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Half-year Report

16th Oct 2018 14:31

RNS Number : 2316E

Federal Bank Ltd (The)

16 October 2018

SDF-24/ /2018-19 16TH October 2018

To,

The London Stock Exchange

Dear Sir,

We enclose herewith the Un-Audited Financial Results of the Bank for the period ended September 30, 2018 which was approved at the Bank's Board of Directors meeting held on 16th October 2018.

Kindly take the same on your record.

For The Federal Bank Limited

Girish Kumar G

Company Secretary

B S R & Co. LLP	M.M. Nissim & Co.
Chartered Accountants	Chartered Accountants
5th Floor, Lodha Excelus	Barodawala Mansion, B-Wing,
Apollo Mills Compound	3rd Floor, 81,
N.M. Joshi Marg, Mahalaxmi	Dr. Annie Besant Road,
Mumbai- 400 011	Worli, Mumbai- 400 018

Limited review report on unaudited quarterly standalone financial results and standalone year to date results of The Federal Bank Limited pursuant to the Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

To the Board of Directors of

The Federal Bank Limited

1. We have reviewed the accompanying Statement of Unaudited Standalone Financial Results ofThe Federal Bank Limited ('the Bank') for the quarter ended 30 September 2018 and year to date results for the period from 1 April 2018 to 30 September 2018 ('the Statement'), attached herewith, being submitted by the Bank pursuant to the requirement of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 ('Listing Regulations'), except for the disclosures relating to consolidated Pillar 3 disclosure as at 30 September 2018, including leverage ratio and liquidity coverage ratio under Basel III Capital Regulations as have been disclosed on the Bank's website and in respect of which a link has been provided in the Statement and have not been reviewed by us.

2. This Statement is the responsibility of the Bank's management and has been approved by the Board of Directors of the Bank in their meeting held on 16 October 2018. Our responsibility is to issue a report on the Statement based on our review.

3. We conducted our review in accordance with the Standard on Review Engagement (SRE) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" specified under section 143(10) of the Companies Act, 2013. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the Statement is free of material misstatement. A review is limited primarily to inquiries of the Bank's personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and accordingly, we do not express an audit opinion.

4. The financial results incorporate the relevant returns of 114 Branches and Treasury Branch reviewed by either of us and un-reviewed returns in respect of 1,138 branches. These Branches cover 59.53% of the advances portfolio (excluding outstanding of asset recovery branches and food credit advance) of the Bank and 63.46% of non-performing advances of the bank.

5. Without qualifying our conclusion, we draw attention to Note No. 8 regarding exercise of the option by the Bank by spreading the provision for Mark to Market (MTM) losses over four quarters resulting into carrying forward of un-amortised MTM losses of ₹ 2,946.99 Lakhs as at 30 September 2018 for amortisation in remaining quarters.

6. Based on our review conducted as mentioned in paragraphs 3 and 4 above, nothing has come to our attention that causes us to believe that the accompanying Statement prepared in accordance with applicable accounting standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and other recognized accounting practices and policies has not disclosed the information required to be disclosed in terms of Regulation 33 of the Listing Regulations including the manner in which it is to be disclosed, or that it contains any material misstatement or that it has not been prepared in accordance with the relevant prudential norms issued by the Reserve Bank of India in respect of income recognition, asset classification, provisioning and other related matters

For B S R & Co. LLP	For M.M. Nissim & Co.
Chartered Accountants	Chartered Accountants
Firm's Registration No: 101248W / W-100022	Firm's Registration No: 107122W




Akeel Master	Sanjay Khemani
Partner	Partner
Membership No: 046768	Membership No: 044577
Mumbai	Mumbai
16 October 2018	16 October 2018

THE FEDERAL BANK LIMITED
REGD.OFFICE: P.B.NO. 103, FEDERAL TOWERS, ALUVA-683101
(CIN: L65191KL1931PLC000368)
STANDALONE UNAUDITED FINANCIAL RESULTS FOR THE QUARTER AND HALF YEAR ENDED SEPTEMBER 30, 2018
														(` in Lakhs)
Particulars					Quarter ended					Half year ended				Year ended 31.03.2018
					30.09.2018		30.06.2018	30.09.2017		30.09.2018		30.09.2017
					Unaudited		Unaudited	Unaudited		Unaudited		Unaudited		Audited
1. Interest earned (a)+(b)+(c)+(d)					276,492		266,738	237,960		543,230		470,369		975,286
(a)		Interest/discount on advances/bills			221,051		207,944	185,900		428,995		364,675		753,878
(b)		Income on investments			48,834		50,715	45,000		99,549		91,829		191,744
(c)		Interest on balances with Reserve Bank of India and other inter bank funds			2,089		2,523	2,586		4,612		4,953		9,581
(d)		Others			4,518		5,556	4,474		10,074		8,912		20,083
2. Other income					32,289		27,086	28,722		59,375		61,632		115,912
3. TOTAL INCOME (1+2)					308,781		293,824	266,682		602,605		532,001		1,091,198
4. Interest expended					174,245		168,732	148,069		342,977		300,411		617,005
5. Operating expenses (i)+(ii)					64,776		64,800	60,292		129,576		117,484		245,090
(i)		Employees cost			30,893		34,502	31,274		65,395		61,119		124,247
(ii)		Other operating expenses			33,883		30,298	29,018		64,181		56,365		120,843
6. TOTAL EXPENDITURE (4+5)(excluding provisions and contingencies)					239,021		233,532	208,361		472,553		417,895		862,095
7. OPERATING PROFIT (3-6) (Profit before provisions and contingencies)					69,760		60,292	58,321		130,052		114,106		229,103
8. Provisions (other than tax) and contingencies					28,882		19,915	17,677		48,797		41,321		94,717
9. Exceptional items					-		-	-		-		-		-
10. Profit from Ordinary Activities before tax(7-8-9)					40,878		40,377	40,644		81,255		72,785		134,386
11. Tax expense					14,274		14,106	14,274		28,380		25,400		46,501
12. Net Profit from Ordinary Activities after tax (10-11)					26,604		26,271	26,370		52,875		47,385		87,885
13. Extraordinary items (net of tax expense)					-		-	-		-		-		-
14. Net Profit for the period (12-13)					26,604		26,271	26,370		52,875		47,385		87,885
15. Paid-up Equity Share Capital(Face value ` 2/- per Equity Share)					39,612		39,552	39,091		39,612		39,091		39,443
16. Reserves excluding Revaluation Reserve														1,181,080
17. Analytical Ratios
(i)		Percentage of shares held by Government of India			NIL		NIL	NIL		NIL		NIL		NIL
(ii)		Capital Adequacy ratio (%)
		Under Basel III			13.29		14.50	14.63		13.29		14.63		14.70
(iii)		Earnings per Share (EPS) (in `)
		(a) Basic EPS (before and after extra ordinary items)			1.34*		1.33*	1.35*		2.67*		2.58*		4.62
		(b) Diluted EPS (before and after extra ordinary items)			1.33*		1.32*	1.33*		2.65*		2.53*		4.56
(iv)		NPA Ratios
		a) Gross NPA			318,453		286,882	194,897		318,453		194,897		279,562
		b) Net NPA			179,629		162,022	106,638		179,629		106,638		155,196
		c) % of Gross NPA			3.11		3.00	2.39		3.11		2.39		3.00
		d) % of Net NPA			1.78		1.72	1.32		1.78		1.32		1.69
(v)		Return on Assets (%)			0.19*		0.20*	0.24 *		0.39*		0.43 *		0.75

* Not Annualised
Segment Information@
													(` in Lakhs)
Particulars			Quarter ended						Half year ended				Year ended 31.03.2018
			30.09.2018	30.06.2018		30.09.2017			30.09.2018		30.09.2017
			Unaudited	Unaudited		Unaudited			Unaudited		Unaudited		Audited
Segment Revenue:
	Treasury		61,715	62,296		58,686			124,011		122,462		239,556
	Corporate/Wholesale Banking		118,582	112,799		94,157			231,381		184,798		378,695
	Retail Banking		123,312	114,264		109,591			237,576		216,569		454,386
	Other Banking operations		5,172	4,465		4,248			9,637		8,172		18,561
	Unallocated		-	-		-			-		-		-
	Total Revenue		308,781	293,824		266,682			602,605		532,001		1,091,198
	Less: Inter Segment Revenue		-	-		-			-		-		-
	Income from Operations		308,781	293,824		266,682			602,605		532,001		1,091,198
Segment Results (net of provisions):
	Treasury		3,468	9,796		10,902			13,264		23,642		25,650
	Corporate/Wholesale Banking		4,999	1,914		6,405			6,913		4,583		(13,797)
	Retail Banking		33,062	28,323		22,789			61,385		43,614		120,093
	Other Banking operations		216	750		1,047			966		1,937		5,251
	Unallocated		(867)	(406)		(499)			(1,273)		(991)		(2,811)
	Profit before tax		40,878	40,377		40,644			81,255		72,785		134,386
Segment Assets
	Treasury		3,118,628	3,145,414		3,050,768			3,118,628		3,050,768		3,510,841
	Corporate/Wholesale Banking		5,856,115	5,249,962		4,580,074			5,856,115		4,580,074		5,072,766
	Retail Banking		4,680,773	4,593,053		3,879,775			4,680,773		3,879,775		4,539,627
	Other Banking operations		1,965	1,184		1,806			1,965		1,806		533
	Unallocated		783,415	678,484		663,369			783,415		663,369		707,628
	Total		14,440,896	13,668,097		12,175,792			14,440,896		12,175,792		13,831,395
Segment Liabilities
	Treasury		3,005,316	2,981,393		2,860,293			3,005,316		2,860,293		3,348,514
	Corporate/Wholesale Banking		5,626,533	5,005,327		4,379,950			5,626,533		4,379,950		4,849,217
	Retail Banking		4,499,891	4,380,781		3,708,703			4,499,891		3,708,703		4,341,585
	Other Banking operations		-	4		-			-		-		1
	Unallocated		55,023	50,716		53,523			55,023		53,523		71,055
	Total		13,186,763	12,418,221		11,002,469			13,186,763		11,002,469		12,610,372
Capital employed:
(Segment Assets - Segment Liabilities)
	Treasury		113,312	164,021		190,475			113,312		190,475		162,327
	Corporate/Wholesale Banking		229,582	244,635		200,124			229,582		200,124		223,549
	Retail Banking		180,882	212,272		171,072			180,882		171,072		198,042
	Other Banking operations		1,965	1,180		1,806			1,965		1,806		532
	Unallocated		728,392	627,768		609,846			728,392		609,846		636,573
	Total		1,254,133	1,249,876		1,173,323			1,254,133		1,173,323		1,221,023
@	For the above segment reporting, the reportable segments are identified into Treasury, Corporate/Wholesale Banking, Retail Banking and Other Banking Operations in compliance with the RBI guidelines.
	Statement of Assets and Liabilities of the bank as on September 30, 2018 is given below:
									(` in Lakhs)
	Particulars			As at 30.09.2018		As at 30.09.2017			As at 31.03.2018

				Unaudited		Unaudited			Audited
	CAPITAL AND LIABILITIES
	Capital			39,612		39,091			39,443
	Reserves and Surplus			1,214,521		1,134,232			1,181,580
	Deposits			11,818,242		9,721,075			11,199,249
	Borrowings			887,349		873,320			1,153,350
	Other Liabilities and Provisions			481,172		408,074			257,773
	Total			14,440,896		12,175,792			13,831,395
	ASSETS
	Cash and Balances with Reserve Bank of India			571,829		472,637			513,276
	Balance with Banks and Money at Call and Short Notice			242,941		404,869			407,065
	Investments			2,821,385		2,631,750			3,078,107
	Advances			10,094,088		8,064,588			9,195,747
	Fixed Assets			45,705		47,203			45,737
	Other Assets			664,948		554,745			591,463
	Total			14,440,896		12,175,792			13,831,395
Notes:
1	The above Standalone Unaudited Financial Results for the quarter and half year ended September 30, 2018 were reviewed by the Audit Committee and approved by the Board of Directors at its meeting held on October 16, 2018. These Results have been subjected to "Limited review" by the Statutory Central Auditors of the Bank and an unqualified review report has been issued.
2	The Bank has made provision for Non Performing Assets as stipulated under Reserve Bank of India (RBI) norms. Further, provision for standard assets including requirements for exposures to entities with Unhedged Foreign Currency Exposures and provision for restructured advances have been made as per RBI guidelines.
3	The Bank has followed the same significant accounting policies in the preparation of the interim financial results as those followed in the annual financial statements for the year ended March 31, 2018.
4	In accordance with RBI Circular DBR.No.BP.BC.1/21.06.201/2015-16 on Basel III Capital Regulations dated July 01, 2015 and RBI Circular DBR.No.BP.BC.80/21.06.201/2014-15 dated March 31, 2015 - 'Prudential Guidelines on Capital Adequacy and Liquidity Standards - amendments', Banks are required to make Pillar 3 disclosure requirements including Leverage Ratio disclosure requirements that are to be made along with the publication of Financial Results. Accordingly, such applicable disclosures have been placed on the website of the Bank which can be accessed at the following link: http://www.federalbank.co.in/regulatory-disclosures. These disclosures have not been subjected to audit or review by the Statutory Central Auditors of the Bank.
5	The Business operations of the Bank are largely concentrated in India and for the purpose of Segmental reporting, the bank is considered to operate only in domestic segment, though the bank has its operations in International Finance Service Centre (IFSC) Banking Unit in Gujarat International Finance Tec-city (GIFT). The business conducted from the same is considered as a part of Indian operations.
6	Other income includes fees earned from providing services to customers, commission from non-fund based banking activities, earnings from foreign exchange and derivative transactions, selling of third party products, profit on sale of investments (net), recoveries from advances written off etc.
7	During the quarter and half year ended September 30, 2018, the Bank has allotted 2,977,913 and 8,458,468 equity shares of ` 2 each, pursuant to the exercise of stock options by employees.
8	On marking to market its investments as at June 30, 2018 in Government Securities held under Available for Sale and Held for Trading category, the Bank has incurred net depreciation of ` 5,893.97 Lakhs. As permitted vide RBI Circular DBR.No.BP.BC.113 /21.04.048/2017-18 dated June 15, 2018, the Bank has exercised the option of spreading the provision for such Marked to Market (MTM) losses equally over four quarters commencing from the quarter ended June 30, 2018. Accordingly, during the quarter and half year ended September 30, 2018, ` 1,473.49 Lakhs and ` 2,946.98 Lakhs has been charged to the profit and loss account respectively towards such MTM losses and the balance unamortised MTM Loss of ₹ 2,946.99 Lakhs has been carried forward, which shall be amortised in remaining quarters.
9	Ministry of Labour and Employment, Government of India on March 29, 2018 has enhanced the gratuity ceiling to an employee under Payment of Gratuity Act, 1972 to ` 20 Lakhs from earlier limit of ` 10 lakhs. This change has resulted to an incremental gratuity liability amounting to ` 7,143.90 lakhs. As per the RBI circular DBR.BP.9730/21.04.018/2017-18 dated April 27, 2018 the Bank has an option to spread the impact of change in gratuity ceiling over four quarters beginning with the quarter ended March 31, 2018. The Bank had availed the option to spread the incremental gratuity expenditure over four quarters beginning with the quarter ended March 31, 2018. Accordingly, during the quarter ended March 31, 2018 the Bank has charged to the profit and loss account an amount of ` 1,785.97 Lakhs and there was an unamortised gratuity expenditure of ₹ 5,357.93 Lakhs. Based on the correspondence with the Reserve Bank of India (RBI) during the quarter ended June 30, 2018, the Bank has charged to the profit and loss account the entire unamortised gratuity expenditure of ₹ 5,357.93 Lakhs.
10	Previous period's / year's figures have been regrouped / reclassified, where necessary to conform to current period's classification.







						SHYAM SRINIVASAN
Mumbai						MANAGING DIRECTOR & CEO
October 16, 2018						(DIN: 02274773)

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

END

IR BXBDGIDBBGIL

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