REG - Federal Bank Ltd The - Quarter II results
SD/F-24/129/2020-21 22 October 2020
To,
The London Stock Exchange
Dear Sir,
We enclose herewith the Un- Audited Standalone and Consolidated Financial Results of the Bank for the period ended September 30, 2020 which was approved at the Bank's Board of Directors meeting held on 16th October 2020
Kindly take the same on your record.
For The Federal Bank Limited
Samir P Rajdev
Company Secretary
Varma & Varma Borkar & Muzumdar
Chartered Accountants, Chartered Accountants
No.53/2600, Kerala Varma Tower Anand Nagar, Om Co-op
Off Kunjanbava Road, Hsg Society, Anand Nagar Lane
Vytilla, Off Nehru Road, Santacruz(East)
Kochi -682019 Mumbai - 400 055
Limited Review Report on unaudited standalone financial results of The Federal Bank Limited for the quarter/half year ended 30th September 2020, pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015
Review Report to
The Board of Directors,
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/half year ended 30th September, 2020 ('the Statement') attached herewith, being submitted by the Bank pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (as amended), except for the disclosures relating to Pillar 3 disclosure under Basel III Capital Regulations, as at 30th September 2020, including Leverage Ratio and Liquidity Coverage Ratio as have been disclosed on the Bank's website and in respect of which a link has been provided in the aforesaid Statement, which have not been reviewed by us.
2. The Statement, which is the responsibility of the Bank's Management and has been approved by the Bank's Board of Directors, has been prepared in accordance with the recognition and measurement principles laid down in Accounting Standard -25 'Interim Financial Reporting' ('AS-25'), prescribed under section 133 of the Companies Act, 2013, the relevant provisions of the Banking Regulation Act, 1949, the circulars, guidelines and directions issued by the Reserve Bank of India (the 'RBI') from time to time (the 'RBI Guidelines'), SEBI circular CIR/CFD/FAC/62/2016 dated 5th July, 2016 (hereinafter referred to as the 'SEBI Circular'), and other accounting principles generally accepted in India. 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 company 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. Our review primarily is conducted on the basis of review of the books of account and records of the Bank. We have also relied on the information and explanations furnished to us by the Bank and the returns as considered necessary by us for the review.
5. Based on our review conducted as above, nothing has come to our attention that causes us to believe that the accompanying Statement of Unaudited Standalone Financial Results prepared in accordance with applicable accounting standards, the RBI Guidelines, the SEBI circular 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 (as amended) 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.
6. We draw attention to Note No.10 of the accompanying Statement of Unaudited Standalone Financial results, regarding the impact of COVID-19 pandemic and the adjustments made in the accounts for the quarter/half year ended 30th September, 2020 on account of the same. As stated therein, in view of continuing uncertainties, the extent of impact of the pandemic on the Bank's operations and financial position would depend on various aspects, including actions taken to mitigate its impact and other regulatory measures.
Our conclusion on the Statement is not modified in respect of this matter.
7. The review of unaudited quarterly/half yearly financial results for the quarter ended 30th June 2020 and the quarter/half year ended 30th September 2019 and audit of financial results for the year ended 31st March 2020 included in the Statement were carried out and reported by predecessor auditors who have expressed unmodified conclusion vide review reports dated 15th July, 2020 and 16th October 2019 respectively for the periods ended 30th June 2020 and 30th September 2019 and unmodified opinion vide audit report dated 28th May, 2020, whose reports have been furnished to us and which have been relied upon by us for the purpose of our review of the Statement.
Our conclusion on the Statement is not modified in respect of this matter.
For Varma & Varma For Borkar & Muzumdar
Chartered Accountants Chartered Accountants
FRN:004532S FRN:101569W
R Rajasekharan Devang Vaghani
Partner Partner
M. No. 22703 M. No. 109386
UDIN: 20022703AAAAAA8316 UDIN: 20109386AAAAFN1336
Kochi-19 Mumbai-55
16th October 2020 16th October 2020
Varma & Varma Borkar & Muzumdar
Chartered Accountants, Chartered Accountants
No.53/2600, Kerala Varma Tower Anand Nagar, Om Co-op
Off Kunjanbava Road, Hsg Society, Anand Nagar Lane
Vytilla, Off Nehru Road, Santacruz(East)
Kochi -682019 Mumbai - 400 055
Limited Review Report on consolidated unaudited financial results of The Federal Bank Limited for the quarter/half year ended 30th September 2020, pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015
Review Report to
The Board of Directors,
The Federal Bank Limited
1. We have reviewed the accompanying Statement of Consolidated Unaudited Financial Results of The Federal Bank Limited (the 'Bank') and its Subsidiaries (the Bank and its subsidiaries together referred to as 'the Group') and its share of the net profit after tax of its Associates for the quarter ended 30th September 2020 and the year to date results for the period from 1st April 2020 to 30th September 2020 (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, as amended ('Listing Regulations'), except for the disclosures relating to consolidated Pillar 3 disclosure, as at 30th September 2020, 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 aforesaid Statement, which have not been reviewed by us.
2. The Statement, which is the responsibility of the Bank's Management and has been approved by the Bank's Board of Directors, has been prepared in accordance with the recognition and measurement principles laid down in Accounting Standard -25 'Interim Financial Reporting' ('AS-25'), prescribed under section 133 of the Companies Act, 2013, the relevant provisions of the Banking Regulation Act, 1949, the circulars, guidelines and directions issued by the Reserve Bank of India (the 'RBI') from time to time (the 'RBI Guidelines'), SEBI circular CIR/CFD/FAC/62/2016 dated 5th July, 2016 (hereinafter referred to as the 'SEBI Circular'), and other accounting principles generally accepted in India. Our responsibility is to express a conclusion on the Statement based on our review.
3. We conducted our review of the Statement 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. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
We also performed procedures in accordance with the circular issued by the SEBI under Regulation 33(8) of the Listing Regulations, to the extent applicable.
4. Our review primarily is conducted on the basis of review of the books of account and records of the Bank. We have also relied on the information and explanations furnished to us by the Bank and the returns as considered necessary by us for the review.
5. This Statement includes the results of the following entities:
a. Fedbank Financial Services Limited (Subsidiary)
b. Federal Operations and Services Limited (Subsidiary)
c. IDBI Federal Life Insurance Company Limited (Associate)
d. Equirus Capital Private Limited (Associate)
6. Based on our review conducted and procedures performed as stated in Paragraphs 3 and 4 above and based on the consideration of the review reports of other auditors referred to in Paragraphs 8 and 9 below, nothing has come to our attention that causes us to believe that the accompanying Statement prepared in accordance with applicable accounting standards, the RBI Guidelines, the SEBI circular 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 (as amended) including the manner in which it is to be disclosed, except for the disclosures relating to consolidated Pillar 3 disclosure, as at 30th September 2020, 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 aforesaid Statement, which have not been reviewed by us, or that it contains any material misstatement.
7. We draw attention to Note No.11 of the accompanying Statement, regarding the impact of COVID-19 pandemic and the adjustments made in the accounts for the quarter/half year ended 30th September, 2020 on account of the same. As stated therein, in view of continuing uncertainties, the extent of impact of the pandemic on the Bank's operations and financial position would depend on various aspects, including actions taken to mitigate its impact and other regulatory measures.
Our conclusion on the Statement is not modified in respect of this matter.
8. The statement of consolidated unaudited financial results includes the interim financial statements / financial information/ financial results of the two subsidiaries whose unaudited financial results reflects total assets of Rs. 4,54,990.48 Lakhs as at 30th September 2020 and total revenues of Rs. 17,416.68 Lakhs and Rs.32,940.75 Lakhs and total net profit after tax of Rs.808.06 Lakhs and Rs.2241.69 Lakhs for the quarter ended 30th September 2020 and for the period from 1st April 2020 to 30th September 2020 respectively, and cash flows (net) of Rs.15,560.19 for the period from 1st April 2020 to 30th September 2020. These interim financial statements/financial information/ financial results have been reviewed by one of the Joint auditors of the Bank, whose reports have been furnished to us by the Management and our conclusion on the Statement, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries, is based solely on their reports and the procedures performed by us as stated in Paragraphs 3 and 4 above.
Our conclusion on the Statement is not modified in respect of this matter.
9. The statement of consolidated unaudited financial results includes the Group's share of net loss after tax of Rs.42.73 Lakhs and Rs.49.55 Lakhs for the quarter ended 30th September 2020 and for the period from 01st April 2020 to 30th September 2020, respectively, in respect of one associate whose interim financial results have not been reviewed by us. These interim financial results have been reviewed by another auditor whose report has been furnished to us by the Management and our conclusion on the Statement, in so far as it relates to the amounts and disclosures included in respect of the said associate, is based solely on the report of the other auditor and the procedures performed by us as stated in Paragraphs 3 and 4 above.
Our conclusion on the Statement is not modified in respect of this matter.
10. The statement of consolidated unaudited financial results also includes the Group's share of net profit after tax of Rs.216.74 lakhs and Rs.379.95 lakhs for the quarter ended 30th September 2020 and for the period from 1st April 2020 to 30th September 2020, respectively, in respect of one associate, based on their interim financial results which have not been reviewed/audited. According to the information and explanations given to us by the Management, these interim financial statements / financial information / financial results are not material to the Group.
Our conclusion on the Statement is not modified in respect of this matter.
11. The review of unaudited quarterly/half yearly financial results for the quarter ended 30th June 2020 and the quarter/half year ended 30th September 2019 and audit of financial results for the year ended 31st March 2020 included in the Statement were carried out and reported by predecessor auditors who has expressed unmodified conclusion vide review reports dated 15th July, 2020 and 16th October 2019 respectively for the periods ended 30th June 2020 and 30th September 2019 and unmodified opinion vide audit report dated 28th May, 2020, whose reports have been furnished to us and which have been relied upon by us for the purpose of our review of the Statement.
Our conclusion on the Statement is not modified in respect of this matter.
For Varma & Varma For Borkar & Muzumdar
Chartered Accountants Chartered Accountants
FRN:004532S FRN:101569W
R Rajasekharan Devang Vaghani
Partner Partner
M. No. 22703 M. No. 109386
UDIN: 20022703AAAAAB2436 UDIN: 20109386AAAAFO6674
Kochi-19 Mumbai-55
16th October 2020 16th October 2020
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, 2020
(` in Lakhs)
Particulars
Quarter ended
Half year ended
Year ended
30.09.2020
30.06.2020
30.09.2019
30.09.2020
30.09.2019
31.03.2020
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
Audited
1. Interest earned (a)+(b)+(c)+(d)
348,790
344,415
325,425
693,205
648,355
1,321,075
(a)
Interest/discount on advances/bills
271,749
270,598
263,766
542,347
524,374
1,067,087
(b)
Income on investments
59,252
60,612
52,744
119,864
108,267
218,407
(c)
Interest on balances with Reserve Bank of India and other inter bank funds
11,661
7,067
3,811
18,728
5,783
13,996
(d)
Others
6,128
6,138
5,104
12,266
9,931
21,585
2. Other income
50,933
48,837
42,092
99,770
81,244
193,141
3. TOTAL INCOME (1+2)
399,723
393,252
367,517
792,975
729,599
1,514,216
4. Interest expended
210,805
214,771
213,047
425,576
420,560
856,185
5. Operating expenses (i)+(ii)
88,265
85,243
82,590
173,508
158,883
337,561
(i)
Employees cost
48,746
49,585
44,070
98,331
83,854
177,236
(ii)
Other operating expenses
39,519
35,658
38,520
75,177
75,029
160,325
6. TOTAL EXPENDITURE (4+5)
(excluding provisions and contingencies)299,070
300,014
295,637
599,084
579,443
1,193,746
7. OPERATING PROFIT (3-6)
(Profit before provisions and contingencies)100,653
93,238
71,880
193,891
150,156
320,470
8. Provisions (other than tax) and contingencies
59,206
39,462
25,177
98,668
44,381
117,217
9. Exceptional items
-
-
-
-
-
-
10. Profit from Ordinary Activities before tax
(7-8-9)41,447
53,776
46,703
95,223
105,775
203,253
11. Tax expense
10,685
13,699
5,033
24,384
25,684
48,975
12. Net Profit from Ordinary Activities after tax (10-11)
30,762
40,077
41,670
70,839
80,091
154,278
13. Extraordinary items (net of tax expense)
-
-
-
-
-
-
14. Net Profit for the period (12-13)
30,762
40,077
41,670
70,839
80,091
154,278
15. Paid-up Equity Share Capital
(Face value ` 2/- per Equity Share)39,893
39,875
39,762
39,893
39,762
39,853
16. Reserves excluding Revaluation Reserve
1,411,407
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
14.64
14.17
13.98
14.64
13.98
14.35
(iii)
Earnings per Share (EPS) (in `)
(a) Basic EPS (before and after extra ordinary items)
1.54*
2.01*
2.10*
3.55*
4.03*
7.76
(b) Diluted EPS (before and after extra ordinary items)
1.54*
2.01*
2.08*
3.55*
4.00*
7.70
(iv)
NPA Ratios
a) Gross NPA
355,219
365,559
361,211
355,219
361,211
353,083
b) Net NPA
121,814
147,746
184,364
121,814
184,364
160,717
c) % of Gross NPA
2.84
2.96
3.07
2.84
3.07
2.84
d) % of Net NPA
0.99
1.22
1.59
0.99
1.59
1.31
(v)
Return on Assets (%)
0.16*
0.22*
0.26*
0.38*
0.51*
0.94
* Not Annualised
Segment Information@
(` in Lakhs)
Particulars
Quarter ended
Half year ended
Year ended
30.09.2020
30.06.2020
30.09.2019
30.09.2020
30.09.2019
31.03.2020
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
Audited
Segment Revenue:
Treasury
60,754
93,782
61,427
154,536
115,775
226,846
Corporate/Wholesale Banking
131,976
115,894
122,637
247,870
246,201
489,365
Retail Banking
206,993
183,576
183,453
390,569
367,623
798,005
Other Banking operations
-
-
-
-
-
-
Unallocated
-
-
-
-
-
-
Total Revenue
399,723
393,252
367,517
792,975
729,599
1,514,216
Less: Inter Segment Revenue
-
-
-
-
-
-
Income from Operations
399,723
393,252
367,517
792,975
729,599
1,514,216
Segment Results (net of provisions):
Treasury
4,154
42,628
15,748
46,782
25,298
41,518
Corporate/Wholesale Banking
15,063
(8,149)
11,334
6,914
29,580
17,058
Retail Banking
22,230
19,299
19,621
41,529
50,897
145,113
Other Banking operations
-
-
-
-
-
-
Unallocated
-
(2)
-
(2)
-
(436)
Profit before tax
41,447
53,776
46,703
95,223
105,775
203,253
Segment Assets
Treasury
4,378,891
4,219,642
2,930,670
4,378,891
2,930,670
3,787,323
Corporate/Wholesale Banking
6,809,139
7,013,384
6,778,385
6,809,139
6,778,385
7,056,243
Retail Banking
6,937,457
6,529,646
6,066,964
6,937,457
6,066,964
6,480,887
Other Banking operations
-
-
-
-
-
-
Unallocated
777,184
819,363
866,430
777,184
866,430
739,352
Total
18,902,671
18,582,035
16,642,449
18,902,671
16,642,449
18,063,805
Segment Liabilities
Treasury
1,305,303
1,396,438
1,326,738
1,305,303
1,326,738
1,627,269
Corporate/Wholesale Banking
1,405,908
1,227,165
999,919
1,405,908
999,919
1,258,540
Retail Banking
14,461,623
14,227,797
12,708,464
14,461,623
12,708,464
13,458,149
Other Banking operations
-
-
-
-
-
-
Unallocated
206,312
238,354
231,897
206,312
231,897
268,086
Total
17,379,146
17,089,754
15,267,018
17,379,146
15,267,018
16,612,044
Capital employed:
(Segment Assets - Segment Liabilities)
Treasury
3,073,588
2,823,204
1,603,932
3,073,588
1,603,932
2,160,054
Corporate/Wholesale Banking
5,403,231
5,786,219
5,778,466
5,403,231
5,778,466
5,797,703
Retail Banking
(7,524,166)
(7,698,151)
(6,641,500)
(7,524,166)
(6,641,500)
(6,977,262)
Other Banking operations
-
-
-
-
-
-
Unallocated
570,872
581,009
634,533
570,872
634,533
471,266
Total
1,523,525
1,492,281
1,375,431
1,523,525
1,375,431
1,451,761
@
For the above segment reporting, the reportable segments are identified as 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, 2020 is given below:
(` in Lakhs)
Particulars
As at 30.09.2020
As at 30.09.2019
As at 31.03.2020
Unaudited
Unaudited
Audited
CAPITAL AND LIABILITIES
Capital
39,893
39,762
39,853
Reserves and Surplus
1,483,632
1,335,669
1,411,908
Deposits
15,674,739
13,954,652
15,229,008
Borrowings
1,104,314
776,384
1,037,243
Other Liabilities and Provisions
600,093
535,982
345,793
Total
18,902,671
16,642,449
18,063,805
ASSETS
Cash and Balances with Reserve Bank of India
611,989
773,319
617,491
Balance with Banks and Money at Call and Short Notice
1,352,867
367,442
639,967
Investments
3,625,263
3,109,436
3,589,268
Advances
12,291,199
11,589,321
12,226,791
Fixed assets
45,717
47,248
47,999
Other assets
975,636
755,683
942,289
Total
18,902,671
16,642,449
18,063,805
Notes:
1
The above Standalone Unaudited Financial Results for the quarter and half year ended September 30, 2020 were reviewed by the Audit Committee and approved by the Board of Directors at its meeting held on October 16, 2020. 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 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, 2020.
3
Pursuant to Board approved policy on preparation of segment information, the Bank, with effect from quarter ended June 30, 2020, has revised the basis of preparation of segment information on a direct identification basis with the aid of Internal Transfer pricing mechanism for more appropriate presentation of the segment results. Accordingly, figures for the previous periods have been regrouped / reclassified to conform to current period's classification.
The change in segment information has no impact on the overall Revenue, Results, and Capital employed of the bank for the quarter and half year ended September 30, 2020 or the previous periods/year.
4
The working results have been arrived at after considering provision for standard assets, including requirements for exposures to entities with Unhedged Foreign Currency Exposures, non-performing assets (NPAs), depreciation on investments, income-tax and other usual and necessary provisions.
5
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.
6
The Capital Adequacy Ratio is computed on the basis of RBI guidelines applicable on the relevant reporting dates and the ratio for the corresponding previous period is not adjusted to consider the impact of subsequent changes if any, in the guidelines.
7
The Business operations of the Bank are largely concentrated in India and for the purpose of Segment 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 part of Indian operations.
8
During the quarter and half year ended September 30, 2020, the Bank has allotted 930,455 and 2,010,385 equity shares of ` 2 each, pursuant to the exercise of stock options by employees.
9
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.
10
On account of uncertainties arising from the COVID-19 pandemic across the world and in India, the extent to which the same will impact the Bank's operations and financial position will depend on various aspects including actions taken to mitigate its impact and other regulatory measures. The Bank's capital and liquidity position is strong and would continue to be the focus area for the Bank during this period.
As per the 'COVID-19 Regulatory Packages' announced by the RBI ('the RBI guidelines'), with regard to providing relief to borrowers' on account of COVID-19 pandemic, whose accounts were standard as on February 29, 2020, the Bank, in accordance with the Board approved policy had offered moratorium on repayment of loan instalments and/or deferment of interest due between March 1, 2020 and August 31, 2020, including relaxation in certain parameters, to all eligible borrowers, without considering the same as restructuring.
As on June 30, 2020 Bank was maintaining provision against the likely impact of COVID-19 amounting to ` 18,630.00 Lakhs, which was in excess of RBI mandated 10% provision on asset classification benefit extended accounts. During the current quarter, as a prudent measure, the Bank has made additional provision of ` 40,161.00 Lakhs (` 9,300.00 Lakhs during the quarter ended June 30, 2020), against the further likely impact of COVID-19 pandemic in respect of exposure of the Bank to certain specified sectors based on the assessment of presently available information. The aggregate provision against the likely impact of COVID-19, including the RBI mandated provision, as on September 30, 2020 stands at ` 58,791.00 Lakhs and is grouped under Other liabilities and provisions in the Balance sheet of the Bank.
The Honourable Supreme Court in a writ petition by Gajendra Sharma Vs Union of India & Anr vide its interim order dated September 3, 2020 has directed Banks that the accounts which were not declared Non performing asset (NPA) till August 31, 2020 shall not be declared NPA till further orders, pending disposal of the case by Supreme Court. Pursuant to the order, the Bank has not declared any account as NPA, which was not declared as NPA till August 31, 2020 as per the RBI Prudential norms on Income Recognition, Asset classification, and provisioning pertaining to advances. However, as a prudent measure Bank has created sufficient provisions in respect of these advances.
11
The disclosures as required under RBI circular DOR.No.BP.BC.63/21.04.048/2019-20 dated April 17, 2020 is given below for the half year ended as on September 30, 2020:
(` in Lakhs)
Amounts in SMA/overdue categories, where the moratorium/deferment was extended (As of March 31, 2020)
371,262
Amount where asset classification benefits is extended (As of September 30, 2020)
76,397
Provisions made during the quarter ended March 31, 2020 and June 30, 2020 (Mandatory 10% Provision)
7,640
Provisions adjusted during the half year ended September 30, 2020 against slippages
-
12
The disclosures as required under RBI circular DOR.No.BP.BC.62/21.04.048/2020-21 dated April 17, 2020 with respect to the number of accounts and the Amount involved in those accounts where the Resolution period was extended is given below for the half year ended as on September 30, 2020:
No. of accounts in which Resolution Period was extended
3
Amount Involved (` in Lakhs)
4,170
13
The figures for the quarter ended June 30, 2020, quarter and half year ended September 30, 2019 and year ended March 31, 2020 were reviewed / audited by previous statutory auditors.
14
Previous period's / year's figures have been regrouped / reclassified, where necessary to conform to current period's classification.
SHYAM SRINIVASAN
Kochi
MANAGING DIRECTOR & CEO
October 16, 2020
(DIN: 02274773)
THE FEDERAL BANK LIMITED
REGD.OFFICE: P.B.NO. 103, FEDERAL TOWERS, ALUVA-683101
(CIN: L65191KL1931PLC000368)
CASH FLOW STATEMENT FOR THE HALF YEAR ENDED SEPTEMBER 30, 2020
(` in Lakhs)
Half year ended
September 30, 2020Half year ended
September 30, 2019Cash Flow from Operating Activities
Net Profit before taxes
95,223
105,775
Adjustments for:
Depreciation on Bank's Property
6,133
5,835
Depreciation on Investments
(809)
2,603
Amortisation of Premium on Held to Maturity Investments
6,761
3,116
Provision for Non Performing Investments
(69)
188
Provision / Charge for Non Performing Assets
42,573
35,177
Provision for Standard Assets
56,462
6,178
(Profit)/Loss on sale of fixed assets (net)
(24)
(45)
Provision for Other Contingencies
511
235
206,761
159,062
Adjustments for working capital changes:-
(Increase)/ Decrease in Investments [excluding Held to Maturity Investments]
92,983
(21,727)
(Increase)/ Decrease in Advances
(106,980)
(602,202)
(Increase)/ Decrease in Other Assets
(30,787)
(65,540)
Increase/ (Decrease) in Deposits
445,730
459,218
Increase/ (Decrease) in Other liabilities and provisions
197,327
196,440
598,273
(33,811)
Direct taxes paid
(26,945)
(40,454)
Net Cash Flow from / (Used in) Operating Activities
778,089
84,797
Cash Flow from Investing Activities
Purchase of Fixed Assets
(3,922)
(6,010)
Proceeds from Sale of Fixed Assets
96
176
Investment in Subsidiary
-
(500)
(Increase)/ Decrease in Held to Maturity Investments
(134,861)
89,331
Net Cash generated / (Used in) Investing Activities
(138,687)
82,997
Cash Flow from Financing Activities
Proceeds from Issue of Share Capital
40
61
Proceeds from Share Premium
711
1,342
Proceeds from Issue of Subordinate Debt
-
30,000
Increase/(Decrease) in Borrowings (Excluding Subordinate Debt)
67,071
(31,749)
Dividend Paid (Including Tax on Dividend)
-
(33,541)
Net Cash generated from Financing Activities
67,822
(33,887)
Effect of exchange fluctuation on translation reserve
174
174
Net Increase in Cash and Cash Equivalents
707,398
134,081
Cash and Cash Equivalents at the beginning of the period
1,257,458
1,006,680
Cash and Cash Equivalents at the end of the period
1,964,856
1,140,761
Note:
Cash and Cash Equivalents comprise of Cash in hand (including foreign currency notes), Balances with Reserve Bank of India, Balances with banks and money at call and short notice.
SHYAM SRINIVASAN
Kochi
MANAGING DIRECTOR & CEO
October 16, 2020
(DIN: 02274773)
THE FEDERAL BANK LIMITED
REGD.OFFICE: P.B.NO. 103, FEDERAL TOWERS, ALUVA-683101
(CIN: L65191KL1931PLC000368)
CONSOLIDATED UNAUDITED FINANCIAL RESULTS FOR THE QUARTER AND HALF YEAR ENDED SEPTEMBER 30, 2020
(` in Lakhs)
Particulars
Quarter ended
Half year ended
Year ended
30.09.2020
30.06.2020
30.09.2019
30.09.2020
30.09.2019
31.03.2020
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
Audited
1. Interest earned (a)+(b)+(c)+(d)
362,188
357,211
333,675
719,399
663,196
1,359,039
(a)
Interest/discount on advances/bills
285,376
282,774
272,087
568,150
539,139
1,104,518
(b)
Income on investments
59,284
60,654
52,674
119,938
108,343
218,550
(c)
Interest on balances with Reserve Bank of India and other inter bank funds
11,661
7,067
3,810
18,728
5,783
13,996
(d)
Others
5,867
6,716
5,104
12,583
9,931
21,975
2. Other income
50,944
48,331
41,169
99,275
78,266
188,181
3. TOTAL INCOME (1+2)
413,132
405,542
374,844
818,674
741,462
1,547,220
4. Interest expended
215,941
219,655
215,422
435,596
425,129
867,831
5. Operating expenses (i)+(ii)
92,710
89,595
86,305
182,305
165,382
354,670
(i)
Employees cost
52,136
52,656
46,321
104,792
87,862
187,598
(ii)
Other operating expenses
40,574
36,939
39,984
77,513
77,520
167,072
6. TOTAL EXPENDITURE (4+5)
(excluding provisions and contingencies)308,651
309,250
301,727
617,901
590,511
1,222,501
7. OPERATING PROFIT (3-6)
(Profit before provisions and contingencies)104,481
96,292
73,117
200,773
150,951
324,719
8. Provisions (other than tax) and contingencies
62,543
40,935
25,343
103,478
44,675
118,722
9. Exceptional items
-
-
-
-
-
-
10. Profit from Ordinary Activities before tax
(7-8-9)41,938
55,357
47,774
97,295
106,276
205,997
11. Tax expense
10,368
14,199
5,334
24,567
26,465
50,720
12. Net Profit from Ordinary Activities after tax (10-11)
31,570
41,158
42,440
72,728
79,811
155,277
13. Extraordinary items (net of tax expense)
-
-
-
-
-
-
14. Net Profit for the period (12-13)
31,570
41,158
42,440
72,728
79,811
155,277
15. Minority interest
199
364
129
563
311
1,028
16. Share in Profit of Associates
174
156
223
330
454
3,771
17. Consolidated Net Profit of the group
(14-15+16)31,545
40,950
42,534
72,495
79,954
158,020
18. Paid-up Equity Share Capital
(Face value ` 2/- per Equity Share)39,893
39,875
39,762
39,893
39,762
39,853
19. Reserves excluding Revaluation Reserve
1,441,882
20. Analytical Ratios
(i)
Percentage of shares held by Government of India
NIL
NIL
NIL
NIL
NIL
NIL
(ii)
Capital Adequacy ratio (%)
Under Basel III
15.19
14.53
14.32
15.19
14.32
14.63
(iii)
Earnings per Share (EPS) (in `)
(a) Basic EPS (before and after extra ordinary items)
1.58*
2.05*
2.14*
3.64*
4.03*
7.94
(b) Diluted EPS (before and after extra ordinary items)
1.58*
2.05*
2.13*
3.63*
3.99*
7.88
(iv)
NPA Ratios
a) Gross NPA
359,172
371,207
365,317
359,172
365,317
358,015
b) Net NPA
124,985
152,566
187,941
124,985
187,941
164,953
c) % of Gross NPA
2.80
2.94
3.06
2.80
3.06
2.82
d) % of Net NPA
0.99
1.23
1.60
0.99
1.60
1.32
(v)
Return on Assets (%)
0.17*
0.22*
0.26*
0.39*
0.49*
0.92
* Not Annualised
Segment Information@
(` in Lakhs)
Particulars
Quarter ended
Half year ended
Year ended
30.09.2020
30.06.2020
30.09.2019
30.09.2020
30.09.2019
31.03.2020
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
Audited
Segment Revenue:
Treasury
60,827
93,782
61,427
154,609
113,692
223,796
Corporate/Wholesale Banking
130,786
114,942
122,637
245,728
246,201
486,614
Retail Banking
221,519
196,818
190,780
418,337
381,569
836,810
Other Banking operations
-
-
-
-
-
-
Unallocated
-
-
-
-
-
-
Total Revenue
413,132
405,542
374,844
818,674
741,462
1,547,220
Less: Inter Segment Revenue
-
-
-
-
-
-
Income from Operations
413,132
405,542
374,844
818,674
741,462
1,547,220
Segment Results (net of provisions):
Treasury
4,234
42,275
15,747
46,509
23,183
38,436
Corporate/Wholesale Banking
15,493
(8,038)
11,334
7,455
29,580
18,421
Retail Banking
22,211
21,122
20,693
43,333
53,513
149,576
Other Banking operations
-
-
-
-
-
-
Unallocated
-
(2)
-
(2)
-
(436)
Profit before tax
41,938
55,357
47,774
97,295
106,276
205,997
Segment Assets
Treasury
4,332,971
4,197,586
2,932,382
4,332,971
2,932,382
3,765,464
Corporate/Wholesale Banking
6,742,587
6,953,817
6,778,385
6,742,587
6,778,385
6,997,531
Retail Banking
7,330,321
6,894,109
6,233,258
7,330,321
6,233,258
6,832,986
Other Banking operations
-
-
-
-
-
-
Unallocated
777,293
819,363
866,430
777,293
866,430
739,352
Total
19,183,172
18,864,875
16,810,455
19,183,172
16,810,455
18,335,333
Segment Liabilities
Treasury
1,298,917
1,395,636
1,326,738
1,298,917
1,326,738
1,626,174
Corporate/Wholesale Banking
1,417,520
1,249,280
999,919
1,417,520
999,919
1,291,143
Retail Banking
14,686,523
14,439,516
12,834,629
14,686,523
12,834,629
13,649,598
Other Banking operations
-
-
-
-
-
-
Unallocated
205,895
238,354
231,897
205,895
231,897
268,086
Total
17,608,855
17,322,786
15,393,183
17,608,855
15,393,183
16,835,001
Capital employed:
(Segment Assets - Segment Liabilities)
Treasury
3,034,054
2,801,950
1,605,644
3,034,054
1,605,644
2,139,290
Corporate/Wholesale Banking
5,325,067
5,704,537
5,778,466
5,325,067
5,778,466
5,706,388
Retail Banking
(7,356,202)
(7,545,407)
(6,601,371)
(7,356,202)
(6,601,371)
(6,816,612)
Other Banking operations
-
-
-
-
-
-
Unallocated
571,398
581,009
634,533
571,398
634,533
471,266
Total
1,574,317
1,542,089
1,417,272
1,574,317
1,417,272
1,500,332
@
For the above segment reporting, the reportable segments are identified as Treasury, Corporate/Wholesale Banking, Retail Banking and Other Banking Operations in compliance with the RBI guidelines.
Statement of Assets and Liabilities of the Group as on September 30, 2020 is given below:
(` in Lakhs)
Particulars
As at 30.09.2020
As at 30.09.2019
As at 31.03.2020
Unaudited
Unaudited
Audited
CAPITAL AND LIABILITIES
Capital
39,893
39,762
39,853
Reserves and Surplus
1,515,764
1,362,141
1,442,383
Minority Interest
18,660
15,369
18,096
Deposits
15,648,514
13,952,139
15,225,191
Borrowings
1,347,911
893,823
1,252,772
Other Liabilities and Provisions
612,430
547,221
357,038
Total
19,183,172
16,810,455
18,335,333
ASSETS
Cash and Balances with Reserve Bank of India
613,172
774,158
618,254
Balance with Banks and Money at Call and Short Notice
1,363,110
373,480
657,477
Investments
3,579,343
3,096,818
3,571,539
Advances
12,590,255
11,754,542
12,484,950
Fixed assets
48,378
48,809
50,481
Other assets
988,914
762,648
952,632
Total
19,183,172
16,810,455
18,335,333
Notes:
1
The above Consolidated Unaudited Financial Results for the quarter and half year ended September 30, 2020 were reviewed by the Audit Committee and subsequently taken on record and approved by the Board of Directors at its meeting held on October 16, 2020. 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 Consolidated Financial Results of the Group comprise the financial results of The Federal Bank Limited and its subsidiaries viz. Fedbank Financial Services Limited & Federal Operations and Services Limited and its associates viz. IDBI Federal Life Insurance Company Limited & Equirus Capital Private Limited.
3
There has been no material change in the accounting policies adopted during the quarter and half year ended September 30, 2020 as compared to those followed for the year ended March 31, 2020.
4
Pursuant to Board approved policy on preparation of segment information, the Bank, with effect from quarter ended June 30, 2020, has revised the basis of preparation of segment information on a direct identification basis with the aid of Internal Transfer pricing mechanism for more appropriate presentation of the segment results. Accordingly, figures for the previous periods have been regrouped / reclassified to conform to current period's classification.
The change in segment information has no impact on the overall Revenue, Results, and Capital employed of the bank for the quarter and half year ended September 30, 2020 or the previous periods/year.
5
The working results have been arrived at after considering provision for standard assets, including requirements for exposures to entities with Unhedged Foreign Currency Exposures, non-performing assets (NPAs), depreciation on investments, income-tax and other usual and necessary provisions.
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
The Capital Adequacy Ratio is computed on the basis of RBI guidelines applicable on the relevant reporting dates and the ratio for the corresponding previous period is not adjusted to consider the impact of subsequent changes if any, in the guidelines.
8
The Business operations of the Bank are largely concentrated in India and for the purpose of Segment 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.
9
During the quarter and half year ended September 30, 2020, the Bank has allotted 930,455 and 2,010,385 equity shares of ` 2 each, pursuant to the exercise of stock options by employees.
10
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.
11
On account of uncertainties arising from the COVID-19 pandemic across the world and in India, the extent to which the same will impact the Bank's operations and financial position will depend on various aspects including actions taken to mitigate its impact and other regulatory measures. The Bank's capital and liquidity position is strong and would continue to be the focus area for the Bank during this period.
As per the 'COVID-19 Regulatory Packages' announced by the RBI ('the RBI guidelines'), with regard to providing relief to borrowers' on account of COVID-19 pandemic, whose accounts were standard as on February 29, 2020, the Bank, in accordance with the Board approved policy had offered moratorium on repayment of loan instalments and/or deferment of interest due between March 1, 2020 and August 31, 2020, including relaxation in certain parameters, to all eligible borrowers, without considering the same as restructuring.
As on June 30, 2020 Bank was maintaining provision against the likely impact of COVID-19 amounting to ` 18,630.00 Lakhs, which was in excess of RBI mandated 10% provision on asset classification benefit extended accounts. During the current quarter, as a prudent measure, the Bank has made additional provision of ` 40,161.00 Lakhs (` 9,300.00 Lakhs during the quarter ended June 30, 2020), against the further likely impact of COVID-19 pandemic in respect of exposure of the Bank to certain specified sectors based on the assessment of presently available information. The aggregate provision against the likely impact of COVID-19, including the RBI mandated provision, as on September 30, 2020 stands at ` 58,791.00 Lakhs and is grouped under Other liabilities and provisions in the Balance sheet of the Bank.
The Honourable Supreme Court in a writ petition by Gajendra Sharma Vs Union of India & Anr vide its interim order dated September 3, 2020 has directed Banks that the accounts which were not declared Non performing asset (NPA) till August 31, 2020 shall not be declared NPA till further orders, pending disposal of the case by Supreme Court. Pursuant to the order, the Bank has not declared any account as NPA, which was not declared as NPA till August 31, 2020 as per the RBI Prudential norms on Income Recognition, Asset classification, and provisioning pertaining to advances. However, as a prudent measure Bank has created sufficient provisions in respect of these advances.
12
The figures for the quarter ended June 30, 2020, quarter and half year ended September 30, 2019 and year ended March 31, 2020 were reviewed / audited by previous statutory auditors.
13
Previous period's / year's figures have been regrouped / reclassified, where necessary to conform to current period's classification.
SHYAM SRINIVASAN
Kochi
MANAGING DIRECTOR & CEO
October 16, 2020
(DIN: 02274773)
THE FEDERAL BANK LIMITED
REGD.OFFICE: P.B.NO. 103, FEDERAL TOWERS, ALUVA-683101
(CIN: L65191KL1931PLC000368)
CONSOLIDATED CASH FLOW STATEMENT FOR THE HALF YEAR ENDED SEPTEMBER 30, 2020
(` in Lakhs)
Half year ended
September 30, 2020Half year ended
September 30, 2019Cash Flow from Operating Activities
Net Profit before taxes
97,062
106,420
Adjustments for:
Depreciation on Group's Property
6,547
6,039
Depreciation on Investments
(456)
2,634
Amortisation of Premium on Held to Maturity Investments
6,761
3,116
Provision for Non Performing Investments
(69)
188
Provision / Charge for Non Performing Assets
42,653
35,194
Provision for Standard Assets
60,831
6,423
(Profit)/ Loss on sale of fixed assets (net)
(25)
(47)
(Income) / Loss From Associate
(330)
(454)
Provision for Other Contingencies
519
235
213,493
159,748
Adjustments for working capital changes:-
(Increase)/ Decrease in Investments [excluding Held to Maturity Investments]
121,152
(23,563)
(Increase)/ Decrease in Advances
(147,958)
(636,145)
(Increase)/ Decrease in Other Assets
(31,396)
(66,781)
Increase/ (Decrease) in Deposits
423,324
464,246
Increase/ (Decrease) in Other liabilities and provisions
194,703
201,710
559,825
(60,533)
Direct taxes paid
(30,115)
(41,587)
Net Cash Flow from / (Used in) Operating Activities
743,203
57,628
Cash Flow from Investing Activities
Purchase of Fixed Assets
(4,522)
(6,987)
Proceeds from Sale of Fixed Assets
103
179
Investment in Subsidiary
-
(500)
(Increase)/ Decrease in Held to Maturity Investments
(134,861)
89,331
Net Cash generated / (Used in) Investing Activities
(139,280)
82,023
Cash Flow from Financing Activities
Proceeds from Issue of Share Capital
40
61
Proceeds from Share Premium
712
6,497
Increase / (Decrease) in Minority Interest
563
6,255
Proceeds from Issue of Subordinate Debt
-
30,000
Increase/(Decrease) in Borrowings (Excluding Subordinate Debt)
95,139
(6,806)
Dividend Paid (Including Tax on Dividend)
-
(33,541)
Net Cash generated from financing Activities
96,454
2,466
Effect of exchange fluctuation on translation reserve
174
174
Increase/(Decrease) in Cash and Cash Equivalents
700,551
142,291
Cash and Cash Equivalents at the beginning of the period
1,275,731
1,005,347
Cash and Cash Equivalents at the end of the period
1,976,282
1,147,638
Note:
Cash and Cash Equivalents comprise of Cash in hand (including foreign currency notes), Balances with Reserve Bank of India, Balances with banks and money at call and short notice.
SHYAM SRINIVASAN
Kochi
MANAGING DIRECTOR & CEO
October 16, 2020
(DIN: 02274773)
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