NEW DELHI: Kerala-based Federal Bank plunged over 10 per cent on Thursday as March quarter net profit dropped an annual 44 per cent due to a sharp rise in bad loan provisioning.
The results came out on Wednesday.The lender recognised Rs 872 crore of slippage in January-March to comply with the central banks February stipulations that had tightened norms for bad loan resolution.The profit came in lower than a Bloomberg poll estimate of 14 brokers, which had expected the bottom line to rise 12 per cent to Rs 287 crore.The stock reacted negatively as it fell 10.47 per cent to hit a low of Rs 90.55 on BSE in early morning.
We decided to implement the RBI circular at one go.
These loans were standard and were being paid and not 90 days overdue.
This accelerated recognition has meant our profit has been hit, said Shyam Srinivasan, CEO, Federal Bank.