The bank is awaiting regulatory authority approval to open its office in UAE
Pact with SIDBI to increase flow of credit to SMEsPlans are under way to start life insurance company
KOCHI: The Board of Directors of Federal Bank Ltd., at its meeting held here on Thursday, approved the financial results (reviewed by the auditors) of the bank for the quarter ended December 31, 2006.
According to a press release, the operating profit of the Aluva-based bank increased by 25.46 per cent to Rs.388.26 crore during the first nine months of the current financial year from Rs 309.47 crore in the first nine months of 2005. The net profit stood at Rs.193.48 crore (up from Rs. 174.48 crore).
Total business of the bank reached Rs. 32,185.98 crore, with an increase of Rs. 5,223.24 crore over the corresponding period in the previous fiscal. Total deposits increased by Rs. 2,118.21 crore (12.88 per cent) to Rs. 18,565.76 crore as on December 2006. During the fiscal, the bank followed a conscious approach to reduce its dependence on wholesale deposits and to support its asset growth from retail small deposits as a strategy in managing liquidity and net interest margin. The savings bank and current deposits registered an impressive growth of 25.30 per cent and 28.71 per cent respectively during the period, said the press release.
The capital adequacy ratio of the bank as on December 31, 2006 was 14.60 per cent. The tier-1 (core CRAR) was 9.78 per cent. The bank has also taken a decision to further strengthen its Investment Fluctuation Reserve by appropriating 5 per cent of the net profit of the bank every year to take care of the depreciation in the HTM category. Accordingly, after appropriating Rs.9.67 crore, the bank holds Rs.166.34 crore in Investment Fluctuation Reserve, though this not required to be kept as per RBI guidelines.
Apart from the addition of 32 branches from the Ganesh Bank of Kurundwad during the fiscal, the bank added 20 new branches and 45 ATMs, taking the total network to 524 branches and 368 ATMs spread over all important centres across 24 States in India.
The bank plans to open 15 more branches before March 31, 2007, of which four are in Kerala.
The business per employee and profit per employee as on December 31, 2006 improved to Rs. 512 lakh and Rs 4.15 lakh respectively from Rs. 415 lakh and Rs. 3.63 lakh respectively as on December 31, 2005. The cost-to-income ratio improved to 43.38 per cent from 46.16 per cent in December 2005.
Increasing shareholders' value
The earning per share and book value per share as on December 31, 2006 stood at Rs.30.14 and Rs.168.82 respectively as against Rs.32.71 and Rs.146.02 as on March 31, 2006.
The bank has entered into a Memorandum of Understanding with the Small Industries Development Bank of India (SIDBI) with the aim of working together to increase the flow of credit to Small and Medium Enterprise (SME) sector units in select industrial clusters viz. rice milling, plastic industries, wooden furniture, coir industry, sea food industry and cashew processing.
The bank formed a new department SME and Agricultural Finance Department to roll out competitive products in SME and agricultural segments.
The Bank is also aggressive in the retail loans market offering competitive products. Its recently launched Federal Easy Gold Scheme offering all-purpose personal overdraft operational through the Bank's ATMs has been well received by the customers, said the release.
During the year, the bank introduced a Programme for Total Banking Inclusion in 10 select grama panchayats in Kerala.
This is an inclusion banking initiative to address the needs of the people at the bottom of the pyramid. The programme will be extended to more panchayats in a phased manner.
The Bank is awaiting approval from the regulatory authority in UAE to open its representative office in UAE.
Federal Bank has already signed an MoU to start a joint venture with IDBI and Fortis for starting a life insurance company.
This new joint venture will enable the bank to offer a wide range of insurance products to the existing customers and also increase the customer base and value to stakeholders. The bank is in the process of shifting its entire branches and operations to a Core Banking Solution from Infosys Technologies. The entire operation of the Bank is expected to be under the new module by September 2007.