The Federal Bank Ltd - Rating reaffirmed at 'CRISIL A1+', rated amount enhanced for Certificate of Deposits

CRISIL Ratings has reaffirmed its 'CRISIL A1+' rating on the short-term debt programmes of The Federal Bank Limited (Federal Bank).

The rating continues to reflect the comfortable capitalisation of the bank, healthy resource profile, and strong brand among non-resident Indians (NRIs). These strengths are partially offset by average, albeit improving, profitability, a relatively modest scale of operations, and geographical concentration.

Asset quality has been improving steadily after the inch up witnessed during the pandemic. Gross non-performing assets (GNPAs) improved to 2.78% as on March 31, 2022, from 3.35% as on March 31, 2021, and a further to 2.67% as on June 30, 2022. This was supported by lower slippages and higher recoveries, apart from sale of Rs 275 crore to an asset reconstruction company, which positively impacted GNPAs by 18 basis points. The asset quality of the corporate segment (35% of the loan book) improved the most, with segment GNPA declining to 0.9% as on March 31, 2022, from 2.1% a year ago.

The bank had 2.2% (Rs 3,366 crore) of its loan book as standard restructured book as on June 30, 2022, of which majority was retail and secured. While majority of the restructured book is well collateralised, its performance as well as overall asset quality will remain monitorable.

Source : Equity Bulls

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TheFederalBank RatingUpdate Reaffirmed