
Other Banking operations
216
750
1,047
966
1,937
5,251
Unallocated
(867)
(406)
(499)
(1,273)
(991)
(2,811)
Profit before tax
40,878
40,377
40,644
81,255
72,785
134,386
Segment Assets
Treasury
3,118,628
3,145,414
3,050,768
3,118,628
3,050,768
3,510,841
Corporate/Wholesale Banking
5,856,115
5,249,962
4,580,074
5,856,115
4,580,074
5,072,766
Retail Banking
4,680,773
4,593,053
3,879,775
4,680,773
3,879,775
4,539,627
Other Banking operations
1,965
1,184
1,806
1,965
1,806
533
Unallocated
783,415
678,484
663,369
783,415
663,369
707,628
Total
14,440,896
13,668,097
12,175,792
14,440,896
12,175,792
13,831,395
Segment Liabilities
Treasury
3,005,316
2,981,393
2,860,293
3,005,316
2,860,293
3,348,514
Corporate/Wholesale Banking
5,626,533
5,005,327
4,379,950
5,626,533
4,379,950
4,849,217
Retail Banking
4,499,891
4,380,781
3,708,703
4,499,891
3,708,703
4,341,585
Other Banking operations
-
4
-
-
-
1
Unallocated
55,023
50,716
53,523
55,023
53,523
71,055
Total
13,186,763
12,418,221
11,002,469
13,186,763
11,002,469
12,610,372
Capital employed:
(Segment Assets - Segment Liabilities)
Treasury
113,312
164,021
190,475
113,312
190,475
162,327
Corporate/Wholesale Banking
229,582
244,635
200,124
229,582
200,124
223,549
Retail Banking
180,882
212,272
171,072
180,882
171,072
198,042
Other Banking operations
1,965
1,180
1,806
1,965
1,806
532
Unallocated
728,392
627,768
609,846
728,392
609,846
636,573
Total
1,254,133
1,249,876
1,173,323
1,254,133
1,173,323
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.
Statement of Assets and Liabilities of the bank as on September 30, 2018 is given below:
(` in Lakhs)
Particulars
As at 30.09.2018
As at 30.09.2017
As at 31.03.2018
Unaudited
Unaudited
Audited
CAPITAL AND LIABILITIES
Capital
39,612
39,091
39,443
Reserves and Surplus
1,214,521
1,134,232
1,181,580
Deposits
11,818,242
9,721,075
11,199,249
Borrowings
887,349
873,320
1,153,350
Other Liabilities and Provisions
481,172
408,074
257,773
Total
14,440,896
12,175,792
13,831,395
ASSETS
Cash and Balances with Reserve Bank of India
571,829
472,637
513,276
Balance with Banks and Money at Call and Short Notice
242,941
404,869
407,065
Investments
2,821,385
2,631,750
3,078,107
Advances
10,094,088
8,064,588
9,195,747
Fixed Assets
45,705
47,203
45,737
Other Assets
664,948
554,745
591,463
Total
14,440,896
12,175,792
13,831,395
Notes:
1
The above Standalone Unaudited Financial Results for the quarter and half year ended September 30, 2018 were reviewed by the Audit Committee and approved by the Board of Directors at its meeting held on October 16, 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 and half year ended September 30, 2018, the Bank has allotted 2,977,913 and 8,458,468 equity shares of ` 2 each, pursuant to the exercise of stock options by employees.
8
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 the quarter ended June 30, 2018. Accordingly, during the quarter and half year ended September 30, 2018, ` 1,473.49 Lakhs and ` 2,946.98 Lakhs has been charged to the profit and loss account respectively towards such MTM losses and the balance unamortised MTM Loss of ₹ 2,946.99 Lakhs has been carried forward, which shall be amortised in remaining quarters.
9
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.
10
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
October 16, 2018
(DIN: 02274773)
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