Federal Bk S Regulatory News (FEDS)

SDF-24/30/2021-22 May 21, 2021

To

The London Stock Exchange

Dear Sir,

We enclose herewith the Audited Financial Results of the Bank for the quarter and year ended March 31, 2021 (both standalone and consolidated) along with Audit 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 May 17, 2021.

Kindly take the same on your record.

For The Federal Bank Limited

Sd/-

Samir P Rajdev Company Secretary

Varma & Varma

Chartered Accountants, No.53/2600, Kerala Varma Tower 

Off Kunjanbava Road, Vytilla, 

Kochi -682019

Borkar & Muzumdar,

Chartered Accountants,

Anand Nagar, Om Co-op Hsg. Society, 

Anand Nagar Lane, Off Nehru Road, 

Santacruz (East) Mumbai - 400 055

Independent Auditor's report on audited Standalone quarterly and annual financial results of The Federal Bank Limited pursuant to the Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

To

The Board of Directors 

The Federal Bank Limited

Opinion

1. We have audited the accompanying standalone quarterly Financial Results of The Federal Bank Limited ("the Bank") for the quarter ended 31st March 2021 and the standalone annual financial results for the period from April 1, 2020 to March 31, 2021 ('Financial Results') 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 Pillar 3 disclosure as at 31st March 2021, 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 standalone Financial Results and have not been audited by us.

2. In our opinion and to the best of our information and according to the explanations given to us, these standalone Financial Results:

i. are presented in accordance with the requirements of Regulation 33 of the Listing Regulations in this regard except for the disclosures relating to Pillar 3 disclosure as at 31st March 2021, 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 standalone Financial Results and have not been audited by us; and

ii. give a true and fair view in conformity with the recognition and measurement principles laid down in the applicable accounting standards, RBI guidelines and other accounting principles generally accepted in India of the net profit and other financial information for the quarter ended 31st March 2021 as well as of the net profit and other financial information for the year ended 31st March 2021.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. ("the Act"). Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Standalone Financial Results section of our report. We are independent of the Bank in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the standalone Financial Results, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

4. We draw attention to Note No. 10 of the accompanying standalone financial results, regarding the impact of COVID-19 pandemic and the adjustments made in the accounts for the quarter/year ended 31st March 2021 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 several factors including actions taken to mitigate its impact and other regulatory measures.

Our opinion is not modified in respect of this matter.

Board Directors responsibilities for the standalone financial results.

5. These standalone Financial Results have been prepared on the basis of the audited standalone annual financial statements and reviewed quarterly standalone unaudited Financial Results upto the end of the quarter ended 31st December 2020. The Bank's Board of Directors are responsible for the preparation of these standalone Financial Results that give a true and fair view of the net profit for the quarter ended 31st March 2021 as well as of the net profit for the year ended 31st March 2021 and other financial information in accordance with the recognition and measurement principles laid down in the Accounting Standards specified under section 133 of the Act, 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 and in compliance with Regulation 33 of the Listing Regulations. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Bank and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Financial Results that give a true and fair view and are free from material misstatement, whether due to fraud or error.

6. In preparing the standalone Financial Results, the Board of Directors are responsible for assessing the Bank's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.

7. The Board of Directors is also responsible for overseeing the Bank's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Financial Results

8. Our objectives are to obtain reasonable assurance about whether the standalone Financial Results as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone Financial Results. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

· Identify and assess the risks of material misstatement of the standalone Financial Results, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

· Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3) (i) of the Act, we are also responsible for expressing our opinion on whether the Bank has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls.

· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors.

· Conclude on the appropriateness of the Board of Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that

may cast significant doubt on the Bank's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the standalone Financial Results or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Bank to cease to continue as a going concern.

· Evaluate the overall presentation, structure, and content of the standalone Financial Results, including the disclosures, and whether the standalone Financial Results represent the underlying transactions and events in a manner that achieves fair presentation.

9. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

10. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

Other Matters

11. These standalone Financial Results incorporate the relevant returns of 614 branches audited by the branch auditors. The branches audited by such branch auditors cover 29.86 % of advances, 43.34 % of deposits and 37.10% of Non- performing assets (Net) as on 31st March 2021 and 24.58 % / 23.91 % of revenue for the quarter ended 31st March 2021/for the period April 1, 2020 to March 31st , 2021. Our opinion on the Financial Results, in so far as it relates to the amounts and disclosures included in respect of such branches, is based solely on the reports of such branch auditors.

12. The standalone Financial Results includes the results for the quarter ended 31st March 2021, being the derived balancing figures between the standalone audited figures in respect of the full financial year ended 31st March 2021 and the published standalone unaudited year to date figures upto the nine months ended 31st December 2020, of the current financial year which have only been reviewed and not subjected to audit by us

13. The audit of quarterly/ annual standalone Financial Results for the quarter ended 31st March 2020 and the year ended 31st March 2020 included in the Financial Results were carried out and reported by predecessor auditors who has expressed 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 audit of the Financial Results.

Our opinion on the standalone financial results is not modified in respect of above matters.

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:21022703AAAAAD6465 UDIN: 21109386AAAAET4932

Kochi-19 Mumbai-55

17th May 2021 17th May 2021

Varma & Varma

Chartered Accountants, No.53/2600, Kerala Varma Tower Off Kunjanbava Road, Vytilla, Kochi -682019

Borkar & Muzumdar,

Chartered Accountants,

Anand Nagar, Om Co-op Hsg. Society, Anand Nagar Lane, Off Nehru Road, Santacruz (East) Mumbai - 400 055

Independent Auditor's report on Audited Consolidated Financial results of The Federal Bank Limited pursuant to the Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

To

The Board of Directors The Federal Bank Limited

Opinion

14. We have audited the accompanying Statement of Consolidated Financial Results of The Federal Bank Limited ("the Bank"), its subsidiaries (the parent and its subsidiaries together referred to as 'the Group') and its associates for the year ended 31st March 2021 ('Consolidated Financial Results'), 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 Pillar 3 disclosure as at 31st March 2021, 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 Financial Results and have not been audited by us.

15. In our opinion and to the best of our information and according to the explanations given to us, and based on consideration of reports of the other auditors on separate audited financial statements of the subsidiaries, associates, these consolidated Financial Results:

iii. include the annual audited financial results of the following entities;

a. The Federal Bank Limited (the parent)

b. Fedbank Financial Services Limited (the Subsidiary)

c. Federal Operations and Services Limited (the Subsidiary)

d. Ageas Federal Life Insurance Company Limited (formerly known as IDBI Federal Life Insurance Company Limited) (the Associate)

e. Equirus Capital Private Limited (the Associate)

iv. are presented in accordance with the requirements of Regulation 33 of the Listing Regulations in this regard except for the disclosures relating to Pillar 3 disclosure as at 31st March 2021, 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 consolidated Financial Results and have not been audited by us; and

v. give a true and fair view in conformity with the recognition and measurement principles laid down in the applicable accounting standards, RBI guidelines and other accounting principles generally accepted in India of the consolidated net profit and other financial information of the Group and its associates for the quarter ended 31st March 2021 as well as of the consolidated net profit and other financial information of the Group and its associates for the year ended 31st March 2021.

Basis for Opinion

16. We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. ("the Act"). Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Results section of our report. We are independent of the Bank in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the Consolidated Financial Results, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence obtained by us and other auditors in terms of their report referred to in "Other Matter" paragraph below, is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

17. We draw attention to Note No. 11 of the accompanying consolidated financial results, regarding the impact of COVID-19 pandemic and the adjustments made in the accounts for the quarter/year ended 31st March 2021 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 opinion is not modified in respect of this matter.

Board of Directors responsibilities for the consolidated financial results

18. These Consolidated Financial Results have been prepared on the basis of the audited consolidated annual financial statements and reviewed quarterly consolidated unaudited Financial Results upto the end of the quarter ended 31st December 2020. The Bank's Board of Directors are responsible for the preparation of these Consolidated Financial Results that give a true and fair view of the consolidated net profit for the quarter ended 31st March 2021 as well as of the consolidated net profit for the year ended 31st March 2021 and other financial information of the Group including its associates in accordance with the recognition and measurement principles laid down in the Accounting Standards specified under section 133 of the Act, 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 and in compliance with Regulation 33 of the Listing Regulations. The respective Board of Directors of the entities included in the Group and of its associates are responsible for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Bank and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the consolidated Financial Results that give a true and fair view and are free from material misstatement, whether due to fraud or error which have been used for the purpose of preparation of the consolidated financial results by the Directors of the Bank, as aforesaid.

19. In preparing the consolidated Financial Results, the respective Board of Directors of the entities included in the Group and its associates are responsible for assessing the ability of the Group and of its associates to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

20. The respective Board of Directors of the entities included in the Group and of its associates are responsible for overseeing the financial reporting process of the Group and of its associates.

Auditor's Responsibilities for the Audit of the Consolidated Financial Results

21. Our objectives are to obtain reasonable assurance about whether the consolidated Financial Results as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated Financial Results. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

· Identify and assess the risks of material misstatement of the consolidated Financial Results, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

· Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3) (i) of the Act, we are also responsible for expressing our opinion on whether the Bank has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls.

· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors.

· Conclude on the appropriateness of the Board of Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group and of its associates to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated Financial Results or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group and its associates to cease to continue as a going concern.

· Evaluate the overall presentation, structure, and content of the consolidated Financial Results, including the disclosures, and whether the consolidated Financial Results represent the underlying transactions and events in a manner that achieves fair presentation.

· Obtain sufficient appropriate audit evidence regarding the financial results/ financial information of the entities within the Group and its associates to express an opinion on the Consolidated Financial Results. We are responsible for the direction, supervision and performance of the audit of financial information of such entities included in the Consolidated Financial Results of which we are the independent auditors. For the other entities included in the Consolidated Financial Results, which have been audited by other auditors, such other auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion.

22. We communicate with those charged with governance of the Bank and such other entities included in the consolidated results of which we are the independent auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

23. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

24. We also performed procedures in accordance with the circular issued by the SEBI under Regulation 33(8) of the Listing Regulations, as amended, to the extent applicable.

Other Matters

25. The audit of the financial statements/ information of two subsidiaries, whose financial statements reflect total assets of Rs. 5,42,484.41 lakhs as at 31st March 2021, total revenues of Rs. 72,281.22 lakhs and total net profit after tax of Rs. 6,043.51 lakhs for the year ended 31st March 2021, and net cash inflow amounting to Rs 38,431.29 lakhs for the year ended on that date, as considered in the Consolidated Financial Results have been audited by one of the joint auditors of the Bank whose reports have been furnished to us by the management and our opinion on the Consolidated Financial Results, in so far as it relates to the amounts and disclosures included in respect of its subsidiaries is based solely on their reports and the procedures performed by us are as stated in section above.

26. The Consolidated Financial Results also include the Group's share of net profit of Rs. 3,236.42 lakhs for the year ended 31st March 2021, as considered in the Consolidated Financial Results, in respect of two associates, whose financial statements have not been audited by us. These financial statements have been audited by other auditors whose report has been furnished to us by the Management and our opinion on the Consolidated Financial Results, in so far as it relates to the amounts and disclosures included in respect of these associates, is based solely on the reports of such auditors and the procedures performed by us are as stated in section above.

27. The consolidated Financial Results includes the results for the quarter ended 31st March 2021, being the derived balancing figures between the Consolidated Financial Results in respect of the full financial year ended 31st March 2021 and the published consolidated unaudited year to date figures upto the nine months ended 31st December 2020, of the current financial year, which have only been reviewed and not subjected to audit by us.

28. The audit of quarterly/ annual consolidated Financial Results for the quarter ended 31st March 2020 and the year ended 31st March 2020 included in the Financial Results were carried out and reported by predecessor auditors who has expressed 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 audit of the consolidated Financial Results.

Our opinion on the consolidated financial results is not modified in respect of above matters.

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: 21022703AAAAAE7965 UDIN: 21109386AAAAEU6237

Kochi-19 Mumbai-55

17th May 2021 17th May 2021

* Not Annualised

(` in Lakhs)

@ 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 March 31, 2021 is given below:

Notes:

1 The above Standalone Financial Results for the quarter and year ended March 31, 2021 were reviewed by the Audit Committee and approved by the Board of Directors at its meeting held on May 17, 2021. These Results have been subjected to "Audit" by the Statutory Central Auditors of the Bank and an unqualified audit report has been issued.

2 The Bank has consistently applied its significant accounting policies in the preparation of the quarterly financial results and its annual financial statements during the years ended March 31, 2021 and 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 year ended March 31, 2021 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 year ended March 31, 2021, the Bank has allotted 297,515 and 3,488,176 equity shares of ` 2 each respectively, 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, including the current 'second wave' which has resulted in imposition of renewed restrictions in various parts of the country, 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', 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 respect of such accounts that were granted moratorium, the asset classification remained standstill during the moratorium period.

The Honourable Supreme Court in a writ petition by Gajendra Sharma Vs Union of India & Anr vide its interim order dated September 3, 2020 had 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 had 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, although the Bank held sufficient provisions in respect of these advances and as a prudent measure, did not recognize the unrealized interest on these accounts as income. Pending final decision in this regard, the Bank had created adequate provisions to cover any likely impact arising therefrom, which was carried under Other liabilities and Provisions' in the Balance sheet of the Bank as at December 31, 2020. The interim order to not declare accounts as NPA has been vacated by the Honourable Supreme Court on March 23, 2021 vide judgement in the matter of Small-Scale Industrial Manufacturers Association vs. UOI & Ors and RBI has issued a circular dated April 07, 2021 thereon, in accordance with which the Bank has made the asset classification of borrower accounts which were granted moratorium as above, as per the applicable extant IRAC norms with effect from September 1, 2020.

As stated above, the Bank held a provision of ` 53,669.00 Lakhs as on December 31, 2020 against the likely impact of COVID-19, including the RBI mandated provision as per such guidelines. During the current quarter, the bank has utilized ` 6,089.00 Lakhs from the above provision for creation of RBI mandated provision for advances restructured under "Resolution framework for COVID-19 related stress" and an amount of ` 47,580.00 Lakhs towards the provision required as per extant IRAC norms.

11 In accordance with the scheme announced by the Government of India on October 23, 2020 for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts (March 01, 2020 to August 31,2020), the Bank had submitted the requisite claim amounting to ` 3,014.95 Lakhs and credited the accounts of the eligible borrowers. Further, in accordance with the decision of the Honourable Supreme Court on March 23, 2021 in the matter of Small-Scale Industrial Manufacturers Association vs. UOI & Ors instructions, the aforesaid RBI circular dated April 07, 2021 and the methodology for calculation of the amount as notified by the Indian Banks Association (IBA), the Bank has created a provision of ` 2,100.00 Lakhs towards estimated refund/adjustment of compound interest/interest on interest/penal interest charged to the borrowers not covered under the above ex-gratia scheme during the moratorium period i.e. March 1, 2020 to August 31, 2020 and reduced the same from interest income.

12 The Board of Directors have recommended a dividend of 35% i.e. ` 0.70/- per Equity Share on face value of ` 2/- each for the year 2020-21 (Previous Year ` Nil per Equity Share) subject to the approval of the members at the ensuing Annual General Meeting. In terms of Accounting Standard (AS) 4 "Contingencies and Events occurring after the Balance sheet date" the Bank has not appropriated proposed dividend aggregating to ` 13,973.05 Lakhs from the Profit and loss account for the year ended March 31, 2021. However the effect of the proposed dividend has been reckoned in determining capital funds in the computation of Capital adequacy ratio as on March 31, 2021.

13 The disclosures as required under RBI circular DOR.No.BP.BC.63/21.04.048/2019-20 dated April 17, 2020 is given below

14 Details of resolution plan implemented under the Resolution Framework for COVID-19-related Stress as per RBI circular dated August 6, 2020 are given below.

(` in lakhs except number of accounts)

15 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 year ended as on March 31, 2021:

16 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 subjected to limited review.

17 The figures for the quarter and year ended March 31, 2020 were audited by predecessor statutory auditors.

18 Previous period's / year's figures have been regrouped / reclassified, where necessary to conform to current period's classification.

Kochi

May 17, 2021

SHYAM SRINIVASAN MANAGING DIRECTOR & CEO

(DIN: 02274773)

* Not Annualised

(` in Lakhs)

@ 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 March 31, 2021 is given below:

Notes:

1 The above Consolidated Financial Results for the quarter and year ended March 31, 2021 were reviewed by the Audit Committee and subsequently taken on record and approved by the Board of Directors at its meeting held on May 17, 2021. These Results have been subjected to "Audit" by the Statutory Central Auditors of the Bank and an unqualified audit 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. Ageas 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 year ended March 31, 2021 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 year ended March 31, 2021 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 year ended March 31, 2021, the Bank has allotted 297,515 and 3,488,176 equity shares of ` 2 each respectively, 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, including the current 'second wave' which has resulted in imposition of renewed restrictions in various parts of the country, 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', 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 respect of such accounts that were granted moratorium, the asset classification remained standstill during the moratorium period.

The Honourable Supreme Court in a writ petition by Gajendra Sharma Vs Union of India & Anr vide its interim order dated September 3, 2020 had 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 had 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, although the Bank held sufficient provisions in respect of these advances and as a prudent measure, did not recognize the unrealized interest on these accounts as income. Pending final decision in this regard, the Bank had created adequate provisions to cover any likely impact arising therefrom, which was carried under Other liabilities and Provisions' in the Balance sheet of the Bank as at December 31, 2020. The interim order to not declare accounts as NPA has been vacated by the Honourable Supreme Court on March 23, 2021 vide judgement in the matter of Small-Scale Industrial Manufacturers Association vs. UOI & Ors and RBI has issued a circular dated April 07, 2021 thereon, in accordance with which the Bank has made the asset classification of borrower accounts which were granted moratorium as above, as per the applicable extant IRAC norms with effect from September 1, 2020.