Last checked at 22 Jul 2020 11:08
SD/65/2020-21 July 22, 2020
To,
The London Stock Exchange
Dear Sir,
We enclose herewith the Unaudited Standalone and Consolidated Financial Results of the Bank for the quarter ended June 30, 2020 along with Limited Review Report issued by the Joint Central Statutory Auditors of the Bank, which were reviewed and recommended by Audit Committee of the Board and duly approved by the Board of Directors at their respective meetings held on July 15, 2020.
Kindly take the same on your record.
For The Federal Bank Limited
Sd/-
Samir P Rajdev
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 Mumbai - 400 011 | Dr. Annie Besant Road, Worli,Mumbai-400 018 |
India | Tel.: +91 22 2496 9900 |
Telephone +91 (22) 4345 5300 Fax +91 (22) 4345 5399 | Email: mail@mmnissim.com |
Limited review report on the unaudited quarterly standalone financial results of The Federal Bank Limited pursuant to Regulation 33 of the Securities and Exchange Board of India (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 ofThe Federal Bank Limited (the 'Bank') for the quarter ended 30 June 2020 (the 'Statement'), except for the disclosures relating to "Pillar 3 under Basel III Capital Regulations", and those relating to "Leverage Ratio", "Liquidity Coverage Ratio" under Capital Adequacy and Liquidity Standards issued by Reserve Bank of India ('RBI') as have been disclosed on the Bank's website and in respect of which a link has been provided in the Note 9 to the Statement and have not been reviewed by us. This Statement is the responsibility of the Bank's Management and has been approved by the Board of Directors. Our responsibility is to issue a report on the Statement based on our review.
2. We conducted our review of the Statement in accordance with the Standard on Review Engagements (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 financial statements are 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.
3. Attention is drawn to the fact that the figures for the 3 months ended 31 March 2020 as reported in this Statement 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.
4. The Statement incorporate the relevant returns of 80 Branches and Treasury Branch reviewed by either of us and un-reviewed returns in respect of 1,183 branches. The Branches reviewed by us cover 51.82% of the advances portfolio (excluding outstanding of asset recovery branches and food credit advance) of the Bank and 50.22% of non-performing advances of the Bank.
Limited review report on the unaudited quarterly standalone financial results of The Federal Bank Limited pursuant to Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Continued)
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 and other recognized accounting practices and policies has not disclosed the information required to be disclosed in terms ofRegulation 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.
6. As more fully described in Note 10 to the Statement, the Bank has recognized provision on certain loans that were though overdue but standard as at 29 February 2020, for which moratorium benefit has been granted, based on the days past due status as on that date in accordance with the Reserve Bank of India COVID-19 Regulatory Package.
Further, as more fully described in Note 10 to the Statement, the extent to which the COVID-19 pandemic will have impact on the Bank's financial performance is dependent on future developments, which are highly uncertain.
Our conclusion on the Statement is not modified in respect of the above 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 |
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Akeel Master | Varun P. Kothari |
Partner | Partner |
Membership No: 046768 | Membership No: 115089 |
ICAI UDIN: 20046768AAAAKY7910 | ICAI UDIN: 20115089AAAAKZ1900 |
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Mumbai | Mumbai |
15 July 2020 | 15 July 2020 |
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, 2020 | |||||
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Particulars | Quarter ended | Year ended | |||
30.06.2020 | 31.03.2020 | 30.06.2019 | 31.03.2020 | ||
Unaudited | Audited(Refer Note 11 below) | Unaudited | Audited | ||
1. Interest earned (a)+(b)+(c)+(d) | 344,415 | 339,684 | 322,930 | 1,321,075 | |
(a) | Interest/discount on advances/bills | 270,598 | 272,435 | 260,608 | 1,067,087 |
(b) | Income on investments | 60,612 | 56,529 | 55,523 | 218,407 |
(c) | Interest on balances with Reserve Bank of India and other inter bank funds | 7,067 | 4,686 | 1,972 | 13,996 |
(d) | Others | 6,138 | 6,034 | 4,827 | 21,585 |
2. Other income | 48,837 | 71,111 | 39,152 | 193,141 | |
3. TOTAL INCOME (1+2) | 393,252 | 410,795 | 362,082 | 1,514,216 | |
4. Interest expended | 214,771 | 218,083 | 207,513 | 856,185 | |
5. Operating expenses (i)+(ii) | 85,243 | 96,780 | 76,293 | 337,561 | |
(i) | Employees cost | 49,585 | 51,906 | 39,784 | 177,236 |
(ii) | Other operating expenses | 35,658 | 44,874 | 36,509 | 160,325 |
6. TOTAL EXPENDITURE (4+5)(excluding provisions and contingencies) | 300,014 | 314,863 | 283,806 | 1,193,746 | |
7. OPERATING PROFIT (3-6) (Profit before provisions and contingencies) | 93,238 | 95,932 | 78,276 | 320,470 | |
8. Provisions (other than tax) and contingencies | 39,462 | 56,750 | 19,204 | 117,217 | |
9. Exceptional items |
| - | - | - | - |
10. Profit from Ordinary Activities before tax(7-8-9) | 53,776 | 39,182 | 59,072 | 203,253 | |
11. Tax expense |
| 13,699 | 9,059 | 20,651 | 48,975 |
12. Net Profit from Ordinary Activities after tax (10-11) | 40,077 | 30,123 | 38,421 | 154,278 | |
13. Extraordinary items (net of tax expense) |
| - | - | - | - |
14. Net Profit for the period (12-13) |
| 40,077 | 30,123 | 38,421 | 154,278 |
15. Paid-up Equity Share Capital(Face value ` 2/- per Equity Share) | 39,875 | 39,853 | 39,720 | 39,853 | |
16. Reserves excluding Revaluation Reserve |
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| 1,411,407 | |
17. Analytical Ratios |
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(i) | Percentage of shares held by Government of India | NIL | NIL | NIL | NIL |
(ii) | Capital Adequacy ratio (%) |
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| Under Basel III | 14.17 | 14.35 | 14.10 | 14.35 |
(iii) | Earnings per Share (EPS) (in `) |
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| (a) Basic EPS (before and after extra ordinary items) | 2.01* | 1.51* | 1.94* | 7.76 |
| (b) Diluted EPS (before and after extra ordinary items) | 2.01* | 1.50* | 1.92* | 7.70 |
(iv) | NPA Ratios |
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| a) Gross NPA | 365,559 | 353,083 | 339,469 | 353,083 |
| b) Net NPA | 147,746 | 160,717 | 167,282 | 160,717 |
| c) % of Gross NPA | 2.96 | 2.84 | 2.99 | 2.84 |
| d) % of Net NPA | 1.22 | 1.31 | 1.49 | 1.31 |
(v) | Return on Assets (%) | 0.22* | 0.17* | 0.24* | 0.94 |
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* Not Annualised |
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Segment Information@ |
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Particulars | Quarter ended | Year ended | |||
30.06.2020 | 31.03.2020 | 30.06.2019 | 31.03.2020 | ||
Unaudited | Audited(Refer Note 11 below) | Unaudited | Audited | ||
Segment Revenue: |
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| Treasury | 93,782 | 76,986 | 54,347 | 226,846 |
| Corporate/Wholesale Banking | 115,894 | 120,584 | 123,565 | 489,365 |
| Retail Banking | 183,576 | 213,225 | 184,170 | 798,005 |
| Other Banking operations | - | - | - | - |
| Unallocated | - | - | - | - |
| Total Revenue | 393,252 | 410,795 | 362,082 | 1,514,216 |
| Less: Inter Segment Revenue | - | - | - | - |
| Income from Operations | 393,252 | 410,795 | 362,082 | 1,514,216 |
Segment Results (net of provisions): |
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| Treasury | 42,628 | 23,436 | 9,550 | 41,518 |
| Corporate/Wholesale Banking | (8,149) | (18,899) | 18,245 | 17,058 |
| Retail Banking | 19,299 | 34,841 | 31,277 | 145,113 |
| Other Banking operations | - | - | - | - |
| Unallocated | (2) | (196) | - | (436) |
| Profit before tax | 53,776 | 39,182 | 59,072 | 203,253 |
Segment Assets |
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| Treasury | 4,219,642 | 3,787,323 | 3,029,635 | 3,787,323 |
| Corporate/Wholesale Banking | 7,013,384 | 7,056,243 | 6,685,002 | 7,056,243 |
| Retail Banking | 6,529,646 | 6,480,887 | 5,719,248 | 6,480,887 |
| Other Banking operations | - | - | - | - |
| Unallocated | 819,363 | 739,352 | 599,926 | 739,352 |
| Total | 18,582,035 | 18,063,805 | 16,033,811 | 18,063,805 |
Segment Liabilities |
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| Treasury | 1,396,438 | 1,627,269 | 1,316,979 | 1,627,269 |
| Corporate/Wholesale Banking | 1,227,165 | 1,258,540 | 1,046,425 | 1,258,540 |
| Retail Banking | 14,227,797 | 13,458,149 | 12,081,947 | 13,458,149 |
| Other Banking operations | - | - | - | - |
| Unallocated | 238,354 | 268,086 | 222,297 | 268,086 |
| Total | 17,089,754 | 16,612,044 | 14,667,648 | 16,612,044 |
Capital employed: |
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(Segment Assets - Segment Liabilities) |
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| Treasury | 2,823,204 | 2,160,054 | 1,712,656 | 2,160,054 |
| Corporate/Wholesale Banking | 5,786,219 | 5,797,703 | 5,638,577 | 5,797,703 |
| Retail Banking | (7,698,151) | (6,977,262) | (6,362,699) | (6,977,262) |
| Other Banking operations | - | - | - | - |
| Unallocated | 581,009 | 471,266 | 377,629 | 471,266 |
| Total | 1,492,281 | 1,451,761 | 1,366,163 | 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. | ||||
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Notes: |
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1 | The above Standalone Unaudited Financial Results for the quarter ended June 30, 2020 were reviewed by the Audit Committee and approved by the Board of Directors at its meeting held on July 15, 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. | ||||
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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. | ||||
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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 ended June 30, 2020 or the previous periods/year. However, had the Bank continued the same method of preparation of segment information as was adopted in previous periods, the segment revenue, segment results, segment assets, segment liabilities and capital employed would have been Decreased / (Increased) by:
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| Segment Revenue |
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| Decreased / (Increased) | Quarter ended | Year ended | ||
| 30.06.2020 | 31.03.2020 | 30.06.2019 | 31.03.2020 | |
| Treasury | (7,235) | (25,250) | (18,617) | (87,363) |
| Corporate/Wholesale Banking | (16,485) | (18,943) | (24,516) | (72,962) |
| Retail Banking | 26,964 | 51,906 | 48,839 | 188,733 |
| Other Banking operations | (3,244) | (7,713) | (5,706) | (28,408) |
| Unallocated | - | - | - | - |
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| Segment Results |
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| Decreased / (Increased) | Quarter ended | Year ended | ||
| 30.06.2020 | 31.03.2020 | 30.06.2019 | 31.03.2020 | |
| Treasury | (207) | (15,597) | (5,902) | (40,682) |
| Corporate/Wholesale Banking | 18,173 | 16,781 | (529) | 49,937 |
| Retail Banking | (20,692) | (1,508) | 4,958 | (10,948) |
| Other Banking operations | 1,462 | (1,968) | 927 | (3,817) |
| Unallocated | 1,264 | 2,292 | 546 | 5,510 |
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| Segment Assets |
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| Decreased / (Increased) | Quarter ended | Year ended | ||
| 30.06.2020 | 31.03.2020 | 30.06.2019 | 31.03.2020 | |
| Treasury | (535,655) | (395,920) | (464,932) | (395,920) |
| Corporate/Wholesale Banking | 941,377 | 791,479 | 923,855 | 791,479 |
| Retail Banking | (238,834) | (188,822) | (192,004) | (188,822) |
| Other Banking operations | (862) | (375) | (934) | (375) |
| Unallocated | (166,026) | (206,362) | (265,985) | (206,362) |
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| Segment Liabilities |
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| Decreased / (Increased) | Quarter ended | Year ended | ||
| 30.06.2020 | 31.03.2020 | 30.06.2019 | 31.03.2020 | |
| Treasury | (3,183,674) | (2,448,092) | (2,029,505) | (2,448,092) |
| Corporate/Wholesale Banking | (4,645,835) | (4,765,561) | (4,507,676) | (4,765,561) |
| Retail Banking | 7,672,980 | 7,036,713 | 6,379,722 | 7,036,713 |
| Other Banking operations | (54) | (24) | (5) | (24) |
| Unallocated | 156,583 | 176,964 | 157,464 | 176,964 |
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| Capital employed (Segment Assets - Segment Liabilities) |
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| Decreased / (Increased) | Quarter ended | Year ended | ||
| 30.06.2020 | 31.03.2020 | 30.06.2019 | 31.03.2020 | |
| Treasury | 2,648,019 | 2,052,172 | 1,564,573 | 2,052,172 |
| Corporate/Wholesale Banking | 5,587,212 | 5,557,040 | 5,431,531 | 5,557,040 |
| Retail Banking | (7,911,814) | (7,225,535) | (6,571,726) | (7,225,535) |
| Other Banking operations | (808) | (351) | (929) | (351) |
| Unallocated | (322,609) | (383,326) | (423,449) | (383,326) |
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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. | ||||
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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. | ||||
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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. | ||||
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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. | ||||
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8 | During the quarter ended June 30, 2020, the Bank has allotted 1,079,930 equity shares of ` 2 each, pursuant to the exercise of stock options by employees. | ||||
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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. | ||||
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10 | The SARS-CoV-2 virus responsible for COVID-19 continues to spread across the globe and India, which has contributed to a significant volatility in global and Indian Financial markets and a significant decrease in the global and local economic activities. COVID-19 outbreak was declared as a global pandemic on March 11, 2020 by World Health Organisation. The Government of India had announced a series of lock-down measures on March 24, 2020 which has been extended from time to time. The recent directions from the Government indicates calibrated and gradual withdrawal of lockdown and partial resumption of economic activities. The extent to which the COVID-19 pandemic will impact the Bank's results will depend on future developments, which are highly uncertain, including among other things, any new information concerning the severity of the COVID-19 pandemic and action to contain its spread or mitigate its impact. The Bank's capital and liquidity position is strong and would continue to be the focus area for the Bank during this period.In accordance with 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.In accordance with the RBI guidelines, the Bank is required to make provision @10% of outstanding advances over two quarters beginning with quarter ending March 31, 2020 in respect of such borrowers whose accounts, though classified as standard, would have become non-performing but for these benefits/relaxations extended as per RBI guidelines. The Bank, as a prudent measure, has made the entire 10% provision amounting to ` 3,026.60 Lakhs during the quarter ended March 31, 2020 itself. Further, in addition to the above, as a prudent measure, during the current quarter, the Bank has made additional provision of ` 9,300.00 Lakhs (` 6,303.40 Lakhs during the quarter ended March 31, 2020), net of write back of ` 1,781.40 Lakhs, against the likely impact of COVID-19 pandemic in respect of exposure of the Bank to certain specified sectors based on assessment of presently available information. The aggregate provision against the likely impact of COVID-19, including the RBI mandated provision, as on June 30, 2020 stands at ` 18,630.00 Lakhs. | ||||
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11 | The figures of the last quarter are the balancing figures between the audited figures in respect of the full financial year and the published year to date figures upto the end of third quarter of the respective financial year, which was subject to limited review. | ||||
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12 | Previous period's / year's figures have been regrouped / reclassified, where necessary to conform to current period's classification. | ||||
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| SHYAM SRINIVASAN | ||
Kochi |
| MANAGING DIRECTOR & CEO | |||
July 15, 2020 |
| (DIN: 02274773) | |||
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 Mumbai - 400 011 | Dr. Annie Besant Road, Worli,Mumbai-400 018 |
India | Tel.: +91 22 2496 9900 |
Telephone +91 (22) 4345 5300 Fax +91 (22) 4345 5399 | Email: mail@mmnissim.com |
Independent Auditor's Review Report on consolidated unaudited quarterly financial results of The Federal Bank Limited pursuant to Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015
To the Board of Directors of
The Federal Bank Limited
7. We have reviewed the accompanying Statement of Unaudited Consolidated Financial Results of The Federal Bank Limited (the 'Bank'/ the 'Parent') and its subsidiaries (the Parent and its subsidiaries together referred to as the 'Group'), and its share of the net profit and loss after tax of its associates for the quarter ended 30 June 2020 (the 'Statement'), being submitted by the Bank pursuant to the requirement of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, except for the disclosures relating to consolidated Pillar 3 disclosure as at 30 June 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 Note 10 to the Statement and have not been reviewed by us.
8. This Statement, which is the responsibility of the Parent's Management and approved by the Parent'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 (RBI) from time to time ('RBI Guidelines') and other accounting principles generally accepted in India. Our responsibility is to express a conclusion on the Statement based on our review.
9. We conducted our review of the Statement in accordance with the Standard on Review Engagements ('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 SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, to the extent applicable.
Independent Auditor's Review Report on consolidated unaudited quarterly financial results of The Federal Bank Limited pursuant to Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Continued)
10. Attention is drawn to the fact that the figures for the 3 months ended 31 March 2020 as reported in this Statement 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.
11. The Statement includes the results of the following entities:
a. Fedbank Financial Services Limited ('the Subsidiary')
b. Federal Operations and Services Limited ('the Subsidiary')
c. IDBI Federal Life Insurance Company Limited ('the Associate')
d. Equirus Capital Private Limited ('the Associate')
12. Based on our review conducted and procedures performed as stated in paragraph 3 above, and based on the consideration of the review report of the other auditor referred to in paragraph 8 below and based on our assessment of the Financial Results/ financial information certified by the Board of Directors as stated in paragraph 9 below, nothing has come to our attention that causes us to believe that the accompanying Statement, prepared in accordance with the recognition and measurement principles laid down in the aforesaid Accounting Standard, RBI Guidelines and other accounting principles generally accepted in India, 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 30 June 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 Statement and have not been reviewed by us, or that it contains any material misstatement.
13. As more fully described in Note 11 to the Statement, the Bank has recognized provision on certain loans that were though overdue but standard as at 29 February 2020, for which moratorium benefit has been granted, based on the days past due status as on that date in accordance with the Reserve Bank of India COVID-19 Regulatory Package.
As more fully described in Note 11 to the Statement, the extent to which the COVID-19 pandemic will have impact on the Bank's financial performance is dependent on future developments, which are highly uncertain.
Our conclusion on the Statement is not modified in respect of the above matters.
Independent Auditor's Review Report on consolidated unaudited quarterly financial results of The Federal Bank Limited pursuant to Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Continued)
14. We did not review the interim financial results of two subsidiaries included in the Statement, whose interim financial results reflect total revenues of Rs.15,525.78 lakhs and total net profit after tax of Rs. 1,433.15 lakhs for the quarter ended 30 June 2020, as considered in the consolidated unaudited financial results. These interim financial results have been reviewed by other auditors 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 the reports of the other auditors and the procedures performed by us as stated in paragraph 3 above.
Our conclusion on the Statement is not modified in respect of the above matter.
15. The Statement also includes the Group's share of net profit after tax of Rs. 156.39 lakhs for the quarter ended 30 June 2020, as considered in the consolidated unaudited financial results, in respect of two associates, 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 financial results are not material to the Group.
Our conclusion on the Statement is not modified in respect of the above matter.
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 |
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Akeel Master | Varun P. Kothari |
Partner | Partner |
Membership No: 046768 | Membership No: 115089 |
ICAI UDIN: 20046768AAAAKX5666 | ICAI UDIN: 20115089AAAALA2106
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Mumbai | Mumbai |
15 July 2020 | 15 July 2020 |
THE FEDERAL BANK LIMITED | |||||
REGD.OFFICE: P.B.NO. 103, FEDERAL TOWERS, ALUVA-683101 | |||||
(CIN: L65191KL1931PLC000368) | |||||
CONSOLIDATED UNAUDITED FINANCIAL RESULTS FOR THE QUARTER ENDED JUNE 30, 2020 | |||||
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| (` in Lakhs) |
Particulars | Quarter ended | Year ended | |||
30.06.2020 | 31.03.2020 | 30.06.2019 | 31.03.2020 | ||
Unaudited | Audited(Refer Note 12 below) | Unaudited | Audited | ||
1. Interest earned (a)+(b)+(c)+(d) | 357,211 | 354,448 | 329,521 | 1,359,039 | |
(a) | Interest/discount on advances/bills | 282,774 | 286,778 | 267,052 | 1,104,518 |
(b) | Income on investments | 60,654 | 56,560 | 55,669 | 218,550 |
(c) | Interest on balances with Reserve Bank of India and other inter bank funds | 7,067 | 4,686 | 1,973 | 13,996 |
(d) | Others | 6,716 | 6,424 | 4,827 | 21,975 |
2. Other income | 48,331 | 67,839 | 37,097 | 188,181 | |
3. TOTAL INCOME (1+2) | 405,542 | 422,287 | 366,618 | 1,547,220 | |
4. Interest expended | 219,655 | 222,137 | 209,707 | 867,831 | |
5. Operating expenses (i)+(ii) | 89,595 | 102,416 | 79,077 | 354,670 | |
(i) | Employees cost | 52,656 | 55,371 | 41,541 | 187,598 |
(ii) | Other operating expenses | 36,939 | 47,045 | 37,536 | 167,072 |
6. TOTAL EXPENDITURE (4+5)(excluding provisions and contingencies) | 309,250 | 324,553 | 288,784 | 1,222,501 | |
7. OPERATING PROFIT (3-6) (Profit before provisions and contingencies) | 96,292 | 97,734 | 77,834 | 324,719 | |
8. Provisions (other than tax) and contingencies | 40,935 | 57,794 | 19,332 | 118,722 | |
9. Exceptional items |
| - | - | - | - |
10. Profit from Ordinary Activities before tax(7-8-9) | 55,357 | 39,940 | 58,502 | 205,997 | |
11. Tax expense |
| 14,199 | 9,645 | 21,131 | 50,720 |
12. Net Profit from Ordinary Activities after tax (10-11) | 41,158 | 30,295 | 37,371 | 155,277 | |
13. Extraordinary items (net of tax expense) |
| - | - | - | - |
14. Net Profit for the period (12-13) |
| 41,158 | 30,295 | 37,371 | 155,277 |
15. Minority interest |
| 364 | 437 | 182 | 1,028 |
16. Share in Profit of Associates |
| 156 | 3,046 | 231 | 3,771 |
17. Consolidated Net Profit of the group(14-15+16) | 40,950 | 32,904 | 37,420 | 158,020 | |
18. Paid-up Equity Share Capital(Face value ` 2/- per Equity Share) | 39,875 | 39,853 | 39,720 | 39,853 | |
19. Reserves excluding Revaluation Reserve |
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| 1,441,882 | |
20. Analytical Ratios |
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(i) | Percentage of shares held by Government of India | NIL | NIL | NIL | NIL |
(ii) | Capital Adequacy ratio (%) |
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| Under Basel III | 14.53 | 14.63 | 14.41 | 14.63 |
(iii) | Earnings per Share (EPS) (in `) |
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| (a) Basic EPS (before and after extra ordinary items) | 2.05* | 1.65* | 1.88* | 7.94 |
| (b) Diluted EPS (before and after extra ordinary items) | 2.05* | 1.64* | 1.87* | 7.88 |
(iv) | NPA Ratios |
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| a) Gross NPA | 371,207 | 358,015 | 343,375 | 358,015 |
| b) Net NPA | 152,566 | 164,953 | 170,726 | 164,953 |
| c) % of Gross NPA | 2.94 | 2.82 | 2.98 | 2.82 |
| d) % of Net NPA | 1.23 | 1.32 | 1.50 | 1.32 |
(v) | Return on Assets (%) | 0.22* | 0.18* | 0.23* | 0.92 |
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* Not Annualised |
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Segment Information@ |
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| (` in Lakhs) |
Particulars | Quarter ended | Year ended | |||
30.06.2020 | 31.03.2020 | 30.06.2019 | 31.03.2020 | ||
Unaudited | Audited(Refer Note 12 below) | Unaudited | Audited | ||
Segment Revenue: |
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| Treasury | 93,782 | 76,019 | 52,264 | 223,796 |
| Corporate/Wholesale Banking | 114,942 | 117,833 | 123,565 | 486,614 |
| Retail Banking | 196,818 | 228,435 | 190,789 | 836,810 |
| Other Banking operations | - | - | - | - |
| Unallocated | - | - | - | - |
| Total Revenue | 405,542 | 422,287 | 366,618 | 1,547,220 |
| Less: Inter Segment Revenue | - | - | - | - |
| Income from Operations | 405,542 | 422,287 | 366,618 | 1,547,220 |
Segment Results (net of provisions): |
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| Treasury | 42,275 | 22,469 | 7,436 | 38,436 |
| Corporate/Wholesale Banking | (8,038) | (17,537) | 18,245 | 18,421 |
| Retail Banking | 21,122 | 35,204 | 32,821 | 149,576 |
| Other Banking operations | - | - | - | - |
| Unallocated | (2) | (196) | - | (436) |
| Profit before tax | 55,357 | 39,940 | 58,502 | 205,997 |
Segment Assets |
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| Treasury | 4,197,586 | 3,765,464 | 3,031,123 | 3,765,464 |
| Corporate/Wholesale Banking | 6,953,817 | 6,997,531 | 6,685,002 | 6,997,531 |
| Retail Banking | 6,894,109 | 6,832,986 | 5,841,039 | 6,832,986 |
| Other Banking operations | - | - | - | - |
| Unallocated | 819,363 | 739,352 | 599,926 | 739,352 |
| Total | 18,864,875 | 18,335,333 | 16,157,090 | 18,335,333 |
Segment Liabilities |
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| Treasury | 1,395,636 | 1,626,174 | 1,316,979 | 1,626,174 |
| Corporate/Wholesale Banking | 1,249,280 | 1,291,143 | 1,046,425 | 1,291,143 |
| Retail Banking | 14,439,516 | 13,649,598 | 12,175,478 | 13,649,598 |
| Other Banking operations | - | - | - | - |
| Unallocated | 238,354 | 268,086 | 222,297 | 268,086 |
| Total | 17,322,786 | 16,835,001 | 14,761,179 | 16,835,001 |
Capital employed: |
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(Segment Assets - Segment Liabilities) |
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| Treasury | 2,801,950 | 2,139,290 | 1,714,144 | 2,139,290 |
| Corporate/Wholesale Banking | 5,704,537 | 5,706,388 | 5,638,577 | 5,706,388 |
| Retail Banking | (7,545,407) | (6,816,612) | (6,334,439) | (6,816,612) |
| Other Banking operations | - | - | - | - |
| Unallocated | 581,009 | 471,266 | 377,629 | 471,266 |
| Total | 1,542,089 | 1,500,332 | 1,395,911 | 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. | ||||
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Notes: |
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1 | The above Consolidated Unaudited Financial Results for the quarter ended June 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 July 15, 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. | ||||
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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. | ||||
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3 | There has been no material change in the accounting policies adopted during the quarter ended June 30, 2020 as compared to those followed for the year ended March 31, 2020. | ||||
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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 ended June 30, 2020 or the previous periods/year. However, had the Bank continued the same method of preparation of segment information as was adopted in previous periods, the segment revenue, segment results, segment assets, segment liabilities and capital employed would have been Decreased / (Increased) by: | ||||
| Segment Revenue |
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| Decreased / (Increased) | Quarter ended | Year ended | ||
| 30.06.2020 | 31.03.2020 | 30.06.2019 | 31.03.2020 | |
| Treasury | (7,235) | (25,250) | (18,617) | (87,363) |
| Corporate/Wholesale Banking | (16,484) | (18,943) | (24,516) | (72,962) |
| Retail Banking | 27,036 | 52,772 | 48,839 | 189,599 |
| Other Banking operations | (3,317) | (8,579) | (5,706) | (29,274) |
| Unallocated | - | - | - | - |
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| Segment Results |
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| Decreased / (Increased) | Quarter ended | Year ended | ||
| 30.06.2020 | 31.03.2020 | 30.06.2019 | 31.03.2020 | |
| Treasury | (207) | (15,597) | (5,902) | (40,682) |
| Corporate/Wholesale Banking | 18,173 | 16,781 | (529) | 49,938 |
| Retail Banking | (20,012) | 274 | 4,976 | (9,063) |
| Other Banking operations | 782 | (3,750) | 909 | (5,703) |
| Unallocated | 1,264 | 2,292 | 546 | 5,510 |
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| Segment Assets |
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| Decreased / (Increased) | Quarter ended | Year ended | ||
| 30.06.2020 | 31.03.2020 | 30.06.2019 | 31.03.2020 | |
| Treasury | (535,656) | (395,920) | (464,932) | (395,920) |
| Corporate/Wholesale Banking | 941,377 | 791,479 | 923,855 | 791,479 |
| Retail Banking | (238,184) | (188,286) | (192,213) | (188,286) |
| Other Banking operations | (1,511) | (911) | (725) | (911) |
| Unallocated | (166,026) | (206,362) | (265,985) | (206,362) |
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| Segment Liabilities |
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| Decreased / (Increased) | Quarter ended | Year ended | ||
| 30.06.2020 | 31.03.2020 | 30.06.2019 | 31.03.2020 | |
| Treasury | (3,183,563) | (2,448,092) | (2,029,505) | (2,448,092) |
| Corporate/Wholesale Banking | (4,645,978) | (4,765,561) | (4,507,676) | (4,765,561) |
| Retail Banking | 7,674,115 | 7,037,239 | 6,379,722 | 7,037,239 |
| Other Banking operations | (1,157) | (550) | (5) | (550) |
| Unallocated | 156,583 | 176,964 | 157,464 | 176,964 |
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| Capital employed (Segment Assets - Segment Liabilities) |
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| Decreased / (Increased) | Quarter ended | Year ended | ||
| 30.06.2020 | 31.03.2020 | 30.06.2019 | 31.03.2020 | |
| Treasury | 2,647,907 | 2,052,172 | 1,564,573 | 2,052,172 |
| Corporate/Wholesale Banking | 5,587,355 | 5,557,040 | 5,431,531 | 5,557,040 |
| Retail Banking | (7,912,299) | (7,225,525) | (6,571,935) | (7,225,525) |
| Other Banking operations | (354) | (361) | (720) | (361) |
| Unallocated | (322,609) | (383,326) | (423,449) | (383,326) |
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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. | ||||
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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. | ||||
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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. | ||||
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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. | ||||
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9 | During the quarter ended June 30, 2020, the Bank has allotted 1,079,930 equity shares of ` 2 each, pursuant to the exercise of stock options by employees. | ||||
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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. | ||||
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11 | The SARS-CoV-2 virus responsible for COVID-19 continues to spread across the globe and India, which has contributed to a significant volatility in global and Indian Financial markets and a significant decrease in the global and local economic activities. COVID-19 outbreak was declared as a global pandemic on March 11, 2020 by World Health Organisation. The Government of India had announced a series of lock-down measures on March 24, 2020 which has been extended from time to time. The recent directions from the Government indicates calibrated and gradual withdrawal of lockdown and partial resumption of economic activities. The extent to which the COVID-19 pandemic will impact the Bank's results will depend on future developments, which are highly uncertain, including among other things, any new information concerning the severity of the COVID-19 pandemic and action to contain its spread or mitigate its impact. The Bank's capital and liquidity position is strong and would continue to be the focus area for the Bank during this period.In accordance with 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.In accordance with the RBI guidelines, the Bank is required to make provision @10% of outstanding advances over two quarters beginning with quarter ending March 31, 2020 in respect of such borrowers whose accounts, though classified as standard, would have become non-performing but for these benefits/relaxations extended as per RBI guidelines. The Bank, as a prudent measure, has made the entire 10% provision amounting to ` 3,026.60 Lakhs during the quarter ended March 31, 2020 itself. Further, in addition to the above, as a prudent measure, during the current quarter, the Bank has made additional provision of ` 9,300.00 Lakhs (` 6,303.40 Lakhs during the quarter ended March 31, 2020), net of write back of ` 1,781.40 Lakhs, against the likely impact of COVID-19 pandemic in respect of exposure of the Bank to certain specified sectors based on assessment of presently available information. The aggregate provision against the likely impact of COVID-19, including the RBI mandated provision, as on June 30, 2020 stands at ` 18,630.00 Lakhs. | ||||
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12 | The figures of the last quarter are the balancing figures between the audited figures in respect of the full financial year and the published year to date figures upto the end of third quarter of the respective financial year. | ||||
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13 | Previous period's / year's figures have been regrouped / reclassified, where necessary to conform to current period's classification. | ||||
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| SHYAM SRINIVASAN | ||
Kochi |
| MANAGING DIRECTOR & CEO | |||
July 15, 2020 |
| (DIN: 02274773) | |||